Sunday, 21 August 2016

Sterling slump is one hard fact in Brexit confusion


The travel industry is often said to be a bell wether for the UK economy and again, post Brexit, it is so proving. Leave supporters may whistle all they like to keep up their spirits, pointing to the fact that shares are up and there is no sign yet of a serious economic slowdown, but the one hard fact in the confusion is the weakness of staring. Holidaymakers flying abroad, many of them likely to have voted leave, are among the first to experience the painful impact of the vote. In the past few days some airport currency exchanges have been offering as little as 99 euro cents to the £. Now it is widely accepted that airport rates are a rip off, but elsewhere you're unlikely to get more than about 1.13, a fall of 13% since mid June, before the referendum. A couple of tour firms have already reminded surcharges, though it's important to remember that under the 1992 package travel regulations operators must absorb surcharges up to 2% of the original holiday price and cannot pass on any increase later than 30 days before you are due to depart. The giant too operator TUI has warned UK customers booking 2017 may have to pay more for they breaks than they would have this year. How much prices will rise is impossible to gauge. First nobody has any idea whether the £ has now hit the bottom, second it depends on the proportion of the holiday price accounted for by hotels and other elements charge in the destination currency and third it depends on the rate at which the operator priced this summer's packages. If those costs represented 60% of the package price and sterling stayed at its current level it's likely the price would have to rise by just under 8% - and that's without adding any impact the cost of airline fuel, which is charged in US dollars. Tour firms are in a bind. Responsible firms buy most of the foreign currency they need on the forward markets to cushion the impact of a slump in the value of the £. If the direst warnings of the Bank of England and other experts come to pass this will prove crucial. But if they buy at depressed rates and sterling bounces back this means they may lose out, effectively paying suppliers such as hoteliers and transfer coach operators more than they need. With interest rates at a historic low a recovery of the £ a ny time soon seems a distant prospect. But equally, such is the ludicrous lack of clarity about the meaning of Brexit and the timetable for withdrawal - if indeed that actually happens in a meaningful sense - that anything looks possible.

Friday, 19 August 2016

Take your running shoes: Bilbao

Part One of an occasional series on places to take your running shoes:

Run between the legs of Louise Bourgeois' giant spider


Running in cities can be frustrating. Often there are too many roads to cross, too many pedestrians to dodge. Sometimes I have resorted to running around car parks. Sometimes, as in Mexico and Bulgaria, there have been so many potholes that I've been forced to return to the treadmill in the hotel gym. Bilbao hadn't struck me as an exception. How wrong I was. I stayed in two hotels in the capital of Spain's Basque country - one on either side of the River Nervion, once a nightmare of pollution, now a healthy artery. Both afforded quick access to running and cycling routes along its banks. From the NH Hotel I crossed the broad Gran Via Don Diego Lopez de Haro in the heat of a summer evening to an uninterrupted route along the south bank.

Guggenheim Museum

First a pleasant park with a boating lake, ornamental trees, boating lake and broad avenues. then the river promenade, east as far as Frank Gehry's stunning and much photographed Guggenheim Museum, symbol of the city's regeneration since the days when the river was lined with heavy industry and a major draw for tourists. Unsurprisingly there are plenty of other runners on this traffic free route. I turn back beneath the legs of Louise Bourgeois' giant spider which may be admired without paying the museum's admission fee.  On the other side of the river I stayed at the Barcelo Bilbao Nervion. The path for walkers and cyclists is a bit closer to the road, the busy Paseo Campo Valentin, but as part of an interesting circuit I swung left outside the main door and headed towards the City Hall and the old town, crossing first the Ayuntmiento bridge and re-crossing the river on Santiago Calatrava's elegant Zubizuri - Basque for white bridge - which is reserved for pedestrians and cyclists. Three to four miles is about my maximum these days but you could easily run five miles without getting balked by traffic or slaloming between shoppers - while still being able to people watch as you go.

Calatrava's bridge

Tuesday, 26 July 2016

Lowcostholidays - early warnings ignored

I wrote this article in 2013 for a publication specialising in travel law. I've resurrected it now to illustrate the failure of the mainstream media - of which I was long a part - to run complex stories on financial protection for travellers. A Fleet Street editor once told me he didn't want "anything about insurance" in the travel pages. I doubt if this will ever change. Yet his and other paper have always been quick to attack when thousands of Brits are left out of pocket or stranded in foreign resorts when a tour operator collapses. 





Though it passed almost unnoticed except by customers directly affected and travel industry insiders, the decision by Lowcostholidays to shift its business base from Britain to Spain was a seismic event in the development of protection for consumers booking holidays by air. The move coincided with debate over the European Commission's blueprint for updating its 1990 Package Travel Directive, which includes a proposal to make the cross border sale of holidays easier. The Commission cites a fictitious operator in Luxembourg who wants to sell packages in Belgium, France and the Netherlands but can't, because they won't accept the protection regime in the company's home country. In the case of Lowcostholidays we have an operator based in Spain, wanting to sell holidays in the UK. To the lay eye it would seem that under current EU law the UK authorities would be justified in taking the same view as the three countries in the EU example. I should add here that, after some initial confusion the Civil Aviation Authority confirmed that customers who had booked before the operator' transferred its business on November 1 would continue to be protected under Its UK ATOL certificate but that any protection for those booking after that date would be provided by the Spanish authorities. According to the Authority, which issued that ATOL, Lowcostholidays was selling holidays under the recently introduced flight plus rules in Britain but in Spain it will be selling them as packages. Flight plus protects consumers against insolvency but doesn't covers all the other elements of the Package Travel Regulations such as the right to cancel if an essential part of the holiday is changed. So where's the problem, you might wonder? Aren't Lowcostholidays customers getting better protection as a result of the move than they would have received if the company had stayed here? That's a tricky question to answer. In Spain EU directives are adopted by Madrid but implemented regionally. The region in question comprises the Balearic Islands. Under EU law, of course, travellers must be reimbursed if an operator fails before they depart. How easy would it be for them to secure that reimbursement if they had to deal with a foreign authority? The law also requires that that they must be repatriated in the event of a failure while they are on holiday. But where to? Harking back to the EC's example, it might not be such a problem if holidaymakers from Luxembourg were flown back to, say, an airport in Belgium. But what would happen if a company based in Mallorca - carrying passengers living in Britain - were to go under. Would the the Balearic Island Government be required to organise repatriation to British airports? Where would it find the aircraft? How much expertise do the authorities there have in such emergency situations, compared with the UK CAA? In theory a single, mutual recognition of protection regimes between EU member states may look attractive. In practice it would run counter to a priority long recognised in London and Brussels, which is to make protection simpler to understand for travellers. Imagine a future in which consumers have a choice of booking with operators based in three or four different countries, all offering the protection required by European law but all interpreting that law in slightly different ways. The result would be more, rather than less, confusion. One way of dealing with the problem of cross-border sales is through bi-lateral agreements between states, though for some in Brussels this may sound a retrograde note, evoking memories of air service bi-laterals in the dark ages before the single market in air travel. This would at least allow authorities in one country to thrash out agreed mechanisms for refunds and repatriation. What such agreements cannot do is ensure that the best expertise available is employed in ensuring that, whenever possible, companies go under at relatively quiet times of year, when the damage to holidaymakers is least severe. This is something Britain's CAA has become adept at over the four decades or so since Court Line, owner of when was then the UK's largest tour company, Clarkson's, collapsed slap in the middle of the summer peak. It should not be forgotten that even if consumers are guaranteed to get their money back when operators fail, they still often face disappointment that a carefully chosen and much looked forward to holiday now won't happen as originally planned. The mutual recognition proposal is not the only flaw in the draft directive. What exactly is an "assisted travel arrangement"? Does it include sales made on airline websites where a customer clicks through to book a hotel or rental car under a separate contract? Some experts think it does but it's not at all clear to me. Where does responsibility lie for organising protection? And why place an absurd arbitrary minimum value - ie 20% of the holiday price - on an additional element which, sold with a flight, turns the arrangement into a package? All these questons gether greater gravity in light of noises from Government suggsting ministers will be reluctant to "gold plate" new EU regulations for the better protection of UK consumers. Better make sure that they get it right to start with.

















Saturday, 23 July 2016

Travel uncertainty and the staycation myth


No sooner does the £ plummet than the "staycation" myth raises its hoary old head again. It's as predictable as "crashed jet had history of problems" when some hack has got hold of its routine maintenance records. Suddenly, so goes the lazy thinking, thousands of Brits have decided to stay in the UK rather than face the increased costs created by the slide in sterling since the Brexit vote. There will be some effect, admittedly, but it won't be significant. Why? First because the vast majority of Brits planning summer holidays have already booked - and in many cases paid in full - for their breaks. And second because the lack of guaranteed sunshine here means you may lose most of any currency related savings in ticket prices at rain proof attractions. Any serious increase in numbers holidaying in Britain is more likely to be the result of terrorist attacks that have made Tunisia and Sharm el Sheikh near no go areas and devastated Turkey's tourist industry - which has been dealt a further blow by lsat week's attempted coup. This has made accommodation in popular western Mediterranean resorts much harder to come by. As for the longer term impact of Brexit on holiday decisions, much will depend on political developments between now and the main, post Christmas summer booking season (it's increasingly likely that those of us who ski will find our already pricey trips markedly more expensive next season). An economic downturn could spell serious problems in the travel industry, especially for tour operators who gambled that a Remain vote would but the value of sterling. Further high profile collapses would clearly dent public confidence. One the other hand, signs that a deal is in sight with EU leaders that would result in the UK effectively or actually staying in the EU could encourage traders to buy sterling again, pushing its value up. Its weakness has already prompted the big US airline Delta to reduce planned capacity on winter flights from the UK to the US. Better safe than sorry. ON top all this is uncertainty caused by the US Presidential election. Suppose what would have seemed purest fantasy a couple of year back comes to pass, and Donald Trump beats Hillary Clinton to the White House.What would be his policy on the visa waiver programme? Trump has already spoken of a ban on immigration from countries with problems of home grown terrorism. It doesn't seem to me such a big jump from there to the reintroduction of visas for travellers who are currently exempt. It must add that successive Washington administrations have failed dismally to attach sufficient importance to incoming tourism. I fervently hope whichever side takes power next will recognise the importance of maintaining the visa waver programme. One thing's for sure though, not many Brits are likely to replace a hoped for American holiday with a staycation.

Friday, 8 July 2016

Brexit travel prices update


It appears not to have dawned yet on many prospective summer holiday travellers that the £ has plummeted in the aftermath of Brexit. Tour operators are reporting that bookings have continued to arrive, particularly for long haul trips. But there seems little doubt that in the slightly longer term, things look bleak for consumers and the industry. As I write sterling is 10% weaker against the euro than it was on the eve of the vote and around 13% down against the US dollar. So a couple of weeks touring for two people in Europe, with spending at, say a relatively modest €300 a day, will cost the best part of £400 extra. Package holidaymakers will be less hard hit, as they will have paid much of the cost upfront. Those who have booked all inclusive trips will escape most lightly. But watch out if you made a pre-Brexit hotel booking on a website allowing you to pay when you check out and showing an illustrative per night price in £s. By the time the credit card fee has been added and the fall of sterling taken into account, the final bill could look very different. It's open to question whether or not there will be surcharges on packages. The amount and timing of surcharges are tightly limited by an EU directive passed not law by the UK Government. (Yes, the same EU British voters elected to leave).Tour operators must absorb extra costs - such as those created by currency fluctuations - up to the first 2% of the holiday price. They can't surcharge later than 30 days before you depart. And the maximum they may charge is 10% of the package price. Much will depend on the extent to which operators bought in advance the currency needed today hotel companies and other suppliers abroad. Industry insiders say it's certain that some were caught out, gambling that a remain vote would prompt a rise in sterling's value against the euro another currencies. As for this who haven't decided where to go yet, the advent of online bookings has at least given operators more flexibility to adjust prices than in the days of the hard copy brochure. The more expensive the accommodation you choose, the more the price is likely to rise. If the hotel element represents, say, 60% of the price of a £700 holiday in Euroland, that price could rise by £56. But even that calculation hangs on whether the operators decides to sacrifice some of its profit margin to keep business flowing. On top of all this is the impact on flying costs. The price of aviation fuel, which is paid for in US dollars, has dropped. So, since 2010,have average worldwide fares. As with tour firms, the short term effect will depend on how much - and at what rate - airlines bought forward. The percentage fuel represents as a proportion of airline operating costs varies, depending on the length of routes (it's higher on short flights) and the efficiency of the aircraft they use. So even working out what impact a 7% appreciation of the US$ against sterling will have on overall fares is mighty difficult and calculating the effects individual routes with any certainty impossible. That said, I wouldn't be surprised to see fares from the UK rising by 2%-3%. All this speculation depends, of course, on speculation - the speculation of currency traders as they bet on the way they think the UK economy will move. All I can say on that front is - buckle your seat belts.

Saturday, 25 June 2016

Brexit vote pushes up travel costs

Touring France - cost rises
Holidays in the immediate future look certain to be more expensive in the aftermath of the Brexit vote. And the choice of flights from the UK could shrink as airlines forecast the number of Britons travelling abroad by air could drop severely. The £ was down approximately 4.6% against the euro today compared with its value on on Thursday and 7.4% against the US dollar. So far the impact has been significant, though not quite as severe as that feared by the investor George Soros shortly before the referendum. Nobody can predict how sterling will move in the longer term, but it can be predicted confidently that for those on tight budgets travel costs will remain very uncertain for some time. Visitors to this website leaving on holiday in the next few days should have no difficulty working out the immediate effect. But I'll do the sums anyway. If you were driving to France, for example, and had been expecting to spend, say, £2500 for two while there , the cost will be a minimum of £115 more than if the country had voted remain. The increase on a holiday to the US with the same amount of spending on the ground envisaged will be a little higher at £185. What's not immediately clear is the impact on tour operators' prices. Unless there is some unexpected early recovery in sterling their costs will also rise. But many operators - and certainly the larger ones - will have bought some or all of the currency they need to pay for hotels rooms, for example, on the forward markets. So they should not need to up their package prices unless they gambled that a vote to remain would prompt a significant jump in the value of sterling. The International Air Transport Association, whose membership includes the world's major carriers , warns the number of UK passengers could fall by 3% - 5% by 2020. Carriers including easyJet have moved to reassure customers that there will be no short term effect but have urged the Government to treat the future of open skies in Europe as a priority. I must repeat earlier warnings that unless the present agreement survives - and EU airlines are still able to operate between any of the countries covered, choice of destinations will shrink. The same will inevitably happen if stopping the free movement of labour means passenger traffic is reduced. This could affect routes to central and eastern Europe in particular. The eventual effect of such shrinkage could also be a time in fares - but that threat is some way off. One key question is whether EHIC (the European Health Insurance Card) will survive Brexit. For the time being there will be no change. It's always advisable to buy private insurance in any cases EHIC doesn't cover all costs- such as that of an ambulance to hospital. Protection for package travellers against the collapse of tour operators will also remain in place and, because of the massive weight of work now necessary to renegotiate more important arrangements with Europe, may survive in its present form for some years.

Saturday, 11 June 2016

Lost in Translation



El Corte Ingles is, roughly speaking, the Spanish equivalent of John Lewis. Though it was probably not the best place to start looking, I went to the department store chain's Bilbao branch in search of some authentic rope soled espadrilles. A helpful man in the men's shoe department looked a little confused, then directed me to the third floor, saying I should ask for espadenyes. Espadenyes is the Catalan for espadrilles. Use of the name in Catalunya was first recorded nearly 700 years ago but they are also traditional footwear in the Basque country. When I inquired on the third floor, a woman server looked blank. So I asked the receptionist at a hotel where I had been staying. He also looked blank. What goes on, I wondered. Hadn't these shoes - once worn by peasants - been made by some shops in the Spanish Basque region for a century or more. Surely they hadn't yielded entirely to the trainer and the flip flop? The receptionist went to ask a colleague. Enlightenment dawned. I should ask for alpargatas, he explained, and Googled a shop in the old town where I could get them. Now, the briefest of research after the event reveals that Basque emigrants to Argentina took the shoes with them and it was there that the third alternative name was coined. The shopkeeper on the Calle Somera knew exactly what I wanted, prodding them a range of colours. These days the rope soles are reinforced using some synthetic material but they are as near as damn it to the real thing. Sometimes, of course, they are kept on with lacing around the ankle. I read that these were made fashionable by Lauren Bacall, who wore them in the 1948 movie Key Largo, and enjoyed a revival in New York in the 1980s, after Don Johnson sported them in Miami Vice, when a pair could fetch nearly $500. Now one of my sons tells me they're "on trend" again. Call them what you like, mine are just for slopping around in. I bought one pair in black pair and a second in cream and they cost me, at the current exchange rate, the extremely unfashionable total of £16.