Mexico relies on Facebook to kick travel slump

by Tom Johansmeyer on

Travel to Mexico got a big ol’ kick in the cojones last year. The global recession spanked airlines and hotels around the world, and since the United States was ground zero for the financial crisis that accelerated the recession, Mexico likely lost some action from its biggest trading partner. And then swine flu came along, bringing much of the Mexican tourism and travel industry to a crawl. When I was in Los Cabos last May, I didn’t lack elbow room. Well, an 82 percent drop in Mexican tourism, according to the Woodrow Wilson International Center for Scholars, can have that effect.

To kickstart the industry and attract more people to the warm sun south of the border, the Mexican Council for the Promotion of Tourism just completed a combination game and giveaway through Facebook. The Gracias A Ti Vive Mexcio website used Facebook Connect to make 10 people incredibly happy with free trips awarded from December 21, 2009 through the end of the year. The only catch was that you had to live in Mexico and have a Facebook page. Winners were selected by game rankings (more details over at Inside Facebook), and the top scorer got to choose from Cancun, Puerto Vallarta and Huatulco – and bring a guest.

With more than 1,300 fans on the Facebook page, it looks like the promotion was a success. And, why wouldn’t it be? Mexico is one of the fastest growing countries in Latin America for Facebook, with 6.67 million users.

Big Apple beats the Mouse: New York City tops tourists’ lists

by Tom Johansmeyer on

Tourism to New York City dropped close to 4 percent last year. For a city already beleaguered by the financial crisis, this represents lost revenue we really could have used. But, the damage wasn’t as bad here as it was in Orlando, which slipped from its spot as the top tourist spot in the United States. This is the first time America’s cultural and financial capital has been the #1 tourist destination in the country since 1990.

Last year, 45.2 million people passed through New York City, and the projections for 2010 are for an increase of 3.2 percent. And, that’s in what is still expected to be a tough travel market.

[Photo by joiseyshowaa via Flickr]

Hawaii needs your help!

by Tom Johansmeyer on

Hawaii needs $1.23 billion and could use your help. Governor Linda Lingle is calling it a “fiscal crisis” and says it won’t be fixed with budget cuts alone. Essentially, the fiftieth state wants everyone else to chip in. This year’s budget gap is $721 million, which will be followed by $509.5 million next year. The state might not hit pre-recession levels until 2014.

According to Lingle, “The stark reality of continuing declining general fund revenues means the state does not have sufficient resources to cover all expenditures.”

The problem is exactly what you’ve seen here on Gadling for a while – the travel market sucks. Hawaii relies on tourism to bring in the cash; the industry touches 74 percent of the state’s jobs directly or indirectly (at least as of 2007).

Georgina Kawamura, the state’s director of budget and finance, tells Reuters, “I can only remain hopeful that we are now at the bottom and will start to pick up.”

Airline recession will continue into 2010, good news for passengers

by Tom Johansmeyer on

The airline industry must be excited to see 2009 coming to a close. It was a year of route cuts, perk cuts and abuse from passengers over all kinds of sacrifices in the cabin … and a genuine commitment to fees for extra bags. The global financial crisis triggered in September 2008 hit the travel industry with extra severity, forcing airlines, famous for not being able to generate easy profits anyway, to scramble to keep their heads above water. But, at least there’s next year … not really.

While nobody with even shred of sense expected 2010 to be the year the airline industry went wheels up, the latest prediction from the International Air Transport Association is pretty grim. IATA expects the sector to lose $5.6 billion next year, thanks to higher fuel costs and revenue declines because of lower fares. This is worse than the $3.8 billion it originally forecasted. The number of passengers filling seats, IATA believes, will increase, but it won’t be enough to make a difference.

There’s good news in here. Continued brutal competition will keep fares low, so if you missed your chance to take that dream trip this year, you’ll have another bite at the apple in 2010. For the airlines … well, there isn’t any good news. But, is there ever?

[Photo by emrank | counting days | via Flickr]

Virgin America: Financials prove service makes a difference

by Tom Johansmeyer on

We’ve all gotten used to bailing out airlines that can’t figure out how to take care of their paying customers, operate profitably or otherwise get their respective acts together. And, there really isn’t much hope of this situation changing. To be an airline, in general, is to be dysfunctional … until you look at the new entrant, Virgin America. The privately held carrier announced on Friday that its revenue surged 38.3 percent from the third quarter of 2008 to the third quarter of 2009.

The airline has amassed a collection of awards to back up its commitment to customer service, including “Best Domestic Airline” in Travel + Leisure‘s 2009 World’s Best Awards and “Best Business/First Class” among domestic airlines in Condé Nast Traveler‘s 2009 Business Travel Poll. And, the fact that the 1,500-person company is adding jobs in this market — beating both the recession and its worsened form in the travel business — suggests that it is possible for an airline to not just survive but actually succeed.

David Cush, Virgin America’s President and CEO, says, “Despite an uncertain economic climate since our 2007 launch, we’re pleased to report steady and strong financial performance and our first quarterly operating profit.” He adds, “At a time when flyers are more discerning than ever, it is clear that our low fares, award-winning guest service and innovative amenities continue to convert a growing network of loyal travelers. We look forward to bringing our unique value proposition to more travelers as we grow in 2010 and beyond. ”

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But, enough of the soft stuff — let’s turn to the numbers. That’s where you’ll find the truth in these matters. Cost containment and operational efficiency helped Virgin America post a record load factor of 86.6 percent, an increase of 5.2 percentage points year-over-year. Costs per available seat mile were pushed down 33.9 percent (24.4 percent ex-fuel), and operating income swung from a $54 million loss in the third quarter of 2008 to a $5.1 million gain this year. Along the way, Virgin America realized a mishandled baggage rate of 1.18 per thousand — three times better than the industry average. And, it attained an on-time rate of 87.2 percent.

Sorry to go “quant” and dwell on the numbers a bit, but they speak to a common theme here at Gadling: whether the airlines are doomed to fail … and be propped up by the government taxpayers and fail again … and so on. Virgin America’s proved that an airline can amass 1.1 million loyalty program members and fly 5.8 million passengers in just over two years and still find a way to get into the black. There is probably market share gain in this airline’s future, but it is making a big mistake: by not screwing up, it’s taking a pass on all the free money the feds are more than willing to give to an industry that refuses to help itself.