Category: Travel stocks & business

No merger? Less money for the millionaires? Better for the 99%? Nah.

In a surprising move, the US government claims to be looking out for fliers as it sues to block the American + US Airways merger. This is unwelcome news to investors, of course, and stock prices are down.

It seems the airlines had been boasting to investors about how the bigger airline could charge more for tickets and more fees. That bragging drove stock prices up, but it also provided the government with lots of ammunition for their anti-trust lawsuit.

“Daniel McKenzie, an analyst for Buckingham Research Group, said the merger went from a 99-percent probability to around 50 percent.” I think that the Airlines (for once since they usually lie) are not lying; I think prices would go up if there were a merger. I’m generally not a fan when the rich would get richer and real people would pay more to fly so I hope there is no merger. Then again, I expect the big companies to have their way.

American expats giving up US citizenship

This article explains that more American expats are giving up US citizenship and explores one possible reason – tax laws.

The article claims that The U.S is the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside. This is somewhat misleading, however; in my experience living in Korea the first $80,000 or so of foreign earned income was not taxed. So i had to report it on my tax return and fill out a special form (2555) but it was only a hassle – it didn’t cost me my fortune (luckily my fortune never included an 80,000+ salary).

For expats who don’t have millions hidden in Swiss bank accounts, this is likely to be the main concern:

“Since 2011, Americans, who disclose their non-U.S. bank accounts to the IRS, must file the more expansive 8938 form that asks for all foreign financial assets, including insurance contracts, loans and shareholdings in non-UNN.S. companies. Failure to file the 8938 form can result in a fine of as much as $50,000. Clients can also be penalized half the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970.”

Reading that article sent me into a panic. I have a bank account in Korea. Am I facing a $50,000 fine?

Luckily for me, the article does a very poor job of explaining which Americans must file form 8938. Really the article is horribly misleading. You see once again my fortune is not big enough for the IRS to care much about. From the IRS website:

“If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.”

Or in my case…

“If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.”

I guess I’m safe. Even if I were single my Korean bank account would be too small to attract notice. Who knew that having less money would make my life so much easier?

Google buying Frommer’s travel guides – more detailed search results coming

After buying Zagat a while back, Google Inc. is buying Frommer’s guides to complement the Zagat restaurant listings.

Google is buying Frommer’s from publisher John Wiley & Sons Inc. along with John Wiley’s other travel-related businesses.

Frommer’s now publishes more than 300 guidebooks and runs the website. It’s unclear what Google has in mind for the guidebooks, but there is some talk about Google’s plans to use Zagat and Frommer’s information to improve their search results.

People searching for popular vacation destinations will soon see some reviews within the search result listings. How this will work exactly remains to be seen, but I imagine you could search for a restaurant or a hotel and then get some sort of rating without actually visiting any of the websites in the search results.

Google’s acquisition of Frommer sent shares of stock in travel firms like Expedia, Orbitz, Priceline, Yelp, and TripAdvisor all down. I see this having the biggest impact on tripadvisor and yelp personally.

Google stock is at a 5 year high. It’s all time high around $750 per share seems within reach. No, this is not any sort of financial advice.

What I haven’t seen yet, is how much Google is paying for Frommer’s.

China refuses to pay Europe’s carbon fee

I actually read a few versions of this same story. Compared to other articles I read on the same topic, this one does contain something I found interesting and only in this one – that China says airplane manufacturers should be held accountable for airline pollution rather than airlines themselves. The idea isn’t developed, however; the author does not provide insight or a relevant quote. Another undeveloped idea is that if we see an “escalation of conflict” between China and Europe there would be “implications for the world.” Nothing on what those might be other than the possibility of China refusing to buy Airbus planes.

For a little background information we turn to the AFP:

The EU launched the ETS in 2005 in a bid to reduce carbon emissions of power stations and industrial plants.

It decided to include airlines, responsible for three percent of global emissions, in the system in the absence of a global agreement to cap aviation emissions.

Under the EU scheme, airlines will have to pay for 15 percent of the polluting rights accorded to them in 2012, the figure then rising to 18 percent between 2013 and 2020.

American Airlines filing for bankruptcy

With 4 billion dollars in cash and strong assets, it seems American Airlines can keep operating without too much difficulty; they say service will be unaffected. Good news for passengers, but if you’re a shareholder you are probably in for some losses. And if you’re pension is with AA, things could be even worse.

Economic conditions cause the Swiss franc to appreciate, hotels may go under

I saw on BBC last night that the Swiss franc is appreciating and that Switzerland’s tourism industry is suffering for it. People paying in Euros and dollars don’t want to trade them for francs and the Swiss are going to countries that do use the weaker currencies to take advantage of their strong franc.

The economy is the problem – investor’s see the franc as a haven and they keep buying more. There’s an article here, but the news report on BBC showed pictures of near-empty hotel restaurants and people interviewed spoke of layoffs and 100 hotels at risk of shutting down.

I’m not familiar with the normal prices in Switzerland, but today I got my email from the Swiss tourism ministry and they say there are some good specials. Does anyone know if they really are good specials? Are they good enough to offset the extra 20% or so you might pay due the franc’s rise?

And even if you get a good hotel deal, can you afford to eat? When I was there years ago restaurant prices were steep. They should be even worse now.

Ashton Kutcher investing in and advising new travel site

Airbnb is getting a lot of free publicity thanks to Ashton Kutcher’s star power. The actor (and comedian and model) is investing in the travel website, which seems to be another booking engine for travel accommodations including privately owned apartments and yachts.

Kutcher is also joining Airbnb as an adviser, which sounded like a publicity stunt to me. I was probably wrong though. Apparently Kutcher knows his stuff when it comes to tech investing (he got into Skype early and that company was just bought by Microsoft so I guess the rich are getting richer).

“For many, Ashton Kutcher is an actor and heart throb, but in the tech scene he’s made his mark as a branding and new media expert with an eye for great ideas and a fearless approach to new markets,” Airbnb said. “To the Airbnb team, he is more than an icon — he is now our ally and trusted adviser.”

Kutcher also advises Pasadena’s UberMedia and they just launched A.Plus; a Twitter app designed by Kutcher.

“From scavenger hunts through the streets of Austin to promote Nikon cameras, to raising awareness for the Sundance Film Festival with reality TV, Ashton’s branding initiatives set new standards for brand engagement through technology,” Airbnb said. “With Ashton on board, we’ll be working together to take our community engagement to the next level and expand our international presence to reach more people from different cultures all over the world.”

Interview with Laura Blair, luxury villa rental business owner

I recently had the opportunity to ask a few questions of Laura Blair, owner of Villas Veritas. It sounds like a pretty good gig – she has to visit over every one of the luxury villas featured on her site. Over 200 properties in Europe, the Caribbean, and the United States. Sometimes she stays in them in order to become an expert on the surrounding area. Hope you enjoy:

1. Let’s say someone has an idea for a travel business; how do they know if it’s a product or service people want to buy?

They should check how many others are offering the service online. If there are hundreds then it’s probably a service that’s in demand but they may want to reconsider given the competition or narrow the parameters to specialize further.

2. Once you’ve established that there is a demand for whatever you offer how do you get started on a business plan?

Well, I imagine you would need to know the costs involved in setting up your business. You need to truly understand your market and what it is that is important to them. I fell into my business by happy accident so I never had a business plan but that was many years ago and a different era. However, for clients seeking a luxury private villa I have always understood the value of genuine knowledge of an area and property. You want to build relationships with people and you want your clients to trust you, so with a business plan for the luxury travel industry the key is personal attention and in-depth study of your product before presenting it to your consumer.

3. Was there a particularly big hurdle to overcome while starting In Villas Veritas?

I was involved in another business when I started In Villas Veritas so I was fortunate to allow In Villas to grow naturally and slowly at first until I was ready to completely change over to IVV full time. Once that happened, things really picked up speed. Of course, this was 15 years ago, when there were very few villa rental agencies so that may have eased the hurdles quite a bit.

4. How has the running of your business changed over the years? Are you facing the same challenges you did 10 years ago?

The running of my business has changed enormously over the years. When I started we were still sending photos and information by regular mail! The internet opened up the way to better and faster communication but also paved the way for many companies who merely warehouse properties on their sites and have no first-hand knowledge of the properties and no direct connection to the properties. The problem now is: how does the consumer know who that is? The only way is for them to know is to ask directly if the service provider actually knows the properties personally and hope that they are honest; word of mouth and referrals are always helpful for that as well.

5. Any advice for someone thinking of starting a travel business?

Know your product inside and out and make sure you can provide the best service possible for whatever area you work in. There are no shortcuts.

Greek Islands for sale – nice tourism business opportunity

If you have money and want to start a tourism-related business, check out this article.

Greece is preparing to sell, or offering long-term leases on, some of its 6,000 sunkissed islands in a desperate attempt to repay its mountainous debts….an area in Mykonos, one of Greece’s top tourist destinations, is one of the sites for sale. The area is one-third owned by the government, which is looking for a buyer willing to inject capital and develop a luxury tourism complex, according to a source close to the negotiations.

I’m not sure what Greek Islands go for these days but I’m sure they are not in my league despite the fact that the recent riots have driven property value down. The article also mentions that it’s a cheap time to vacation in Greece, again thanks to the riots, since tourism is way down.

Mykonos does have name brand recognition though – it came up when one of our readers needed help finding a Greek vacation spot and again when someone was looking for a honeymoon spot.

Just an aside, before you start thinking that selling islands is an unheard of step to raise money, keep in mind that Arizona is doing something somewhat similar as it sells state-owned buildings (and then leases them back).

Businesses that take care of pets while you’re on vacation

I try to blog about travel related businesses once in a while and while this is not exactly a travel business, it does cater to travelers. There’s a franchise called Fetch! that offers dog boarding in someone’s home (as opposed to a kennel).

“”A lot of people won’t go on vacation because they don’t want to leave their pets at a kennel,” Griffith said. That’s her market.”

It’s the kind of job that might not allow for much travel now that I think about it – obviously you have to stay home to take care of the animals people trust you with.