In the News II

Quote: AZDuffman

Correct, they should refund. But that is part of why you have the insurance as this money might have already been used for operating costs, it is not escrowed.

You speak as if hotels actually should be operating by the skin of their teeth with no cash reserves. In many cases, the hotel hasn't even seen that money in their account yet even if it was a prepay. They might have seen the deposits, but not holding cash reserves to cover guest deposits in the event you can't provide guests with the rooms is just bad business.

Even our franchisor's actual policy was that guests must be refunded or given the rooms. If it was something like a power outage, then the guest had the choice of staying (we'd usually offer a 50% discount) or having the reservation cancelled at no charge.

If we overbooked, then not only did we not charge the guest, we were also required to pay for them to stay at the nearest available hotel of comparable quality or better.

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Nope, the flight is not the hotel's concern. The guest should but a refundable fare or else have travel interruption insurance.

I would say that, given it is a natural disaster situation, the airline should refund it anyway or give an open date for the same trip. I don't even want to get into that. I'm sure that you don't agree.

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How?

Start with that you think people should have to purchase an insurance plan in case they are not, or cannot, be given what they have already paid for.

Quote: Mission146

You speak as if hotels actually should be operating by the skin of their teeth with no cash reserves. In many cases, the hotel hasn't even seen that money in their account yet even if it was a prepay. They might have seen the deposits, but not holding cash reserves to cover guest deposits in the event you can't provide guests with the rooms is just bad business.

Even our franchisor's actual policy was that guests must be refunded or given the rooms. If it was something like a power outage, then the guest had the choice of staying (we'd usually offer a 50% discount) or having the reservation cancelled at no charge.

If we overbooked, then not only did we not charge the guest, we were also required to pay for them to stay at the nearest available hotel of comparable quality or better.

I worked at a place for just a few weeks and we did the same, sent them down the street at our cost. Now, though, where have I said the hotel should keep the cash paid for the rooms? I have not. I am saying the room fee refund is all the hotel owes.

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I would say that, given it is a natural disaster situation, the airline should refund it anyway or give an open date for the same trip. I don't even want to get into that. I'm sure that you don't agree.

Depends on the kind of ticket you buy. Pre-1978 it was easy. Fixed price, usually refundable, and few people flew for vacation more than once in their life. Since then other plans have come up. Some airlines offer dirt cheap travel. Part of the deal might be "you bought the ticket, it is yours and if you cannot make it then not our problem." If you make this deal then you made that deal. If you booked travel to the big island and the airport is open so the flight takes place, why should the airline have to pay a penalty? Why should the hotel have to pay for that flight as it is no business of theirs?

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Start with that you think people should have to purchase an insurance plan in case they are not, or cannot, be given what they have already paid for.

See above. If the airline can deliver what you purchased why should they be penalized?

Quote: Mission146

That's not comparable, in my opinion. In the case of a hotel, business operations and the physical property are part and parcel because the physical property literally IS the source of all business operations. That's what a hotel does.

But you are insuring different things. Physical damage vs. financial damage.

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I'm not saying total revenue loss for a month won't hurt you, but it shouldn't end you. If it does end you, then all the better, as the hotel will presumably be purchased by a competent operator. We're not talking about some newly-constructed roadside motel that was erected in an area where transient work suddenly tried up; we're talking about a tourist destination.

The remainder of the quote was what I said. I assume you meant to add something else and misclicked?

Even if it does not "end" you it will have massive consequences. In an extreme case it could cause you to not be able to do an update that could cost you your flag. Then to reflag you have to do other work, buying signs at the least. So you should use good risk management and cover as needed.

Might have misclicked. Too much to do to go correct it.

Quote: AZDuffman

I worked at a place for just a few weeks and we did the same, sent them down the street at our cost. Now, though, where have I said the hotel should keep the cash paid for the rooms? I have not. I am saying the room fee refund is all the hotel owes.

That's fine. We can definitely agree on that. If everyone does the right thing, then the hotel refunds rooms that they say the guest can no longer have. If the airline does the right thing, then due to natural disaster, they will offer a later flight of the passenger's choosing. My opening point is that there is no world where the hotel should deny the room and the guest still be charged more than $0.00.

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Depends on the kind of ticket you buy. Pre-1978 it was easy. Fixed price, usually refundable, and few people flew for vacation more than once in their life. Since then other plans have come up. Some airlines offer dirt cheap travel. Part of the deal might be "you bought the ticket, it is yours and if you cannot make it then not our problem." If you make this deal then you made that deal. If you booked travel to the big island and the airport is open so the flight takes place, why should the airline have to pay a penalty? Why should the hotel have to pay for that flight as it is no business of theirs?


See above. If the airline can deliver what you purchased why should they be penalized?

Pre-1978 sounds nice. It sure sounds to me a lot like there is a whole industry built about around businesses creating problems and then charging extra if you want the solution to those problems.

I'm not asking the airline to pay a penalty. Major airlines have the direct protection of the Government anyway, and subsidies, which they then used to do stock buybacks, in case you had forgotten. I'm suggesting that the airline should simply offer the passenger a comparable flight elsewhere or a different flight to Maui at no additional cost, due to the natural disaster.

Quote: AZDuffman

But you are insuring different things. Physical damage vs. financial damage.

Physical damage is also financial damage. If you have insurance on the property and there is physical damage, then insurance reimburses or handles it getting fixed directly; if no property insurance, then the hotel pays to fix it, ergo, financial damage.

Besides, if a hotel has property insurance, then the long-term health of the hotel is good for the insurance company. Rather than separate insurance, just make it part of the package and if you're going to charge, then factor that coverage into a single plan. It's not that hard. Maybe there actually is a more comprehensive option that would do that; I do not claim to know. If there is, then the hotel should get that option. I simply don't see the need for 87 different insurance plans.

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Even if it does not "end" you it will have massive consequences. In an extreme case it could cause you to not be able to do an update that could cost you your flag. Then to reflag you have to do other work, buying signs at the least. So you should use good risk management and cover as needed.

Might have misclicked. Too much to do to go correct it.

I can accept your explanation, but again, that has nothing to do with whether or not the guest should be refunded, which we now agree on.

Quote: Mission146

Pre-1978 sounds nice. It sure sounds to me a lot like there is a whole industry built about around businesses creating problems and then charging extra if you want the solution to those problems.

Sounds nice, but tickets costing several times as much and the feds controlling most routes. Airlines run more for employees than fliers and shareholders. The years between 1979-2010s disrupted that industry like no other. No legacy carrier survived without at least one bankruptcy*

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I'm not asking the airline to pay a penalty. Major airlines have the direct protection of the Government anyway, and subsidies, which they then used to do stock buybacks, in case you had forgotten. I'm suggesting that the airline should simply offer the passenger a comparable flight elsewhere or a different flight to Maui at no additional cost, due to the natural disaster.

Nothing is wrong with stock buybacks, I do not understand why some on here have issue with them. I do not know the details of the subsidies, but if they follow the 2008 subsidies to banks there were all kinds of holes. Some banks did not even want them but CEOs like Jamie Dimon were told "everyone is taking them, before you leave the room your signature or your brains will be on the contract."

Even non-refundable tickets will be refunded in a situation like you say. That is governed above even USA law.



*LUV is not a legacy carrier, they were a local before 1978.

Quote: Mission146

Physical damage is also financial damage. If you have insurance on the property and there is physical damage, then insurance reimburses or handles it getting fixed directly; if no property insurance, then the hotel pays to fix it, ergo, financial damage.

But that is not how underwriting a policy works. Our problem seems to be you are trained in the hotel industry and I am from the financial industry. We are looking at this from opposite sides.

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Besides, if a hotel has property insurance, then the long-term health of the hotel is good for the insurance company. Rather than separate insurance, just make it part of the package and if you're going to charge, then factor that coverage into a single plan. It's not that hard. Maybe there actually is a more comprehensive option that would do that; I do not claim to know. If there is, then the hotel should get that option. I simply don't see the need for 87 different insurance plans.

If there was demand and it was legal then the insurance companies would offer it as a package. For all I know they probably do. You think an insurance salesman does not think of this? If it is not offered as a package then I would say it is like your homeowners and flood are different.

Quote: AZDuffman

Sounds nice, but tickets costing several times as much and the feds controlling most routes. Airlines run more for employees than fliers and shareholders. The years between 1979-2010s disrupted that industry like no other. No legacy carrier survived without at least one bankruptcy*

I'm not certain that it actually did cost more as many factors go into that, so it's not as if you could just do a straight inflation calculator and say it cost more back then. There are any of number of things to have happened in those decades. It's a very complicated industry that I do not claim to know much about.

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Nothing is wrong with stock buybacks, I do not understand why some on here have issue with them. I do not know the details of the subsidies, but if they follow the 2008 subsidies to banks there were all kinds of holes. Some banks did not even want them but CEOs like Jamie Dimon were told "everyone is taking them, before you leave the room your signature or your brains will be on the contract."

Even non-refundable tickets will be refunded in a situation like you say. That is governed above even USA law.

*LUV is not a legacy carrier, they were a local before 1978.

I don't have a problem with stock buybacks as a concept, just when you're doing it with government subsidies. In general, stock buybacks are a positive; they indicate a company's confidence in itself, which should increase investor confidence, thereby causing a greater price per share. Given the choice of buybacks and issuing new shares to generate capital, give me the buybacks every time.

Quote: AZDuffman

But that is not how underwriting a policy works. Our problem seems to be you are trained in the hotel industry and I am from the financial industry. We are looking at this from opposite sides.

Fair enough. You're quite correct. I am inclined to look at it from a lens of what would work best for the hotel.

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If there was demand and it was legal then the insurance companies would offer it as a package. For all I know they probably do. You think an insurance salesman does not think of this? If it is not offered as a package then I would say it is like your homeowners and flood are different.

I think homeowners and flood are different only because homeowners tends to cover for unexpected things whereas, if a place needs flood insurance, then it is highly likely to have a flood, at some point. It sounds like you would know better than I would. Given the unexpected nature of the Maui situation, I would suggest that homeonwers' is the closest comparable of the two. It's not as if wildfires are an expected event...though you could make the argument based on recent history.

Stock buybacks are only good if you believe your company will appreciate more than the other options that you could invest that money in.