p1 Cover Oct9
travel trade gazette
the voice of the travel industry ttglive.com
Abta told to target retailers Abta has been urged to look at the demands large retailers place on bed banks rather than portraying the accommodation suppliers as the “big bad wolves”. Bed banks and industry experts responded as Abta chief executive Mark Tanzer defended the association’s stance at the opening of the Travel Convention in Barcelona p4
Taxman turns on travel Revenue & Customs has set up a top-level tax avoidance team to scrutinise the travel industry p5 TRAVEL GIVES BACK.
Flood relief in Cambodia An agent tells how he helped a luxury hotel aid flooded villages after Typhoon Ketsana swept through south-east Asia p9
The intelligent read: TTG launched its first Travel Intelligence Report at the Travel Convention this week to acclaim from the industry and wider world. The findings of its exclusive and rigorous analysis of consumer research, booking data and flight capacity statistics were immediately picked up by the national media and led to reports on the BBC and newspapers across the UK p7
TTG Travel Awards 2009: Winners, groovers, dresses and successes! Read the judges’ verdicts on the worthy victors. Plus, Best Dressed fashion special, p38
p2 Contents Oct9
Intelligence needed to adapt to public’s new buying habits “GROSS AFFLUENZA” was the condition Tui UK & Ireland boss Dermot Blastland said all consumers had some years ago. The symptoms were that people spent money without really thinking about the value they were getting – but those days are long gone and a new psychology now prevails. The public is short of cash. And delegates at Abta’s Travel Convention were this week warned that this has made them learn how to “buy smart” – whether it’s groceries, clothes or indeed travel. Of course, the no-frills carriers introduced the concept several years ago, but flights are a commodity product, not a purchase as big or emotional as the two-week annual summer holiday. And experts say the shift in mentality is far more profound than customers simply opting for a shorter or closer-to-home holiday for a couple of years while the downturn prevails. Rather, they suggest it is a major structural shift in buying habits that will become engrained in consumer behaviour. For travel providers, this means customers will be even more clued up than before and will buy predominantly from those offering good quality at low prices. And that means the cost reduction journey being taken by most companies is far from over. Even BA boss Willie Walsh said on a video clip that he believes all full-service carriers will have to look at unbundling more elements and charging for them – although not, he was careful to add, on the same scale as the no-frills carriers have done. The trick, according to the heads of some of the country’s biggest fashion stores, supermarkets and hotel chains, is to cut things that do not compromise the customer experience. Ditching things they won’t notice and keeping those they really want can be done only by truly understanding your customers and the market conditions, which may well may be why we have had such an overwhelming response to our inaugural TTG Travel Intelligence Report, published this week. There is a real thirst for both tangible statistics and insightful analysis to ensure current challenges are met and businesses flourish in the year ahead. Here at TTG we are committed to giving you both.
Lucy Huxley Editor
Travel Convention 2009 ■ Photi says Abta should target retailers, not bed banks p4 ■ Buyers’ habits have changed for good, warns PwC boss p6 ■ TTG’s exclusive launch for Travel Intelligence Report p7 ■ Video coverage of Carnival boss Micky Arison on ttglive ■ Full reports from all the business sessions on ttglive Tax team targets travel p5
letters a week” from indie agents hoping to sell their businesses
A team of tax avoidance specialists has been set up by Revenue & Customs to probe travel companies
Interview: Craig Cherry p16
Revenue & Customs.
Amex agent helps relief p9
The Monarch procurement chief explains airline’s drive to trim supplier total from 1,200 to 900
An Amex consultant on sabbatical in Cambodia has been helping with relief efforts after typhoon
Royal Caribbean on tips p20
Abta rule change ‘flawed’ p10 Abta and the CAA are accused of shying away from their consumer protection responsibilities and making themselves “outdated” Air.
Cruise giant has hinted that Brits’ distaste for onboard gratuities could spur tipping policy review Operators.
Recession ‘unites trade’ p32 The downturn has brought the independent sector closer together, says Caribtours boss Paul Cleary
Report: BA’s City-NY link p12 Business travellers could have problems justifying the cost of tickets for BA’s new New York link Agents.
Indies ‘want to sell up’ p14 Co-op boss is receiving “five or six
City & finance p16 Cruise p20 Air p24 Hotels & resorts p26 Operators p34 Letters p36
p3 Contents Oct9
The section for you and your business, including agent news and reviews, easy-to-use product guides and in-depth features to help you sell more. Make sure YOU get the Knowledge.
of the week
TTG Travel Awards p38 Judges reveal the factors that swayed their decisions, and find out what winning means to the lucky recipients
Best Dressed! p52 See photos of our Best Dressed at the TTG Travel Awards competition winner and runners-up, and read our fashion expert’s styling tips
Mystery Shopper p56 This week our mystery shopper heads to Cambridge looking for a family holiday in Disneyland Resort Paris
Latin America p59
■ News from key airlines and operators in our Noticeboard page ■ We hunt down the quirkiest hotels and lodges across Latin America, including Canopy Tower in Panama (pictured) ■ How winter sales are shaping up for Mexico ■ There’s also chance to win tickets to the brilliant new Mexican exhibition at the British Museum, courtesy of Superbreak ■ For another chance to win with Superbreak, see page 19 for its Wicked theatre break in London competition
■ We ask an expert how clients can spend their time in Orlando ■ A reminder of how to win a place on the Orlando Super Fam ■ We also take a look at what European and UK theme parks have in store for the forthcoming spooky and festive seasons
Travel Convention coverage
Win prizes including shopping vouchers and fam trip places ttglive.com/competitions
Sign up to receive our fortnightly emails with the latest jobs in travel ttglive.com/subscribe
ttgluxury Experience Luxury agents can enter to win a place on our fantastic ttgluxury Experience trip to Jordan ttgluxury.com/Jordan
Virgin Holidays “You’ll negotiate contracts with our overseas partners that meet the safety, quality, price and terms specified by our business which ensure that we deliver the very best holidays for our customers at the best possible price. . .” p79
Marketing and website assistant
ttglive.com Jobs alerts
The Travel Convention took place in Barcelona this week and as media partner for the event, ttglive.com has been bringing you all the news as it happens. If you missed any of the big stories you can read them online. You can also check out photos from the business sessions and social events. Plus, Roving Readers have been filing reports to give you the inside scoop. Find out more at ttglive.com/abta
Steppes Travel “Previous experience within the travel industry, Dreamweaver and Photoshop is desired, as are excellent communication skills and attention to detail. You will act as an ‘approver’ on all web and e-news copy. . .” p79
Area sales manager – North West and Yorks Hays Travel Independence Group “The role is to support and develop a specific group of Hays Travel Independence Group members, to develop potential new members and ensure optimum levels of service are provided at all times. The position will be home-based. . .” p82
Quick flick Abta 4-7, 37 Air Europa 59 Allbury 32 Amex 9 BA 4, 9, 14, 36 BAA 36 Bahamas TO 35 Caribtours 32 Co-op Travel 14 CTO 34 Disneyland 57 Fred Olsen 20 Gold Medal 37 Harlequin 26 ITT 26 Jaz Hotels 26 Kuoni 64 Langham Hotels 35 M’chester airport 24 Medhotels 5
Mexicana 24, 64 Monarch 16 NCL 22 Premier Travel 57 Regal Hotels 26 Royal Caribbean 20 Saga Holidays 4 Samoa TA 9 Somewhere2stay 4,5 Sunvil 64 Superbreak 66 SuperClubs 35 Thomas Cook 57 Titan Travel 4 Travel C’llrs 4 Virgin Atlantic 24 Virgin Holidays 35 Visit USA 14 White Hart Ass. 4 Youtravel 10
p4 News Oct9
09.10.2009 ‘BA cuts will Fight rages over cause despair’ Abta protection ABTA has been told TTG REPORTS FROM to target its retail members rather than bed banks if it wants to tackle risky business models. The association was urged to look to retailers as chief executive Mark Tanzer (pictured), speaking at the Travel Convention, defended its plans to make all members responsible for money collected on their behalf. The move is designed to stop customers losing out in the event of an agency failure, and Abta says it will encourage retailers and suppliers to adopt less risky business models. But Chris Photi, senior partner at White Hart Associates, writing on ttglive.com, said that Abta was unfairly portraying bed banks as “big bad wolves”. Photi said bed banks had adapted an “unbelievably flexible and workable” model that allowed Abta’s retail members to “abdicate responsibility for the consumer”. Those members should look at their protection and terms with suppliers, he said. Somewhere2stay managing director Stuart Jackson agreed that the issue was not one for the bed banks, which just supply the product agents need, but for the association’s retailers, which choose the commercial models they work by.
Abta chairman John McEwan has invited Travel Counsellors chairman David Speakman to meet him and chief executive Mark Tanzer to find a solution to consumer protection. McEwan issued the invitation after Speakman criticised the association’s move to improve consumer protection by making member bed banks responsible for money collected on their behalf. Speakman said Abta was trying to put “one wheel back on a wheel-less car” after “surrendering its credibility on consumer protection three
“If Abta wants to tidy this up to show the association stands for something, retailers also have to distribute and sell in such a way that honours the Abta badge,” he said. Jackson will start talks with his retail partners next week on options including leaving Abta or changing commercial terms with retailers. Tanzer said Abta’s move was a “strong statement of principle”. But he insisted it did not constitute a judgement on the merits of one business model over another. Abta board member John de Vial said Abta’s rule change could encourage a less risky approach to the deals retailers strike with suppliers. He said: “Should Abta members be able to appoint someone as a distribution point and then not take responsibility? We think that’s wrong.”
years ago – when Abta decided to cease payments to consumers when an agency went bust. Speakman said the only way to properly financially protect the customer was not to allow the agent or the supplier to hold the money until the product is delivered, putting the money in a trust fund. McEwan said Abta’s proposals for bed banks and for an “agents’ Atol” would provide more protection for consumers than trust accounts, as used by Travel Counsellors.
UNIONS have claimed British Airways customers will be “in despair” if the airline’s proposals to change the roles of cabin crew on long-haul flights go through. Unite, the union representing cabin crew, held an emergency meeting on Wednesday to discuss its response to BA’s proposals, which emerged during negotiations about plans to cut 1,700 jobs and impose a two-year pay freeze. A Unite spokeswoman said the changes to cabin crew responsibilities, which would lead to the number of crew on Boeing 747 flights from Heathrow dropping from 15 to 14, would worsen customer service. The changes are due to start in November. “Customers will be in despair because the company is pursuing this no-frills approach to cabin crew,” she said. “It goes to the heart of what BA is about. We think it should remain a full service national flag-carrier.” BA said it had to cut costs as it was expecting to make a significant loss for the second year running for the first time in the airline’s history.
Saga parent to buy Titan Travel SAGA Holidays’ parent company, Acromas, has agreed to buy tour operator Titan Travel. Titan Travel, a family-owned tour operator, was first linked to the owners of the grey-market specialist in the summer. Titan will join a portfolio of companies under the Acromas umbrella. Chief executive Andrew Goodsell said: “Titan is a good fit with our existing travel brands: Saga Holidays, Saga Cruises, Spirit of Adventure and AA Travel.” In August it was reported that the firm’s sale was being handled by McInnes, an arm of Begbies Traynor, the professional services company, and that a deal for around £20 million was likely to be completed.
p5 News Oct9
In brief ■ Atol deadline sees 220 licences not renewed More than 200 companies did not renew their Atol licence with the CAA by the October 1 deadline. Some 132 will no longer hold an Atol and another 87 missed the deadline but could still get a licence. No big names were in the list despite speculation that some would struggle to meet bonding requirements.
■ Barbados PM in last-ditch APD talks Barbados prime minister David Thompson has held talks in London with leading travel figures in a last-ditch attempt to persuade the British government to scrap next month’s planned increase in Air Passenger Duty. Tui UK & Ireland managing director Dermot Blastland and George Blundell-Pound from the Federation of Tour Operators were among those at the meeting.
■ ‘A 2010 bounce-back is blind optimism’ Hoseasons boss Richard Carrick said those in the industry hoping travel bookings will bounce back in 2010 were suffering from “blind optimism”. Carrick said many in the travel industry have underestimated a fundamental change in consumer behaviour during the past year. Recession breeds “clever buyers”, p6
■ Aer Lingus to axe jobs and cut pay Aer Lingus is to cut nearly 800 jobs and impose pay reductions in an attempt to reduce costs by ¤97 million by 2011. The airline is offering voluntary redundancy to 500 staff but has admitted there may have to be compulsory redundancies. Another 187 jobs will go at head office. Staff earning more than ¤35,000 will see their pay cut.
Tax team set up to target travel Lee Hayhurst.
A TOP-LEVEL team of anti-tax avoidance specialists has been set up by Revenue & Customs to investigate the travel industry. The team is particularly focusing on VAT due under the Tour Operators’ Margin Scheme, and a leading expert has warned bed banks should be urgently assessing their potential liabilities. Damon Wright, manager at accountants Grant Thornton, said bed banks should all be looking at their books in the light of the Medhotels VAT tribunal. Last week TTG revealed that lastminute.com is facing an £11 million VAT claim from when it owned Medhotels, with a four-day tribunal case due to start on November 23. “The agency model is under very serious scrutiny by Revenue & Customs,” said Wright. “All businesses working on an agency model need to be aware. “If they have not reviewed their contracts and procedures to ensure the whole process from
purchase to sale fully supports the agency model they should do so now.” Wright said the Revenue was investigating if VAT was being paid on the difference between the hotels’ net rate and the final price the consumer pays, arguing a bed bank is liable to pay UK VAT on this under Toms. He warned that if the Revenue was not successful against bed banks it could then target large online travel retailers and retail partners to try to recoup the money. The Revenue team is understood to have met several bed banks already, including Somewhere2stay and Lowcostbeds. Somewhere2stay’s Stuart Jackson confirmed the meeting but said he was confident his company qualified as an agent. “We obviously believe we are fine but whether the VAT man interprets it that way is another thing,” he said. “I think they want to prove one case and then look to come after others.”
■ United offers flyers one-off luggage fee Frequent flyers on United Airlines could save money on luggage charges by stumping up an annual fee as part of its Premier Baggage scheme. The airline said customers could make a one-off payment of $249 to check in two bags every time they fly United for the next 12 months.
■ All Leisure wins award for biggest growth All Leisure Group, which owns cruise lines Swan Hellenic, Voyages of Discovery and Hebridean, has won a business achievement award from law firm Clarke Willmott for the biggest increase in sales and pre-tax profits of any public company in the south of England in the last year. All Leisure increased turnover by 49.7% to £67.5 million while profits rose 91% to £9.1 million. ttglive.com
For the latest news, reviews and comment from the travel industry, visit ttglive.com
TTG REPORTS FROM
READY TO REPORT! TTG ’s team of Roving Readers was out in force at the Travel Convention in Barcelona this week. To find out what they made of all the speakers, sessions, supplier events and parties, go to ttglive.com/abta 09.10.2009
p6 ABTA Oct9
news conference report
The Travel Convention 2009
Trade Media Partner
October 6-8 ■ Barcelona
This week’s convention concluded one of the trade’s toughest seasons. TTG ’s team reports from Spain
‘New breed of buyers’ CUSTOMER buying habits have fundamentally shifted during the recession and will not return to pre-credit crunch ways, the Travel Convention was told. PricewaterhouseCoopers partner Malcolm Preston (pictured) said a poll of 1,000 consumers for PwC showed four different types of behaviour: switching location, downgrading, buying less and buying clever. He singled out buying clever as having the most impact on the holiday market and said after the recession customers would continue to look for promotional offers, use the internet more and spend more time checking prices. “Travel companies must reduce the selling cost by pricing each element of the package according to how the buyer values it,” he added. Another PwC partner, Mark Hudson, said it
was no longer possible to pigeonhole consumers according to age or social demographic. Hudson showed video interviews with senior figures, including Tui managing director Dermot Blastland and British Airways chief executive Willie Walsh, about consumer habits over the past 12 months. Blastland highlighted cruise and all-inclusive as two recession-successful products due to the consumer’s desire to pre-budget. Walsh focused on the need to “unbundle” the core product to see what customers actually value and what could be removed to save costs while not affecting customer experience. Hudson also warned that the midmarket was becoming “deserted”. “The bland mass market is in trouble. The only way for the price to go is down,” he said.
Teletext to open travel outlets in Tesco stores TELETEXT Holidays has agreed a new retail partnership with Tesco to help compensate for losing its analogue television service. The deal was announced at the Travel Convention. It will operate branded travel agencies at Tesco Extra stores, and plans to employ more than 100 agents at 20 outlets over the next two years. The first 250sq ft shop will open in December in Pitsea, Essex, with up to six staff. The second shop to open will be almost four times the size with dedicated cruise, Mediterranean and worldwide sales departments. Teletext Holidays managing director Victoria Sanders said: “I am conscious of losing a certain audience when analogue goes and I think this will go some way to holding on to them. “The retail agent is not a dying breed; people still want to go to an agency and book a holiday.” Shop customers will also be able to access the teletextholidays.co.uk site on self-service pods.
Carnival has ‘no plans to build bigger ships’
Abta to offer free child protection training
CARNIVAL Corporation chairman Micky Arison has ruled out his company building ships as large as rival Royal Caribbean International’s. Speaking at the Travel Convention, Arison said Cunard’s Queen Mary 2 was “probably” the biggest ship Carnival will ever build. Royal Caribbean will launch the 5,400passenger Oasis of the Seas in November, a ship that is 40% bigger than those in its fleet that now hold the title of the world’s largest liners. Arison said he had no intention of building anything larger for the Carnival Cruises brand than its newest ship the Dream, nor anything larger for UK market leader P&O Cruises than the 3,000-passenger Ventura.
ABTA is launching free online training for the travel industry on child protection issues. The Every Child Everywhere training, unveiled at the Travel Convention, will educate staff on how to deal with child protection problems in resorts when travelling. The training is launched in partnership with children’s rights organisation Ecpat UK. It has three modules: following, implementing and developing child protection policies and procedures. Ecpat UK director Christine Beddoe said: “This tool will give travel professionals an understanding of child protection issues and of the importance of child protection policies.”
Carnival chairman Micky Arison He said: “We try to build ships that have the flexibility to visit ports such as Venice. When you get to a certain size you start to limit flexibility.” Arison admitted he was worried about the state of the global economy last year but said the trading environment had dramatically improved. Carnival was now able to access banking facilities that were closed to it at the start of the credit crunch, he added.
p7 ABTA Oct9
conference report news
The Travel Convention • October 6-8 • Barcelona TTG LAUNCH.
TTG holds exclusive reception to unveil Travel Intelligence Report THE first TTG Travel Intelligence Report 2009 was launched at an exclusive reception in Barcelona on the evening before the formal start of the Travel Convention. TTG editor Lucy Huxley was joined by research partners Sarah Smalley from GfK AscentMI and Sally Morgan from The Network for the launch event. The report combines booking data from GfK Ascent-MI, consumer research from The Network and flight capacity information from aviation statistics provider OAG. As well as reviewing the tough past 12 months,
In brief ■ UK cruise passengers will rise 5% in 2009
the report also identifies trends to help travel leaders make informed decisions. Huxley said: “I hope the Intelligence Report empowers readers to meet current challenges and flourish in the year ahead.” Copies will be available at a special WTM event in November, at TTG’s Qatar Airways-sponsored Luxury Directors’ Club on October 12 at the Berkeley Hotel in London, and at the International Luxury Travel Market in Cannes in December.
■ Copies of the TTG Travel Intelligence Report are also available on Amazon, priced £89
Intelligence readers: Tracey Cheffey, travel category director at Yahoo!, and Paul Turner, chief executive of travel insurance firm Arnold Fisher
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A record number of UK holidaymakers will take a cruise in 2009, according to statistics released at the Travel Convention by the Passenger Shipping Association. The total number of British cruise passengers is on track to rise to 1.55 million this year, a 5% increase on 2008. The PSA has predicted a further 6.5% increase to 1.65 million next year as new ships such as P&O Cruises’ Azura, Cunard’s Queen Elizabeth and Celebrity Cruises’ Celebrity Eclipse enter service.
■ Cook to donate £12k to Abta Benevolent Fund Thomas Cook has pledged £12,000 to the Abta Benevolent Fund. The fund was established by Abta 20 years ago to help colleagues who are or were previously employed by an Abta member and have fallen on hard times. It has awarded a total of £500,000 in grants and loans.
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p9 News Oct9
In brief ■ Australian mega-fam invites agents Aussie Specialist agents are being invited to put their names down for Tourism Australia’s 2010 Corroboree mega-fam in May. There are places for about 140 agents from the UK and Ireland on the trip, which will include a two-day training workshop in Melbourne and 21 options for five-day fam trips around Australia. Agents have until October 29 to register interest. Register at specialist.australia.com
■ Wendy Wu appoints regional sales bosses Asia specialist Wendy Wu has added two sales managers to its trade team. Dougie Hill, who previously worked for Thomas Cook Signature, and Paul Mellon, formerly of Trails of Indochina and Inghams, have both been appointed as UK regional business development managers.
■ Cresta offers Christmas market breaks City-break operator Cresta has unveiled a Christmas Markets & Winter Breaks brochure, featuring short breaks to European cities famed for their festive markets, including Lille, Bruges, Antwerp, Brussels, Munich, Hamburg, Copenhagen, Prague, Vienna, Budapest and Stockholm. Prices start at £135 per person. Operator news and new brochures, p32
■ Police call off search for missing agent Police in Manchester this week called off the search for missing travel agent Jane McMurchy after a woman’s body was found in woods near Altrincham. The 47-year-old was said to have been suffering from depression since losing her job at Portman Travel five months ago.
■ TripAdvisor brings flight price software to UK TripAdvisor has launched a UK version of its search function that tells customers the final cost of a flight before they input payment details. The Expedia-owned review site has tailored its Fees Estimator software to the UK so users can see how much any flight will end up costing.
■ Jet2 claims pole position at Manchester Jet2.com claims to be Manchester airport’s biggest scheduled leisure airline after adding four routes for next summer. The airline said the services to Dubrovnik, Split, Reus and Prague increased its destinations served from Manchester to 28, more than any other scheduled carrier. Manchester wins TTG Best Airport Award, p24 ttglive.com
For the latest news, reviews and comment from the travel industry, visit ttglive.com
Amex agent from London helps Cambodia flood relief Chris Gray.
A TRAVEL consultant on sabbatical in Cambodia has been helping with relief efforts after typhoon Ketsana flooded nearby villages. John Palfrey worked with owners of a luxury hotel, the Sojourn (pictured), to distribute food to hundreds of families on the outskirts of Siem Reap, close to the temples of Angkor. The hotel already had a close relationship with the village, Treak, because it organised trips for guests to see how families lived in traditional Cambodian homes, giving 50% of the tours’ proceeds to the villagers. Palfrey, who is working at an orphanage on sabbatical from his job as a travel consultant at American Express in London, said the hotel and its sister property acted as distribution centres for relief after the flood.
He joined staff from the hotel to help divide food into family supply bags and distribute clothes and blankets. “The floods have left the community under a couple of feet of water – survivable due to the construction of most Cambodian homes,” he said. “But the food supply has been wiped out and those without employment now have nothing.” Palfrey said the relief effort was an extension of the commitment Sojourn’s owners were already showing the local community. “It’s an example of a travel company becoming part of the community it works in. This is tourism really making a difference.” Typhoon Ketsana left a trail of destruction across south-east Asia last week, causing the most damage in the Philippines before hitting Vietnam and Cambodia.
Tsunami-hit Samoa revives campaign SAMOA is to restart its promotional campaigns on Monday – less than two weeks after the Pacific islands were hit by a tsunami. Samoa Tourism Authority withdrew the campaigns following the tsunami on September 29 but travel agents are being urged to keep booking clients to the islands. Authority spokeswoman Kate Fenton said: “It is important British tourists continue to come to Samoa and support the hotels and resorts that have not been affected. We are relying on UK agents’ continued support, and trust they will encourage clients to continue to visit.” The worst-affected area was the south-east coast of Upolu Island, where resorts, family
homes, community buildings, roads, power lines and water supplies were damaged. Temporarily closed properties include Coconuts Beach Club, Maninoa Surf Camp, Sinalei Reef Resort, Salani Surf Resort, Vavau Beach Bungalows, Taufua Beach Fales, Litia Sini Beach Resort and Namu’a Beach Fales. The tourist board said properties in neighbouring areas were still operating, despite suffering some damage. Accommodation in the rest of the country is unaffected. Faleolo International airport, Samoa’s main gateway, has remained open throughout. Air New Zealand and Polynesian Blue have laid on extra flights and reduced air fares to Samoa.
p10-11 Youtravel Oct 9
in-depth youtravel VIP weekend
Guests at the annual Youtravel VIP weekend were optimistic about next year, concerned about Greece, and angry with Abta and the CAA. Rupert Murray reports from Crete
‘Protection flaws marginalise Abta’ A
BTA and the CAA have been accused of shying away from their consumer protection responsibilities and making themselves increasingly irrelevant and “outdated”. Chadwell Travel managing director Chetan Patel claimed the two bodies had looked for “any excuse” to avoid paying out after recent failures, so another way had to be found to cover every element of a holiday. “The government is a couple of decades behind the time and still seems to think everything is a package,” he said. “I can see no alternative to charging a price per element – even something like 20p – to ensure everything is covered. We have to go down this route, as far as I can see, because nobody seems willing to take responsibility.” Youtravel sales and marketing director Paul Riches agreed with Patel, saying the complexity of the system meant the consumer lost out. “We have gone through agency failures and
when we know we are liable we pay out,” he said. “But there is such a big grey area that bodies like the CAA and Abta can hide. “They are supposed to represent the consumer but in reality they don’t. “It is a total mess, with no consistency, and the only way to do this properly is to create a levy or an insurance which covers every element. “The latest Abta plan is for members that supply product to have to honour all bookings whether or not they have been paid for. “The whole thing is flawed and they haven’t tackled what to do with the money once paid and who holds and protects it.” UK Travelshop group general sales manager Geoff Andrews went a step further, claiming Abta was “outdated and dying”. The industry had changed so much and so many companies were no longer members that it had become unnecessary, he said.
■ Your views on bed bank ruling: Letters, p36
Youtravel’s round-table panel Clockwise from top left: Phil Norris sales director, A2B Transfers Chris Roche commercial manager, Travel Republic Chetan Patel managing director, Chadwell Travel Andy Stark, head of Triton Rooms
Victoria Sanders managing director, Teletext Holidays Geoff Andrews group general sales manager, UK Travelshop Paul Riches sales and marketing director, Youtravel.com Russell Adamson northern sales director, Barrhead Travel
Crete, unlike some other Greek islands, benefits from good air access 2010 FORECASTS.
Next year tipped for slight growth TTG asked each of the panellists for their predictions for next year. This is how they think 2010 will measure up against 2009.
Russell Adamson, Barrhead Travel “We have three new branches opening in the near future so I am very optimistic that next year is going to be a good one. We seem to be bucking the trend and hope that will continue.”
Paul Riches, Youtravel.com “Booking trends have changed. The DP [dynamic packaging] arena has still got growth in it, so in our sector we still see a bit of growth, but it is tough to get customers. The feelgood factor is important. Everyone has been talking about recession, but if you’ve still got a job you have more money to spend, the mortgage is lower and it is going to seem like everything is not as bad as everyone told you – so I think people will be more optimistic and more likely to travel.”
p10-11 Youtravel Oct 9
Greece urged to be proactive
Geoff Andrews, UK Travelshop “At the most, next year is going to be 10% better than this year. The issues are going to be the same as those which have hindered us this year such as late bookings and a strong euro, which I can’t see changing. An election might help.”
Victoria Sanders, Teletext Holidays
Chetan Patel Chadwell Travel “I am optimistic about next year; it will be better than this year and margins will creep up. This year everyone had to drop margins to fight for business. Last year we were facing a huge lack of confidence but next year people will be more confident.”
Andy Stark, Triton Rooms
“The late market is going to continue. We’ve got a few things to keep an eye on as potentially impactful such as the World Cup and oil prices. I think UK holidays will continue to be popular. If you look at holiday cottage bookings for next summer they are up on last year. There will not be as much all-inclusive but self-catering will do better.”
“Anyone who didn’t go on holiday this year will go next year. If people went for a UK holiday this year they will be gutted and want to go away. It’s important to watch your business costs, keep a very close eye on what you’re spending and what is coming in. People will travel next year and I expect to see a slight step up.”
Chris Roche, Travel Republic
Phil Norris, A2B Transfers
“I can see self-catering and allinclusive doing well and I believe the UK will do better than this year. Price will be the winner and websites will leverage different marketing channels to acquire customers as cheaply as possible. The key will be conversion and the biggest factor there will be price. Customers are still looking for absolute value and I think our margins will be similar to this year.”
“2010 will be somewhere between level and 5% up on 2009. January, February and March will be better but will be undermined by a worse May and June, which will even things out. People are still after value for money. In terms of transfers we will do well numbers-wise. Customers are booking shuttles this year, downgrading from a taxi, and in a perverse way this has helped our numbers.”
GREECE is in danger of being overtaken by growing destinations such as Egypt and Turkey. Triton Rooms’ Andy Stark, who spent 20 years working overseas for First Choice, said he had watched Greece slip back in the last decade. “It has done nothing particularly wrong but other gateways such as Turkey and Egypt have been developing and it hasn’t been quick enough to hold its business,” he said. “Greece is driven by where carriers are going, places like Zante, Crete and Rhodes. The shame is that people have missed out on some of the other islands because you can’t get there without a boat and you can’t get a boat because operators can’t get the insurance. A massive amount of Greece is therefore unavailable.” Stark added: “And from a health and safety perspective a lot of places we used to sell can’t be advertised now for basic reasons, like the balcony isn’t high enough.” Stark, who lived in Crete for five years, said the Greek tourist board did not do enough. “The Greeks seem to have gone back into themselves and it needs a governmental push to get Greece back to its glory days; it has a lot of work to do.” UK Travelshop group general manager Geoff Andrews agreed Greece has to change, adding: “It needs to go back to grass-roots. The Greeks need to go back to promoting the small islands.” Phil Norris, sales director at A2B Transfers, said the key to success for Greece was to have a strong regional flying operation. “If a UK region loses a Greece flight people will simply fly somewhere else from that airport, they won’t travel to London to get to Greece.”
Santorini: the Greek tourist board “must work to revive the glory days”
p12 news Oct9
news british airways
BA bullish despite high-fare concerns The UK’s flag-carrier attracted praise and criticism with the launch last week of its highly publicised London City-New York all-business-class service. Martin Ferguson was onboard BUSINESS travellers could have problems justifying the cost of tickets for British Airways’ new premium service, according to a leading travel manager. Mark Avery, head of procurement at PricewaterhouseCoopers, said some companies would block attempts by employees to book the all-business-class service from London City to New York JFK because cheaper fares would be available from Heathrow. Lead-in fares for the service, which is twicedaily on weekdays with a limited service on weekends, start at £1,996 including taxes and charges. Avery, a former chairman of the Institute of Travel and Meetings, was onboard the inaugural City flight last week and admitted he was “very impressed” by the service. “It was very good, and clearing customs and immigration in Shannon was beneficial given the time it saves the passenger when arriving at JFK, which can be slow and cumbersome,” he said. “But the bottom line is that it will be hard to justify the premium fare at City over cheaper fares out of Heathrow.” Avery said he had also received negative feedback about the flight times of the outbound leg from London. “When you land in New York it’s already early
evening and you’ve lost most of the day,” he said. Richard Tams, the carrier’s UK sales director, admitted the service needed some “fine-tuning” but was confident the route would succeed. “I don’t think you can really understand or appreciate the service until you’ve tried it,” he said. “The initial feedback has been good and I have picked up some ideas from passengers about how we could make improvements. “They are small things but important if we are creating the best customer experience.” BA’s chief executive, Willie Walsh, has said he expects the new service to be profitable by the end of the year.
No-frills widen passenger gap BRITISH Airways reported further falls in its passenger numbers last month, in contrast to Ryanair and easyJet which both saw increases. BA’s overall passenger numbers for the month dropped 1.7% compared with September 2008 to 2.92 million. Premium traffic dropped 7.9% but non-premium traffic rose 0.7% – the third consecutive month of rises. In contrast easyJet and Ryanair both saw rises in carryings and load factors in September. EasyJet’s passenger numbers rose 5.3% to 4.4 million, with a 1.2 point hike in load factor to
Martin Ferguson test-flies BA’s new 32-seat Airbus A318 London City-New York service PASSING through security at London City airport is famously slick. I had checked in online and had only hand luggage so it took me just 16 minutes to get from the airport entrance to gate 24, where there was a make-shift lounge. Free Wi-Fi and refreshments including champagne helped ease the two-hour delay. Three cabin crew gave the 32 passengers five-star attention, though at times they looked noticeably one man short. The 70-minute journey to Shannon – where passengers clear US customs and immigration – was hectic. The trio hurried to serve and then clear away drinks and appetisers before landing. However, the one-hour stopover in Ireland was worth its weight in gold given the time it saved avoiding JFK’s long queues. The touchscreen inflight entertainment system was user-friendly and the food and drink plentiful and good quality. There were some teething problems with the mobile communication technology which allows passengers to email and text. BA insisted these minor hitches would be ironed out in time. We landed more than an hour behind schedule, but the walk from the aircraft to the taxis outside the terminal took under eight minutes.
88.1%. Ryanair’s carryings grew 17% to 6.1 million with a one point rise in load factor to 85%. BA’s increase in economy-class traffic was largely the result of price-cutting, and its “revenue passenger kilometre”, a measure of sales volume, fell 0.8%. The biggest drop in passengers numbers (17.7%) was on Asia-Pacific routes. European passenger numbers dipped by 2.9% to 1.8 million. However, American routes were up by 3.4% and Africa and Middle East traffic climbed by 3.9%. The carrier’s overall load factor, which measures the proportion of seats sold, rose 2.4 points to 81.3%.
■ BA’s seat fee ‘could bite it on the bum’, p14
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p14 news Oct9
news visit usa
The Visit USA Association held its latest general meeting in London, where the economy, the Co-op’s current trading and BA’s new seats fee were discussed. Robin Searle reports
Co-op says ‘indie agents selling up’ THE HEAD of the Co-operative Travel’s retail division is receiving “five or six letters a week” from independent agents hoping to sell their businesses. But many have left it too late to take action and would struggle in the tough sales climate of the rest of the year, he added. Retail distribution director Trevor Davis (pictured) said the Co-op had outperformed the market this summer, with customer numbers down 9% against an average of 11%. He said one of the Co-op’s biggest concerns was a rise in unemployment, acknowledging that staff and shop cuts made by his own company contributed to the problem. But he said pressures on high street shops meant that cuts had been unavoidable. “We are losing an awful lot of experience, but
if your business is 20% down, you can’t carry the same cost base as you can when you’re 10% up,” he said. Davis said he hoped the fall in sales had levelled off, and a slow recovery would now begin. But he predicted a challenging end to the year and flat peak sales period. He also listed a series of factors, including VAT rises, Air Passenger Duty increases, the general election and the World Cup, that would present more challenges to the travel industry in 2010. “There is evidence that some confidence is coming back and we are seeing some evidence of people saying ‘we’ve gone without this year, we won’t next year’,” he said. “But there’s no doubt October to December is going to be a tough time for independent agents.”
Seat fees may ‘bite BA’s bum’ BRITISH Airways has admitted its decision to charge passengers for securing preferred seats in advance of a flight could “bite it on the bum”. But Simon Brooks, the airline’s head of consumer sales, talking at the Visit USA event, said BA would “die as a business” if it failed to act. Brooks said the flag-carrier had clawed back losses from £3 million a day to £1 million, but said it could not continue to operate with record load factors but low yields. “We have had to make strong and occasionally unpalatable decisions,” he said. “Some we’ll get right but, to be candid, some we’ll get wrong and we may get bitten on the bum. “The seating policy may not be the right thing to do but we need to do something.” Brooks said BA was focusing on managing its destination mix and frequencies to reduce
its reliance and exposure on key routes, and hoped to receive clearance in the “next month or so” for anti-trust immunity that would enable it to pursue a joint business agreement with American Airlines and Iberia. Brooks pointed to the launch of a daily Las Vegas service in October and the new all-businessclass service to New York as evidence of BA’s commitment to growth and the US market in particular. He said senior managers were doing their bit towards BA’s recovery. “None of us are getting pay rises,” he said. “In fact, I’ve had a pay cut, if the truth be known.”
Expert predicts slow recovery TRAVEL companies can expect to see signs of economic recovery over the coming year, but tax rises in 2010 could put the brakes on consumer spending. John Walker, chairman of Oxford Economics, predicted a slow recovery in 2010, which would start to gather pace in 2011. But he told the Visit USA meeting that the depth of recession meant travel companies should not expect a quick return to previous performance levels, and warned likely cuts in public spending and hikes in taxes next year could discourage spending on travel. Walker said there was a “reasonable backdrop to start being more positive” but warned that optimism needed to be grounded in reality. “The overhang of this recession is going to last a long time,” said Walker. “You will see strong recoveries in some sectors but if something goes down 50% and then recovers 50%, you’re still 25% down on where you started.” Walker predicted factors such as an aggressive monetary policy response and lower levels of fixed rate borrowing meant recovery in the UK would outpace the eurozone, but was likely to be slower than in the US.
US: good value versus visa fees FAVOURABLE exchange rates and pricing could make the US a more attractive option than the eurozone next year, according to experts. On Holiday Group chief executive Steve Endacott said the combination of favourable fuel hedging prices and little movement in exchange rates would result in cheaper holidays to the US compared with the eurozone. But he said that the challenge was persuading customers to spend the disposable income produced by lower interest rates. “If you’ve got a job and you’ve got money, there’s no logical reason why you wouldn’t go on holiday next year,” he said. Trevor Davis, the Co-operative Travel’s retail distribution director, agreed US holidays would be good value next year, but warned that proposed charges for the Esta visa waiver programme could severely dent UK-US travel.
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p16 City Oct9
City & finance Keep up to date with the travel industry’s financial news and results at ttglive.com
Interview Craig Cherry, Monarch Airlines
Chartered Institute of Purchasing and Supply’s Awards that were handed out on September 9.
Cherry picks up procurement pace With its prices and margins being pushed downwards, Monarch is focusing on procurement and reducing its suppliers to help survive the recession and avoid cutting jobs. By Lee Hayhurst
rocurement has never traditionally been among the more high-profile areas of business, but the recession has thrust it up the pecking order at one airline. Monarch Airlines is undergoing a thorough review of its supply chain, led by head of procurement Craig Cherry (pictured). Covering £300 million of costs a year, the job has been deemed so important Cherry is now reporting direct to Monarch managing director Tim Jeans. He has been tasked with working through all the relationships the airline has with its 1,200 suppliers such as ground-handlers and catering firms. The result is likely to be a rationalisation of the suppliers the airline uses, possibly cutting the number by up to a third.
Cutting suppliers “We have already identified 300 suppliers we won’t be working with in the future,” Cherry said. “One of the strengths of our business is that we have always done a lot of ad hoc flying. But what we want to do is be more strategic. “There are not a lot of places we have not been to, so we can start having a supplier in any place we want who is already part of the nominated supply business rather than having to shop around at the last minute.” Cherry said for firms, particularly airlines, facing enormous market pressures to cut prices and work off tighter margins, suppliers must be
expected to do their bit to help. A well-run procurement programme could make the difference between having to lay off staff to deal with the downturn or not. “The rules of the game have changed; everything that was previously set in stone has now gone,” Cherry added. “Our prices and our margins are getting pushed down and all we are doing is reacting to that.” Cherry was one of the judges on the
Deserving recognition He was disappointed travel firms did not feature among the 200 award entries and said travel should prize its procurement teams more highly. “Not one entry came from anything that even vaguely resembled the travel industry, and that’s disappointing,” he said. “If you take the big two, for instance, I’m sure they have big procurement teams, and airlines take this area seriously. “World-class buying is a profession, a skill; it’s a trade. But to have that recognised has always been difficult. “If you take the judging panel for the awards I was the only judge who was not a board director for his organisation. “What businesses have done is, lazily, made the procurement function report to the finance director. It’s not been given the profile it deserves. “When we find ourselves in the situation we find ourselves in at the moment, all of a sudden the profile becomes very different.” Cherry said colleagues at Monarch who are having their division’s spending reviewed are supportive of the work he is doing. “I have never once had to use Tim [Jeans] or pull rank in any shape or form. Everyone is behind it because people’s livelihoods are at stake.”
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p18 City Oct9
news city & finance Comment Graham Pickett
company failures in the wake of XL Leisure Group’s collapse. With unemployment reaching 2.47 million in the UK, and further rises expected, consumers are also reluctant to commit to large expenditure before they need to. This puts increased pressure on the traditional business model of holiday companies, making it harder than ever to predict departure patterns. Airlines and tour operators that have already cut their headcount are less able to respond to changes in demand at short notice. According to Iata, airline load factors actually rose 0.4% in July 2009 compared with the previous year. However, with passenger numbers down by 2.9%, this points to a reduction not just in demand but in supply.
No green shoots for travel
Slow recovery and oil pose new threat Airlines that have suffered during the downturn could face a threat to their balance sheets during economic recovery, says Graham Pickett
il prices that fell significantly during the recession have begun to climb once more. The airline industry was able to mitigate the effects of the previous oil price peak by hedging – that is, buying forward months ahead at lower prices. This time, with cash reserves low and balance sheets in a weaker position for some airlines, it will be more difficult. This will be even harder from a timing point of view with the quieter winter season upon us. After months of economic uncertainty, airlines and tour operators have seen significant changes in the nature of demand for their products, such as the rise in late bookings. Airlines and tour operators need to respond
quickly to these changing conditions. This is a major challenge for an industry that has to bear the huge fixed capital costs of operating aircraft, ships or hotels.
UK confidence impacted Within leisure travel, job market uncertainties and the falling value of sterling have dented consumer confidence. Holidaymakers who had become accustomed to a strong pound have seen their spending power slashed in their favourite destinations. As it appears likely the UK economy is in for a slow recovery, this could be a problem that will continue for some time. Late bookings is another key trend affecting the leisure sector, caused partly by fears over
The collapse of several airlines in the past year, coupled with cuts by the remaining carriers and tour operators, have reduced overall capacity in the market. The logic of current market conditions would suggest that consolidation is one way for airlines to gain a competitive advantage of scale. While merger and acquisition activity remains slow, some developments are taking place. The airline and travel industries are in the midst of deeply uncertain times. Flexible responses in the face of unpredictable booking patterns, cost reductions and innovative revenue streams are all needed. Operators need to focus on those areas where consumers are spending money, such as economy business travel, all-inclusive holiday destinations, non-eurozone/domestic holidays or cheaper, greener transport. Airlines may need to shift away from previous “cash cows” such as premium business travel, if they are to return to profitable results. Whether this can be achieved quickly enough to avoid any further large scale failures is a key question. Whilst some commentators are seeing green shoots appear in the UK economy, for aviation and travel the recovery appears to remain some way off.
Graham Pickett is aviation partner at Deloitte UK
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For the latest cruise news, visit ttglive.com/cruise
Fred Olsen starts Philippines fund FRED OLSEN Cruise Lines has started a fund for for the victims of the flooding in the Philippines. Most of the line’s crew are from the country and have family and friends there. The cruise line has sent a sizeable donation to distribute to families in urgent need of help. Fred Olsen also said customers had asked how they can help and, in response, the cruise line established the fund to help flood victims. Posters are being displayed on ships to tell passengers they can donate through their cabin accounts. Donations will be distributed through Fred Olsen’s crew agency based in the Manila area. Managing director Mike Rodwell said: “This is a very worrying time for many of our crew, and we have set up this fund to offer them much needed support at this difficult time. “The company has pledged to match customer contributions to the fund to a significant level.”
■ To contribute to the fund, post a cheque, made out to “Fred. Olsen Cruise Lines”, to Deborah Moore, Fred Olsen House, White House Road, Ipswich IP1 5LL
In brief ■ Leading Cruise Agents plans regional events The Leading Cruise Agents of the UK has decided to hold regional meeting after requests from members. The first will take place on November 4 in Birmingham. LCA members should email Matt Bates at email@example.com.
■ Dubai unveils new cruise terminal Dubai unveiled plans for its new cruise terminal at Seatrade Europe in September. The facility is due to open in January 2010, when the emirate is expected to host 99 ships and 383,000 customers.
■ Hurtigruten welcomes morning Bergen flight Cruise operator Hurtigruten has welcomed the addition of a morning Gatwick-Bergen flight by carrier Norwegian. The line said the flight provided a more convenient service for its UK passengers. ttglive.com
For the very latest cruise news, visit ttglive.com/cruise
Royal Caribbean to review tips policy Lee Hayhurst.
ROYAL CARIBBEAN INTERNATIONAL has strongly hinted that it could change its policy on cruise ship staff gratuities for the UK market. TTG understands there have been concerns this summer about the number of customers, almost a third on some sailings, opting not to pay tips on ex-UK cruises. This led to the line requesting agents to not encourage their customers to deselect automated payments when booking. Royal Caribbean is set to significantly increase its UK deployment next year when Independence of the Seas starts sailing year-round from Southampton. Brits’ reluctance to pay tips puts strain on the economic model of cruising, which is based on crew pay being supplemented by gratuities. Adam Goldstein, president and chief executive of Royal Caribbean, would not go into details as to the level at which Britons were not paying tips. But he said: “It’s an important issue. It’s not one that’s unique to Royal Caribbean International; it’s inherent in this marketplace. “The issue for us is strategic because this is an important strategic market for us. “Gratuities are a significant issue for the UK market and we have to think about it.”
Sign-up shows ‘focus on UK’ ROYAL CARIBBEAN Cruises has claimed joining Abta underlines its commitment to the UK trade. The membership officially started on October 1 and means the line’s bonding shifts from the Passenger Shipping Association to Abta. Royal Caribbean Cruises said it remained a full member of the PSA and would continue to play an active part in its work promoting the cruise industry to both the trade and consumers.
Royal Caribbean’s Jo Rzymowska shows off a TTG award At the recent Advantage conference in Heathrow, the line’s UK managing director, Robin Shaw, told delegates the issue was one that was hotly debated internally. “Tipping cultures differ massively,” he said. “Royal Caribbean was effectively built out of the US where the culture is very different. But as become far more international we have to think about how we develop tipping policies. There may be things in the future we adapt.” Shaw celebrated a double win at the TTG Travel Awards when Royal Caribbean and sister line Celebrity Cruises won the two cruise categories.
■ TTG Travel Awards coverage, starts p38
The line said the decision to join Abta would not affect the PSA. Robin Shaw, Royal Caribbean Cruises’ vicepresident and managing director for the UK and Ireland, said: “There is a real feeling that businesses in travel and tourism should speak with one voice through one body – and Abta is taking on the challenge to be the main lobbying body. “We look forward to making a positive contribution on behalf of the cruise sector.” Mark Tanzer, Abta chief executive, added: “Royal Caribbean Cruises are a great addition to the Abta family.” Cruise-only sales offered by the operator’s three brands will be covered under the Abta membership. Fly-cruise packages will continue to be protected under Royal Caribbean’s Atol.
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Line relocates to Hammersmith NCL has moved its London office and all 100 staff to premises in Hammersmith. The line was previously based off the swanky Kensington High Street, close to X Factor’s Simon Cowell’s London headquarters. But the lease on that building expired and the operator has moved to larger west London offices, most recently occupied by failed music retailer Zavvi. UK general manager Stephen Park said the new offices were spacious, and that the venue had been fitted out to a high standard by Zavvi. The move took place over the weekend before last and Park said despite the logistics of moving such a large office it went ahead without any “dramas”. “The biggest drama was I had to go in at the weekend and help move everything, and buy everyone pizza,” he added. NCL will now focus on developing technology to automate more of the work it does with the trade, such as the booking process and live API feeds.
NCL to step up training ahead of Epic launch Lee Hayhurst.
NCL is poised to take its trade training programme to the next level as it gears up for the launch of its biggest ship. The operator will bring Epic – equivalent in size to the current largest cruise ship afloat – to the UK next year ahead of its first Caribbean cruises to showcase it to the British market. And UK general manager Stephen Park has promised exciting developments on NCLU, the line’s revamped training programme which has a treasure hunt feature (pictured).
“We are already planning how our training programme is going to work next year,” he said. “We want to make sure we keep improving, and Epic will be at the forefront of that.” Although still relatively new, NCLU, a UK version of the US programme scooped this year’s TTG Travel Award, and was collected by marketing boss Claire Riches (inset). The accolade marked a second successive win in the category for the cruise industry after Ace, the PSA’s trade training arm, won it in 2008. NCL’s award complemented other victories for the cruise industry outside of the cruise-specific categories including Carnival Cruise Lines defending its trade sales team title and Complete Cruise Solution for best trade site. Park said this was no coincidence due to the fact that cruise lines rely on the trade for sales.
■ Read why the judges rated NCL so highly: Awards, p44
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