Monday, November 28, 2016

The Sharing Economy Meets Travel

Repairing a Broken Travel Industry One App at a Time

The world of travel is experiencing a seismic shift. Quite simply the way we travel is changing rapidly and a bunch of huge travel industry players may soon find themselves staring into the abyss of irrelevancy.

They are the new Polaroid.

Why? Lets begin by assessing the state of the conventional travel industry.

Domestic Airlines
I speak as a 2 million mile flier with lifetime platinum status with over a million air miles banked in multiple airline FF accounts.

• America's domestic airlines view passengers as a materials handling problem.
  Airline's focus on finding more profitable ways to ticket and transport human cargo.

• Airlines openly disregard passenger expectations of decency, comfort and civility.
   American Airline ads recently blamed eroding service on their customers.
• Airline mergers have reduced competition & capacity and led to higher fares.

• Airlines are rewarded for adding fees like pollen in the spring.
  United's share price recently soared after announcing fees to use overhead bins.

• Domestic airlines go political in lieu of competing with superior airlines.
  They demand access to foreign markets and block foreign airlines from US markets.

• Airlines change rules on loyalty programs faster than I change socks.
  The changes never favor passengers.

• All of the above is 10 X's worse on Spirit or Allegiant Airlines.

Here I also speak as a lifetime platinum traveler with millions of hotel miles in various accounts.

• Mega mergers consolidate reservation networks and crush independent hotel chains.
  Marriott and Hilton have clearly taken a page from WalMart. 
  Move in and kill off local competition.
  Try some great local chains: Room Mate (Spain) / Citizen M (Paris, London, NYC).

• Reduced competition = rooms that cost $79 / nt. in 2008 now cost $150 / nt.
  Hotel rates skyrocketed during a period of near zero inflation.

• And, like airline bag fees - hotels keep dreaming up new fees.
  Resort fees, amenity fees, parking fees, early check-out fees, internet fees etc.

Rental Cars
My clients are taxpayers, so I am a car rental hoe. I have no loyalty. I rent from the agency that offers the best price coupled with a skip the counter program.

• Every novice rental car customer faces a shit storm of up selling at the counter.

• Rental agencies love hiding extras.
  Like the "emergency road service" fee added automatically at Thrifty SLC.
  Rental agencies play "Where's Waldo" and novice renters get fleeced.

• Rental agencies quietly dream up new zingers like the LDW (loss damage waiver).
  A renter damaging a car is liable for lost revenue during the repair of a damaged car. 
  That may sound fair....but....
  Renters have no way of determining how long it (should have taken) for repairs.

The Government
• State and local governments tax the crap out of rental car / hotel customers.
  Travelers pay for everything from convention centers to Cactus League baseball in AZ.
  Seattle frequently rack up more taxes & fees than the actual daily car rental rate.

• Despite rising traveler complaints, consumer watchdog protections are disappearing.
  Travelers are left to  fend for themselves. So learn your rights.

They're so icky!
• Taxi fares remain stupidly high in most major markets.

• In key markets (Vegas) taxi monopolies appear wired.
  Far be it for Roadboy to suggest that kickbacks might be the culprit.

• Expect "check engine" lights, smelly stained seats & broken credit card readers.

• Many cab drivers are lost.
  Try turning off their Google Maps or Waze and see where you wind up.

In sum, as the conventional travel / hospitality industry now offers frightening levels of ambivalence toward customers, so travelers have responded by seeking other options.

And by increasingly abandoning conventional travel offerings via new app based services they are frequently liking what they find.

So what is the future?

Long Distance Transport
Although most Americans have never heard of Europe's Bla Bla Car, more than 4,000,000 Europeans use this app each month to arrange long distance rides (averaging 200 miles). Put in perspective every month more travelers ride share on Bla Bla than use EuroStar and Jet Blue combined. We'll surely see something similar in key markets like the NE.

Despite all my banked hotel points I now frequently opt to save my points (for emergency trips) and opt for Airbnb accommodations.

Airbnb delivers me an entire home, located right where I want to be. I can get a full kitchen, wireless internet and a washer and dryer. And, frequently, they come with hosts that offer a "locals only" perspective on the cities and neighborhoods they love.

It becomes a trade: tiny overpriced hotel rooms with daily maid service vs. entire homes with a built-in concierge. All at prices that are typically far less than even moderately priced, limited service hotels. But be very careful. AirBNB cancellation policies for high demand areas can be onerous if you need to cancel in an emergency. Also don;t go looking for customer support from AirBNB.  There simply isn't any way to talk to a human being about key policies etc.

Rental Cars / Taxis
Nowadays, I rigorously avoid renting cars for business whenever I can. Instead I opt for light rail, Uber and / or Lyft. No more fighting for parking spots, mad dashes to refill gas, watching for local speed / radar traps and toll roads.

And, so far nearly every Uber I've experienced provided a clean car with a friendly, competent driver. And (I contend) everyone is far safer when travel transactions are cashless.

When I rent a car for pleasure trips I first check to see if my destination has Silvercar. Silvercar only rents Audi A4's at $69 / day or less. There is no counter, you go straight to the car and check-in using your app.

So as fast buck private equity owned hospitality providers feed shareholder greed, the sharing economy is expanding to provide new opportunities to exploit the void the travel dinosaurs so willingly create. And, frequently adventurous travelers emerge as big winners.

Roadboy is selling his retirement funds if they contain conventional hospitality industry players.

Roadboy's Travels © 2016

No comments: