Egyptian Tourist Office appoints new director in Spain

From next week we will have a new colleague among the destination marketing community of Spain. Mohamed Mohsen Ismail will replace Magued Abousedera at the head of the Egyptian Tourist board in Spain. Mohamed Mohsen Ismail (born 1975) knows Spain and presumably Spanish because he has been here to study marketing. Since 2007 he has been coordinating the “desert tourism” product in Egypt.

I welcome Mohamed to Madrid and wish him every success in winning back the market share Egypt lost last spring. In 2010, Spanish tourist arrivals to Egypt were at 160,000 per year, making it a popular destination with tourists and with Spanish investors.  For me, Egypt is one of the most successful destinations in the world when it comes to bouncing back after a crisis. Perhaps because the pyramids are an irresistible lure to tourists, perhaps because of their marketing or perhaps because there is a lot of foreign investment the fact is that time after time Egypt’s tourism figures have taken a real beating only to pick themselves up and fight back to the top of the ranking.

Mr. Abousedera for his part leaves Madrid with a heavy heart because he said he always felt like Spain was his second home.  He is nonetheless happy to be taking up a new position at the Ministry of Tourism in Cairo.

Mohamed Mohsen Ismail (Image from http://www.Hosteltur.com)

 

Kuoni considering closing their Spanish tour operator.

There was a piece in today’s Hosteltur saying that Swiss Tour Operator Kuoni is considering plans to offload all the areas of it’s business that are making a loss. This would include their Spanish Tour Operator Viajes Kuoni

I can see their cause for concern as the group has seen its losses grow in the first half of 2012 to a total of over forty million euros (despite making a profit last year). Here there is a saying that “Big problems (and losing 40 million euros in six months is definitely a big problem) …require big solutions” and Kuoni seems to be considering the idea of weeding out all but the healthy blooms in their garden. Apparently the plan is to try to sell off the loss-making divisions of their group (including Octopus Travel and the tour operators in Spain, Italy, Netherlands and, somewhat surprisingly, Russia). If they cannot find a buyer, plan B is to simply cease trading which would affect the jobs of around 500 staff. This would, in theory, tidy up the group balance sheet which last year managed to increase profit by a healthy 44%.

Last year, Kuoni Spain made it’s first step towards selling direct to the consumer by opening their own travel centres (very smart by the way!) in Madrid, Barcelona and Valencia and by sending quotes directly to consumers via the web (albeit stopping short of actually selling the package and referring them to a retail agent).

Kuoni has been in the market for many years (I think I first dealt with them in the early 90’s) and they have been a touchstone for quality long-haul travel. I have to admit that the fact that they are not able to make a profit in this market goes totally against the grain my recent post highlighting the current trend in the market towards long-haul, high-end travel as the most profitable area of tour operation. Kuoni’s troubles however started before the current crisis and affect more than just their Spanish arm so we will just consider them the “exception that confirms the law” as they say here in Spain.

 

Spain without Ryanair?

Ryanair love to be in the press and the attitude of their larger-than-life CEO Michael O’Leary has always been that “It doesn’t matter what they say so long as they are talking about you”. Be that as it may, the abundance of horror stories in the media and social media this week must be testing for this theory. They have had: emergency landings, planes running out of fuel, government complaints, hospitalized passengers due to cabin depressurization, and even a plague of bed-bugs. I am never one for conspiracy theories but as a PR man I know how the media can be manipulated and with so much bad press in such a short time I do begin to wonder if it is being orchestrated (or at least encouraged) by someone. Let’s face it, if you were a policeman investigating an attempted murder of Ryanair’s business you would have a line-up of suspects with valid motives as long as the queue at the airlines customer services desk.

The Spanish government seems hell bent on taming the Ryanair bull. Now don’t get me wrong I totally agree that Safety must always be first and it is the government’s duty to ensure that every possible security measure must be strictly implemented at whatever cost. But if, God forbid, any serious accident ever happened to Ryanair there would be so much “I told you so” “it could/should have been avoided” “they cut corners on safety””why didn’t they see the signs”, etc. that politician’s head would roll. Tragically accidents do happen but when an Air France flight disappears into the Atlantic Ocean it is not necessarily because Air France have been skimping on cost so I think it unfair to assume that that would be the case for Ryanair. Mr. O’leary might be a tad eccentric but he is definitely not stupid. He knows better than anyone else that an air crash would be the end of his dream and the beginning of an eternal nightmare and he will not be taking any more risks than anyone else. Passenger discomfort is part of the Ryanair brand (and ultimately part of their success) but passenger safety, surely, must be as important to them as any other airline.

Personally I have never flown Ryanair and so long as I have a choice I would prefer not to but that is my personal choice and there are literally millions of Europeans who choose otherwise. This is what brings me to write this post in a blog interested exclusively in the outbound tourism market from Spain. This August, Ryanair flew 8.9 million passengers in Europe, nearly 2 million more than any other airline. A good number of these flights were to or from Spanish airports. Whether we like it or not Ryanair has undoubtedly contributed a great deal to the growth in travel by Spaniards to Europe (not to mention the growth in inbound tourism to Spain). What would be the immediate effect on outbound travel to Europe of a ban on the airline by Spanish airports?  Mr O’leary loves to flex his muscles and exercise his ego by clashing horns with regional airports, as we have seen on numerous occasions. The latest example being a dispute with AENA over Alicante airport’s insistence on using airbridges for loading and offloading passengers. Ryanair refused to bend and cancelled their routes to Alicante. AENA was sure that other airlines would fill the gap left by the stubborn Irishman. Well so far this year 640,000 less passengers have used Alicante airport (a decrease in 11%) whilst Ryanair has had a record month in August so it would seem that Alicante’s tourism business, both incoming and outbound has come out of this battle the worst. What I don’t know and what the Spanish authorities must be asking themselves is …could the results of that experiment be extrapolated to a nationwide fall-out with Ryanair?

Michael O’leary dressed as a matador to launch Spanish routes.

Tour operators look to long-haul for margin

Before the summer I was at an event in Nairobi talking about the Spanish outbound market to members of the Kenyan incoming trade. Having heard on the news what a state Spain is in, they were all surprised to see me there at all …but when my advice to them was to concentrate solely on presenting their best and most luxurious products to the Spanish market they looked at me as if I were a baboon in a frock. I explained “The Kenyan Tourist board is measured by visitor numbers but you, as a business, are interested in profit. Statistics might be down but profits can still increase”. Well admittedly it is not exactly rocket science but I think it was enough to persuade some top safari camps to come over to FITUR despite the tourist board not having a stand this year.

Over the last year or so I have mentioned several times that the higher-end long-haul destinations should be those most resilient to the current economic down turn. It stands to reason that business travel, luxury, honeymoon, etc. are the segments that are not so cost-sensitive and therefore not so directly affected by the nation’s consumer confidence as the bog-standard middle class family holiday. It seems that the Spanish tour operators have come to the same conclusion and more and more are promoting long haul destinations where there is more margin. I have mentioned in previous posts how the sector’s wise old owl Pepe Hidalgo, president of the same Globalia Group that back in the eighties lead the people’s revolution for mass travel with their famous “Curro está en el Caribe” campaign, saw the crisis coming a couple of years ago and responded by creating Latitudes, a higher-end brand specializing in “grandes viajes” hoping for “grandes margins”. The Orizonia group have shifted their attention from the popular Viva Tours o Iberojet brands to push for higher margins from Kirunna. Meanwhile the Barceló group has launched La Cuarta Isla, a tour operator specialising in long haul and exotic destinations. Tui Spain too are seeing their best results and growth from the Tui Ambassador tours brand specialising in long-haul. Even Panavision, the classic package operator I knew years ago for their cheap coach tours around Europe, have started programming Kenia and other African destinations, if not we a separate brand, at least with a separate brochure.

It’s not just the big groups that are focussing on long haul, some mid-sized tour operators such as Mapa tours, who made a fortune by investing heavily in Prague or Cairo are going longer distances and with smaller groups to increase returns.

Other long-haul specialist operators such as Catai Tours, Nuba or Marco Polo have always focussed on this segment and have a bit of a head start though they will inevitably notice that their niche is getting crowded with hungry competitors.

So this could be a silver lining to the dark cloud hanging over the Spanish economy for long haul destinations. But what about the traditionally cheaper destinations that have been popular with the budget traveller or the mass tourism market (as far as Spain’s outbound tourism could ever be called “mass”)? We have seen how North African destinations such as Tunisia and Egypt have not surprisingly opted to lower prices to win back the market share they lost in last year’s storm but much as a 300€ holiday to Egypt might be tempting for the tourist but it is not going to leave much margin for the travel agent, the tour operator or even the airline. Similarly the average long weekend in any destination in the Euro zone is hardly worth the effort to sell. If we add to this the fact that Spanish travelers are increasingly confident booking short and mid-haul travel online direct from suppliers it makes more sense for the Spanish tour operators to concentrate on the long-haul “grandes viajes”.

 

New head for Halcon

Juan Jose Hidalgo, president of the Globalia group (Halcón Viajes, Viajes Ecuador, Travel Plan, Latitudes, etc.) yesterday named Jesús Júarez as CEO of the retail arm of the Group, formed by the agencies Halcon Viajes and Viajes Ecuador.

According to the press release issued by Globalia, Juarez, 38, has over 20 year’s travel industry experience (he must have started as young as I did!). After working in several other large travel agencies in 2009 he joined Halcón Viajes as the company’s sales director.  Juárez takes over from Fernando Garcia Rascon who has been a key member of Hidalgo’s team for 21 years.

The new and young blood at the head of the powerful retail group is Hildalgo’s response to the difficult situation of the market and disappointing sales so far this year. Juárez is clear that urgent action needs to be taken to “reactivate the retail chain in the face of a depressed market” and today he is said to be giving his staff a pep talk full of positivity and optimism.

I wish him and his team the very best of luck.

Iberia Express Open Routes to Germany and Scandinavia

After opening a new route to Amsterdam last month, Iberia Express have just announced new routes for the winter to Berlin, Frankfurt and Düsseldorf in Germany and Stockholm and Copenhagen in Scandinavia. They have meanwhile cancelled their summer routes to Mikonos, Naples, Riga and Edinburgh (and domestic summer destinations such as the Balearic Islands). 

The airline in now among the top ten operators from Madrid’s Barajas airport having managed to shift over 1,000,000 passengers in over 7000 flights since they started operations in March this year. So the new routes certainly represent a good opportunity for destination marketers in Germany and Scandinavia. That said, if I were them, I wouldn’t make any long term marketing plans around today’s news, welcome as it is, as Iberia Express has made it clear that it plans to chop and change its routes according to the weather and the market climate.

Indeed Iberia Express can almost be considered as a new barometer of the the Spanish travel market because it is clear that the strategy for their owners IAG is based on opportunism and flexibility to go with the flow (passenger flow). They have no long-term commitment to any destination or route rather they will move planes to react to seasonal demand. Indeed if you ask the staff of mother company Iberia about this, (which I suggest you only do if you have a lot of time and a large drink), they will say that the strategy is to make it look as though only the routes operated by Iberia Express are profitable and thus make Iberia look inefficient and unprofitable in order to justify cutting routes and jobs at IB to pass them on to low-cost IBX.

I am not the person and this is not the blog to discuss conspiracy theories of unions and investors but what does interest me is Iberia Express’ analysis of where the traffic will come from this winter. Clearly their interest is in the potential North-South traffic of Germans and Scandinavians coming to warmer climates during the winter but, as I always say, “what comes down must go up” (or was it the other way round?). There is therefore potential to get Spanish tourists, albeit as a minority, to travel South-North during the winter. Of the Spanish passengers a significant proportion will be business travelers but for Stockholm, Copenhagen and Berlin there will be great opportunities for city-break leisure traffic during the winter “puentes” and I recommend their tourist boards and DMC’s to at least make their product known and readily available to the market.