Abandoned hotels past their days of glory: Which will rise again?

by Jamie Rhein on

Over at ProTraveler, there is a read worth noting about eight abandoned hotels in various parts of the world. They once had glory days, but didn’t hold onto it for financial woes or pestilence.

These are the places that chronicle shifts of time. Hot destinations that don’t stay hot or where the owners made bad decisions. You’ve probably come across examples of these types of places in your own travels.

“What was this place?” you might say to your traveling companions. You wonder if anyone important stayed here or what the building looked like when it was brand spanking new.

One example is this picture of the Palace Hotel in Jerusalem. I love this shot. The hotel reminds me of John Everett Millais’s painting of Ophelia still clutching flowers, dead, floating face-up in a pond.

The photos are haunting, I think. Chairs with no one sitting in them, debris scattered across the floor, and an old sign that once flashed its neon. These are reminders that nothing gold can stay, but if lucky, can be resurrected into a new life.

For example, the Palace Hotel is to be reopened as a Waldorf-Astoria luxury hotel in a few years. The Diplomat Hotel in the Philippines may be turned into a museum. The folks who are going to do the project better hurry while there is still a building worth saving. It’s thought to be haunted, so hopefully, the ghosts will be happy with the change.

Gadling’s airline hit list: five airlines to watch this summer

by Grant Martin on

With all of the trouble swirling around the airline industry it’s hard not to think about this summer and more problems that could occur. Summertime is traditionally a busy time of year, with travel prices and oil going up as vacationers hit the road. This year is a little different though. More Americans are staying home because they can’t afford to take that summer vacation to Disney World and the cost of operating an airplane is at an all time high. We suggest in an earlier article that this combination could spell disaster for more than one airline.

I’m not the only speculator on the obituaries — Morningstar released a financial report on the airlines earlier this month that rated the liquidity and debt coverage of some of the major carriers. What they found was that Southwest was the only airline in a decent position, a few other carriers were squabbling along in second place and there were a lot of airlines in serious financial trouble this summer.

Business Travel Commission and AirlineForecasts issued another doomsday paper last week called the Airline Crisis Report, where they look at the earnings of the top ten carriers in the United States. The only company in the black? You guessed it.

So we’ve put all of the data together and mixed in a fair amount of “gut feeling” to make Gadling’s Hitlist: 5 Airlines to Watch this Summer. Expect to hear about these airlines in the news, woeing about fuel prices and cutting about service and maybe even exploring the “B” word: bankruptcy.

  1. Frontier – Denver based Frontier Airlines declared bankruptcy earlier this year because their credit company started taking a larger cut out of their transactions. All this has potential passengers afraid of another Skybus incident where they might get trapped at their destination, so my bet is loads and profit are down even further. Today the struggling airline released a report saying they would take a $59.4M loss this year, their largest deficit ever.
  2. L’avion – Never heard of L’avion? Most people haven’t. One of the last of the business-class-only carriers around town is struggling to keep it’s head above water as OpenSkies is about to jump into the USA-Paris market this month. If we’ve learned anything from Maxjet, Eos, or Silverjet, L’avion is up to bat next.
  3. US Airways – The above data seem to indicate that US Airways is in one of the worst situations among all carriers — among the most outstanding debt, lowest liquidity and lowest earnings in the market. Earlier this year they were rumored to be in talks with United to merge. Someone needs to bail them out, because they keep hemorrhaging cash and with a rating among the lowest on the Airline Quality Report, passengers need a boost in confidence.
  4. Spirit – Low Cost Carriers are among the first victims in a downturn, as Skybus already showed us. While Spirit has been around for a while, they may not have the customer or frequent flyer base to keep things going in sustained tight times. As MSNBC’s Chris Elliott pointed out last week, they’ve almost shut down their customer service, which can’t be a great sign of things to come.
  5. Mesa/Pinnacle – As small feeder airlines for the larger carriers, both Mesa and Pinnacle face the potential of being trimmed out as the giants cut costs. Just last week, Pinnacle was dropped as a feeder by Delta Airlines. Mesa, on the other hand, was rated among the lowest in both the Morningstar and AQR reports.

Think I’m full of crap? As I admitted before, much of these predictions are a mixture of speculation and data — these notes shouldn’t influence your portfolio investments or even your decision to book tickets. Let me know what your favorite airlines and predictions are below are and hold on for a little bit of turbulence this summer.

Oil, the economy and airlines

by Grant Martin on

The numbers don’t look good for the the airlines this summer, I’m afraid. Small trickles of data keep coming in from every direction pointing to a toxic combination of high oil prices and low demand that are going to be serious hurdles for the industry as the year progresses. Predicting more bankruptcies, Morningstar recently ranked the top carriers by liquidity and debt coverage, highlighting the struggling US Airways and Frontier Airlines at the back of the pack while pointing out the very few who might have a chance. The IATA keeps adjusting its annual industry profits as crude rises, from +4.5bn when a barrel of oil was 86$ to -2.3bn when it was 106$ (the current price is around 130$).

At the same time, carriers have been forced to launch fare sales across the board because demand is so low that they can’t fill airplanes. So even when flights sell out, they’re still losing money.

In the past six months alone, we’ve written about seven airlines that have gone under, Skybus, Aloha, ATA, Eos, Silverjet, Maxjet and Oasis Hong Kong, with Frontier Airlines going bankrupt but continuing operations. There are seventeen others that we didn’t mention.

Each airline eulogizes its tenure with a farewell note left on an abandoned webpage, most pointing to the rising price of jet fuel and recalling a long lost day when their company meant to change the world.

How can the airline industry continue to operate in these conditions? Their current business plan is to make some of it up by adding extra fees — 15$ here for a checked bag, 50$ there for a changed ticket. But Americans are crafty. They’ll do whatever they can to get around extra fees, from cramming everything into an overhead compartment to starving to death on a transcontinental flight. And in the end the few dollars made by selling stale sandwiches on their flight won’t make up for the extra price of jet fuel in the belly of the aircraft.

So the industry will continue to take hits and the price of oil will continue to rise. Meanwhile, consumers will continue to demand low cost tickets, tapering off demand and cutting into the bottom line. Capacity will need to be reduced severely to maintain cash flow. Some, like American Airlines parent company, AMR have already initiated these efforts, announcing a 12% cut in capacity just last week.

And what if they’ve squeezed every last nickel out of the consumer, cut as many corners as possible and still can’t afford to run the airline? Run the well dry and hope that things get better before anyone notices. Only once their credit has turned tepid and the feds have shuttered their gates will they cease operations, stranding thousands of passengers and leaving only a website and a few dusty old MD-80’s in an airline empire that never could have been.

Silverjet ceases operations

by Grant Martin on

As expected, Silverjet ceased all operations on Friday, marooning more believers in the “business-class-only” model and completing the hat trick of airlines in that niche to go bankrupt in the last six months. At root of the issue are the same old villains, high oil prices and lack of demand in the business-class-only market. It’s just too hard to get started as a niche carrier these days.

On their website, the recently deceased airline leaves a brief eulogy and thank you to its dedicated passengers, offering to those stranded: “You are advised to seek alternative travel arrangements with other carriers, and contact your credit card company or travel agent directly for information on obtaining refunds.”

So much for their CEO Lawrence Hunt’s strong words and encouragement after Eos and Maxjet fell.

All eyes are now on L’avion, the French carrier established in 2006 flying under the same business model (but to Paris instead of London). Will they prevail where Maxjet, Eos and Silverjet failed? What about British Airways‘ OpenSkies airlines who are set to fly next month?

I wish there was not as direct a correlation between oil prices and airline bankruptcies as there is now. But if it the statistical data hold true, I’m not sure if anyone has a chance anymore.

Last business class only airline almost goes south, bailed out by UAE

by Grant Martin on

If you’ve been following the airline industry over the past few months, you may have noticed that things aren’t going so hot. Several airlines serving niche industries have gone under including Skybus (budget), Oasis Hong Kong (long haul budget) and Eos and Maxjet (business class only).

When the market is tight, niche carriers like above are particularly affected because passengers tend to revert back to the old trustables, legacy carriers that have a lower probability of going out of business and that can provide a sure thing. Effectively, the downturn in the industry creates a secondary problem for the company: in addition to now having to pay high fuel and operating costs, fewer passengers are now generating revenue with which carriers can operate.

Thus defines the problems faced by the half dozen or so carriers that have gone belly up in the last few months, and what is continuing to plague carriers that are still afloat.

Like other carriers, the last remaining business class only airline in operation, Silverjet, has been struggling in the recent market. It was only by a recent injection of $25m by a private United Arab Emirates investor that they’ve been able to stay afloat.

How long will Silverjet be able to last on this crutch? Will they be able to turn business around and operate with a profit in the current market? Is business-class-only a viable model? Your guess is as good as mine. Stay tuned to find out.