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 The Tactical Traveler

joe A BUSINESS-TRAVEL BRIEFING
FOR NOVEMBER 23, 1998


BY JOE BRANCATELLI

This week: Use your miles or lose them; hotel REITs go back to the future; currency change, quite literally, on the fly; London hotel rates are falling; and more.

COUNTER INTELLIGENCE: Use Them or Lose Them
American Airlines' announcement last week that it was acquiring Reno Air came as no surprise. The move was probably preordained from the moment Reno took over most of American's routes at the bigger carrier's erstwhile hub in San Jose, California. And don't be shocked if you read some months down the road that American has also snapped up Midway Airlines, which moved lock, stock and deicing machines to Raleigh-Durham several years ago when American dropped that city as a hub. So the question now is: Is there an independent future for smaller carriers? The answer: Use them or lose them. Fly smaller airlines such as ProAir, Frontier, Vanguard and Kiwi and they might survive. Ignore them and they'll surely disappear--and, of course, your fares will skyrocket. To that end, be aware that Frontier launches three new routes next month from its hub in Denver, where it's battling United Airlines. Effective December 17, Frontier will launch two daily nonstops to Atlanta, home of Delta Air Lines; three daily flights to Dallas/Fort Worth, American's home; and three to Las Vegas. "Salebration" fares start at $79 one-way. And over in Detroit, where ProAir operates from Detroit-City Airport against the gigantic Northwest hub at DTW, the smaller carrier is bulking up. ProAir launches flights to Atlanta and Orlando on December 6, and begins service to Seattle and New York/LaGuardia on January 10. Fares start at $89 one-way and are available from 800-4PROAIR or www.proair.com.

IN THE LOBBY: Hotel REITs Go Back to the Future
When I first started reporting about business in the 1970s, the concept of the REIT (real-estate investment trust) was dead, a victim of a monumental and unprecedented financial collapse in the late 1960s. That's why I've been consistently shocked that REITs made such a strong comeback during the last two years as a vehicle for hotel ownership. But now it's back to the future for the REITs. The financial viability of this form of real-estate company has collapsed--and only partly due to recent unfavorable Congressional tax action These debt-driven hotel combines are unraveling as quickly as they were assembled. Mediatrust, whose stock has plummeted to $16 from a high of $36 earlier this year, has accumulated more than $3 billion in debt, posted a $195 million third-quarter loss, and announced plans to spin off its major acquisition, the LaQuinta hotel chain. Things are even worse at Patriot American, which went on a hotel buying binge last year and bought Wyndham and half a dozen other lodging chains. Now the company can't pay its debt and is selling hotel assets, including Interstate, one of the nation's leading hotel-management firms. And even though it has switched financial structures and is no longer a REIT, Starwood Hotels is suffering, too. After gobbling up the Sheraton and Westin chains last year, Starwood had a net third-quarter loss of $77 million, but omitted the numbers in public statements, reporting the loss only in its required filings with the Securities and Exchange Commission.

DOLLAR WATCH: Change on the Fly
The idea is so logical, so absolutely right on the money, that you wonder why no airline has tried it before. But El Al will become the world's first airline to provide in-flight currency exchange. The service, called Fly&Change, will allow passengers to change up to $500 worth of the local currency of their destination. The airline says the service will begin later this month on select flights from Tel Aviv to Paris, London, Frankfurt and Zurich. Fly&Change will eventually expand to all flights and uses an automated device developed in Ireland, El Al says.

THE WEEKLY WONDER: London Rates Are Falling Down
A hundred years ago, Nobel Prize novelist John Galsworthy opined that you could spend more money in a London hotel than anywhere in the world. That's been especially true recently as the British capital enjoyed record hotel occupancy and spiraling room rates. But occupancy has softened and now some hotels have begun to offer special rates and promotions. One example: the winter rates, valid through March 31, at London's four-star Millennium and Copthorne properties. At the Britannia Mayfair, it's now $250 a night; at Bailey's and the Chelsea Knightsbridge, it's now $225; at the Gloucester, it's $230; and at the Tara, the price is now $199. Rates are guaranteed in U.S. dollars and include value-added tax and English breakfast. Moreover, guests staying three nights receive the fourth night free. For more information, call 800-465-6486.

This column originally appeared at biztravel.com.

Copyright 1993-2007 by Joe Brancatelli. All rights reserved.