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Week in Review - 4/06/20

By Industry Intel posted 04-06-2020 12:49

  

Airlines must refund ticket purchases for flights they canceled due to the coronavirus pandemic, according to the U.S. Department of Transportation. That includes customers who bought nonrefundable tickets. DOT announced that U.S. and foreign airlines are "obligated" to refund full ticket prices, including optional services purchased by passengers, rather than provide credit vouchers.

President Donald Trump said his administration was looking at ordering airlines to end domestic routes between coronavirus "hotspots." Asked during a White House press briefing about stopping people from traveling to and from places like Detroit, New Orleans and New York, Trump said, "We’re thinking about doing that. ... But once you do that, you really are clamping down on an industry that is desperately needed." Trump said there were similar considerations for rail travel.

The U.S. Department of State halted almost all passport services. The U.S. government already advised citizens to avoid international travel due to the coronavirus pandemic. The State Department noted that "even countries, jurisdictions or areas where cases have not been reported may restrict travel without notice." Passport services currently are available only to those with a "qualified life-or-death emergency and who need a passport for immediate international travel within 72 hours." There is no indication as to when regular passport services will resume.

American Airlines faces the greatest risk of bankruptcy among major U.S. carriers, according to J.P. Morgan analysts. They highlighted the company's debt, describing AA as the "most leveraged major airline in our coverage," and questioned the degree to which Washington would further assist airlines. "The margin for error for American Airlines management to navigate this crisis outside of the courts is growing uncomfortably thin (and dependent on factors outside of management control, i.e. duration of the virus, traffic recovery cadence, further government support)," according to the analysts' April 6 research note.

Business travel startups continued to rightsize their businesses following the collapse in business travel demand. "We’ve had to make some very difficult decisions to ensure TravelBank will be here for our customers for a long time coming," according to a spokesperson for the travel booking and expense management firm. "Like others in this industry, this included reducing our headcount and cutting non-essential spend. Every team related to our travel product was affected. As we double down on the expense side of TravelBank, those teams will stay and grow as necessary." According to The Wall Street Journal , Pana, the non-employee travel specialist that partners with BCD Travel , among others, also had to cut employees.

"The one-meeting trip will disappear forever," said Sanofi CEO Paul Hudson when discussing the long-term future of work with The Wall Street Journal . While business people would be more confident in the use of remote conferencing, he said, they would still "get together for networking where it's larger groups, or where there are two or three days' worth of content. That’s incredibly important for our commitment to the environment and to respect people's time away from families."

Avis Budget and Hertz can withstand six to eight months of significant revenue contraction, according to Northcoast Research analyst John Healy. Speaking during an Auto Rental News webinar, Healy said liquidity for the two companies "is very manageable" despite an 80 percent fall in revenues. "As car rental companies shrink their fleet in line with the state of demand, it frees up unrestricted cash that can utilized to keep the business afloat," Healy said.

The U.S. hotel industry this year will see demand and revenue per room drop by more than half, according to STR and Tourism Economics. Their new forecast for 2020 projected a 43 percent decline in occupancy and a 14 percent reduction in average daily rate. "Already wavering pricing confidence will take a significant hit and drop ADR to a six-year low," according to STR SVP Jan Freitag. Citing the "combination of pent-up travel demand and federal aid," the firms expect 2021 improvements in all key metrics that would more than offset this year's performance. That performance has been historically bad recently for U.S. hotels. For the week ended March 28, the average daily rate fell about 40 percent year over year to around $80. Occupancy declined by more than two-thirds year over year to under 23 percent. New York occupancy was just above 15 percent.

British Airways will furlough 30,000 cabin crew and ground-based employees. As it cuts April and May flying by 90 percent versus last year, the airline also is placing 4,000 pilots on unpaid leave during the next two months. BA currently operates only from London Heathrow after suspending all services at London Gatwick and London City airports.

Accor said more than half of all its 5,000 hotels were closed, and it expected that to rise to about two-thirds in the coming weeks. The company's global portfolio includes Ibis, Mercure, Novotel, Raffles, Sofitel, Swissôtel and several other brands.

 

Compiled by the editors of TheCompanyDime.com.

 

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