In this tough economy.. the two major pillars in the Travel industry are going two different directions...
COLLOQUY Article
A travel article in the New York Times asks: "Given that both
airlines and hotels have been hit by the slowing economy, why the
disparity between their approaches to serving their best customers, the
frequent travelers?" The answer has a lot to do with competition. The
article states: "As hotel chains have proliferated, the industry has
become increasingly competitive."
If hotels ran on jet fuel would they, could they be as generous?
Here is a NewYorkTimes article on this topic.
My Views
I think the primary reason being the mix of Fix and Variable Costs and also the competition.
Fixed Cost for entering into Airline sector is so huge that you hardly find any new players entering in the established markets. On the other hand, in the Hotel industry, the Fixed costs are not as astronomical as in Airline industry.
The sheer number of available hotels and rooms make them competitive even for survival.
Airlines know that even if they jack-up prices, new competition is not going to enter the market and for all the existing ones, all are sailing in the same broken boat... so who cares?
On the other hand, though the variable cost in airline industry is considered a small portion (i mean the incremental cost of putting new passenger on a flight is almost nil). But that is true when you have empty seats. And when the jet fuel going through the roof one day and dropping in the sea within 3 months, there is too much uncertainty to keep empty seats. That's why we see so many airlines consolidating flights.. which means no empty seats anymore.
For Hotels, they don't have this problem and their daily running cost is far too less as compared to Airlines.
So given all this, you will see the two industries going completely different direction anyway.
COLLOQUY Article
A travel article in the New York Times asks: "Given that both
airlines and hotels have been hit by the slowing economy, why the
disparity between their approaches to serving their best customers, the
frequent travelers?" The answer has a lot to do with competition. The
article states: "As hotel chains have proliferated, the industry has
become increasingly competitive."
If hotels ran on jet fuel would they, could they be as generous?
Here is a NewYorkTimes article on this topic.
My Views
I think the primary reason being the mix of Fix and Variable Costs and also the competition.
Fixed Cost for entering into Airline sector is so huge that you hardly find any new players entering in the established markets. On the other hand, in the Hotel industry, the Fixed costs are not as astronomical as in Airline industry.
The sheer number of available hotels and rooms make them competitive even for survival.
Airlines know that even if they jack-up prices, new competition is not going to enter the market and for all the existing ones, all are sailing in the same broken boat... so who cares?
On the other hand, though the variable cost in airline industry is considered a small portion (i mean the incremental cost of putting new passenger on a flight is almost nil). But that is true when you have empty seats. And when the jet fuel going through the roof one day and dropping in the sea within 3 months, there is too much uncertainty to keep empty seats. That's why we see so many airlines consolidating flights.. which means no empty seats anymore.
For Hotels, they don't have this problem and their daily running cost is far too less as compared to Airlines.
So given all this, you will see the two industries going completely different direction anyway.
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