Orizonia and the Barceló bail out

The Spanish outbound market is today buzzing (or maybe trembling) with news that the Barceló Group is about to buy out the troubled Orizonia Group (comprising Vibo viajes, Kirunna, Iberojet, Orbest, Viva tours).
After years of losses, months of rumours and weeks of increasingly desperate and sometimes contradictory moves by Orizonia’s president Fernando Conte, it looks as though the Barceló offer will be accepted by the group’s owners (venture capital funds: Carlyle, Vista Capital and ICG).
There are still a number of issues to be solved before the deal can finally go through… not least of which is the banks’ acceptance to condone 70% of Orizonia’s 620 million euro debt or the approval of the Spanish government’s equivalent of the monopolies commission to the mega-holding that would result from the operation. However, I am pretty sure it is as good as done and everything needs to move very quickly because Orizonia needs an urgent injection of 60,000,000 € in the next few weeks or it will collapse altogether.
The Orizonia situation is, to me, a reflection of the Spanish outbound travel market which itself it pretty typical of the Latin business culture that has gone so quickly from boom to gloom. Let’s face it, tour operation is about being an intermediary taking a small part of an already small market. There is of course money to be made but it is definitely not the big bucks business that some Spanish tour operators seem to think. The key is not in generating huge turnover but in understanding and rationalising the process and costs required to generate each sale. It has always surprised me, for example, how well tour operator brands are known by Spanish consumers, often more so than retail agencies. If you are in the wholesale business surely your marketing budget should be limited mainly to selling your services and product to the retail agents and they should in turn invest their marketing budgets to sell to the end consumers. Not in Spain! Why did Viajes Marsans need the vast glass office building it bought not long before going bust? There is a lot of show and not enough substance in Spanish tour operation. Time after time, the tour operator business model based on brand and turnover rather than product and profitability has shown to be unsustainable and unless you have a very understanding and patient bank (which no longer exist in Spain) it is a recipe for disaster.
Nobel Tours grew itself out of control and out of cash, Marsans did the same (and added some questionable financial management to the poison) and now Orizonia, one of the most consolidated groups in the industry finds itself fighting desperately for survival as a result of a few years phenomenal growth (coinciding with poor performance of its retail arm). Something is fundamentally wrong when you can turnover 2.350 million euros and make a loss of 42 million.
The new group, if Barceló takes over Orizonia, will turnover over 4,000 million euro but the Barceló group come from a sound hotel background and they have a more pragmatic approach to the tour operation business.

Mobile tourism marketing in Spain Review updated by Kayak

In 2013 there will be more Spaniards connected via mobile devices than computers

This is one of the many interesting statements in the white paper just written by the leading travel comparison website and app Kayak. The 3^rd KAYAK Online Travel Barometer, written in collaboration with online and mobile industry specialists such as Segittur, Turismo AS, Google, Vueling, Minube, ReallyLateBooking, Meliá Hotels and Logitravel, analizes the trends in the use of mobile apps for search and travel reservations. The white paper was officially launched yesterday by its authors at an event in Barcelona that generated of 600,000 impacts on Twitter. You can view it below in Spanish but here are some of the main conclusions in English:

• Mobile commerce will continue to increase, spurred on mainly by the growth of tablet users, who shop online an average of 21% more that of computer users.
• New models of tourism oriented business will arise based on mobiles thanks to the facilities in tendencies of the SoLoMo concept  (Social, Local, Mobile)
• Investment in advertising on mobile devices will increase but remain low compared to the investment made in digital media and consumption time made by consumers.

Smartphones are here to stay and are currently leading an important revolution in the social and economic fields particularly in the travel and tourism business. The development of apps and new platforms for e-commerce and content based in a mobile environment will allow for new forms of consumerism, motivated by a key factor: from 2013 on there will be more Spaniards connected via mobile devices than via computers.

The study analyzes, in four chapters, the differing behavior of travelers using a mobile APP to source online travel information and purchases and those that prefer the Web, the rate of adaptation to mobile technology of Spanish travelers, the challenges of the mobile market in Spain and the upcoming trends in 2013. All the observations were compiled and analized from a survey made by a group of experts in the field chaired by José Luis Martínez (Country Manager Spain KAYAK)

The main difference between the user of a mobile app and the user of the web is that the former is more technology oriented and more faithful to brands. We are dealing with a traveler that uses mobile apps to make last minute reservations even in the same place where the product is being consumed. Still, we find ourselves in the situation of users surfing on mobiles, but making purchases through the Web, just as it occurred 12 years ago when the user searched the Web and bought offline.

Spain is very advanced in the field of mobile technologies, taking a lead position, especially in the case of smartphones, considering that the preference in Spain for these devices over normal mobile phones is among 55% compared to the European average that’s situated on 47,6% according to data provided by ComScore. In 2013 there will be more Spaniards connected to a mobile device than a computer, a new scene in which brands, tourism companies and destinations will have the chance to delve, improve and make advances on mobile marketing, at the same time reinforcing the relationship with their clients.

According to state tourism technology company Segittur, surfing on the Internet, taking pictures, recording videos and checking email are the main actions made by Spaniards through these devices. However already 23% of the total hotel searches and 18% of flight searches on Google Spain are made through mobile phones. In Vueling, mobile searches represent 10% of the total traffic, but they have seen an increase of 250% in sales through mobile.

Tourism businesses are increasingly aware of this reality and there is a greater visibility of Webs adapted for mobiles as well as APPs. On the other hand, the investment made in mobile publicity is increasing its share of marketing budgets of these companies, even if they’re still lower than the Web marketing budgets.

The general complaint common to all those involved in this study is that the biggest challenge for the mobile market in Spain are the high prices of surfing as well as the incredibly expensive fees for roaming.

José Luis Martínez, KAYAK’s country manager for Spain and Portugal, believes that as soon as operators and institutional organizations start supporting initiatives regarding a reduction in rates we will see a faster evolution.

Another big handicap are the mobile payment systems. “Even if the work is being guided into having well established and standardized payment systems, the question that still remains is how fast these systems will be adopted. The credit card is still the ideal payment method, but may be it is not the best way for spontaneous purchases on APPs and mobile sites”, explains Martínez.

Last but not least, some of the trends in the mobile environment for 2013 according to the opinions of the experts participating in this study will be:

• Meta search apps will continue to grow on their market share.
• Integration of new marketing strategies.
• Implementation of features based on geolocation.
• Mobiles will be key in the branding of coupon businesses.
• Development of voice and local search.
• In situ competition. Mobile phone users will be able to analize in situ all the offers available and compare between them.
• New payment systems through the phone will finally take on.

“In our KAYAK Online Travel Barometer, we have tried to gather some of the opinion leaders in the field and debate about the 2013 traveler. An enriching experience that we hope to repeat and that has revealed a result a social traveler, that looks for customized products, that likes to compare and one that will become a mobile traveler” explained José Luis Martínez, country manager of KAYAK Spain & Portugal.”