Cuba Confounds the Online Travel Agents
It's a popular destination, and airlines are there. So why aren't the likes of Priceline and Expedia ready to sell?
by Justin Bachman
September 14, 2016 — 1:50 PM EDT
U.S. airlines are now flying to Cuba after a half-century ban on travel there, but you wouldn’t know it from browsing any of the major travel-booking websites.
None of those behemoths—Expedia, Orbitz, Priceline, TripAdvisor, or Google Flights—offers air travel or lodging for Cuba, touted as one of the hottest new destinations thanks to more than 50 years of being off-limits to Americans.
The U.S. still bans tourism to Cuba, but since President Barack Obama moved to normalize relations with the nation at the end of 2014, his administration has outlined a dozen areas of permitted travel. Three U.S. airlines have begun commercial service, and five more are expected to start by year’s end. Consumer demand is expected to be strong, and U.S. airlines have rushed for access to the island, where only 110 daily flights from the U.S. are allowed. The American Society of Travel Agents estimates at least 2 million Americans would visit by the end of next year if restrictions were lifted.
So far, though, the big online travel companies have eschewed selling those flights. For one thing, it’s not a financial priority: As airlines have dramatically curbed commissions on ticket sales, online agencies’ margins from selling airfares have contracted, making lodging far more lucrative. And although three-quarters of U.S. travelers shop for flights using the online agencies, only 26 percent of fare shoppers ultimately book with an agency, with most travelers purchasing directly from airline websites, according to a July paper by research firm Phocuswright Inc.
Only one major player in online travel has so far made much of a splash in the Cuban market, and that's Airbnb Inc., the accommodations platform. In March, the company announced it was adding 4,000 private lodgings, or casas particulares, in Cuba, calling the nation “the fastest-growing market in Airbnb history.”
As for the big online travel agencies, “many of them are working on it,” said Emily Cullum, a spokeswoman for the Travel Technology Association, the trade group that represents online travel agencies, but she gave no details on why Cuba commerce had proved vexing.
Expedia and Orbitz are “eager to fulfill demand” for Cuba and have a team “taking every step to ensure that the solutions align with the laws governing travel between the countries,” said Tarran Street, a spokeswoman for Bellevue, Wash.-based Expedia Inc., which bought rival agencies Orbitz Worldwide Inc. and Travelocity last year. Street said the company was not ready to discuss when Cuba inventory would be available.
The Priceline Group Inc. is working to add Cuba flights this year but wants to be cautious about meeting legal and regulatory requirements, spokeswoman Leslie Cafferty said Wednesday. “We’re just being really careful with crossing the t’s and dotting the i’s,” she said. “We’re not risk-takers on the legal front.”
Priceline has been using its top accommodations site, Amsterdam-based booking.com, as a “test case” to sort out credit card and bank payments for Cuba, given that U.S. banks don’t do business there, because of the embargo. Priceline’s “meta search” site Kayak shows Cuba itineraries, links to a State Department page outlining rules for Cuba travel, and sends shoppers to airlines or European-based Kiwi.com to buy.
Google Flights is working on the technical aspects of Cuba travel and plans to make searches available soon, a spokeswoman said. And a spokesman for TripAdvisor Inc. said the company had no “details to share” about when it would add Cuba to its network of travel sites. That's after TripAdvisor sent several executives to Cuba back in June for a “fact-finding and cultural exchange mission” and issued a statement urging Congress to let Americans travel there freely.
One likely reason these companies have been slow to embrace Cuba ticket sales is the welter of U.S. regulatory stipulations that cover these itineraries, given the embargo. But like U.S. airlines, ticket sellers bear no legal liability if a customer lies about his reason for a trip to Cuba. And industry experts say it’s unlikely the U.S. government will audit Americans’ travel there.
The regulatory considerations have forced airlines and global distribution systems—the technology platforms that distribute airline, lodging, and rental-car inventory to travel agents worldwide—to customize their booking pages for Cuba. That means programming new language and interfaces to account for the legal attestations travelers must make that they are eligible to travel to Cuba.
The Treasury Department also requires travel providers to retain customer information for at least five years on Cuba travel. Airlines are doing this, and corporate lawyers are likely debating whether online travel agencies must, too, said Jeff Klee, chief executive officer of CheapAir.com, a smaller online travel agency that sells tickets to Cuba.
Legal issues aside, such companies as Google, Expedia, and Priceline are, after all, technology enterprises, renowned for their innovation and technical chops. The global systems that power online travel agencies are ready when it comes to presenting unique new booking channels for Cuba itineraries, said Erika Richter, a spokeswoman for the American Society of Travel Agents. Earlier this month, Sabre Corp., which is based in Southlake, Texas, and is one of the largest global distributors, said it was the first to release a travel certification process for Cuba itineraries.
“I’m really surprised,” Klee said of the delays by his bigger rivals. “I don’t know what’s going on. I don’t know if there’s some reason that they’re reluctant to get into the Cuban market.”
Another consideration could also be how much information to display about trips to the island. The Cuban government requires U.S. travelers to have health insurance and a visa, although regulators don't require ticket sellers to post this information. Delta Air Lines Inc. includes these notices on its booking page for Cuba flights; American Airlines Group Inc. does not.
American, JetBlue Airways Corp., and Silver Airways Corp. have begun flights to four Cuban cities, while United Continental Holdings Inc. starts its service to Havana on Nov. 29, to be followed two days later by Delta and Spirit Airlines Inc. Southwest Airlines Inc. plans to announce its Cuba schedule and fares this month. Alaska Air Group Inc. has not yet determined when it will begin its daily Havana flight from Los Angeles.
Klee, the CheapAir.com CEO, said that when Obama made clear last year that scheduled air service to Cuba would resume, his 105-employee firm in Southern California was “rushing to beat everybody” among the online travel agencies.
“When this option first came up, we were very determined to be first,” he said. “Because we’re small, we like to be first at things, to say, ‘We can do this, get it onto the site.’ And here we are, 15 months later.”
http://www.bloomberg.com/news/articles/2016-09-14/cuba-confounds-the-online-travel-agents
It's a popular destination, and airlines are there. So why aren't the likes of Priceline and Expedia ready to sell?
by Justin Bachman
September 14, 2016 — 1:50 PM EDT
U.S. airlines are now flying to Cuba after a half-century ban on travel there, but you wouldn’t know it from browsing any of the major travel-booking websites.
None of those behemoths—Expedia, Orbitz, Priceline, TripAdvisor, or Google Flights—offers air travel or lodging for Cuba, touted as one of the hottest new destinations thanks to more than 50 years of being off-limits to Americans.
The U.S. still bans tourism to Cuba, but since President Barack Obama moved to normalize relations with the nation at the end of 2014, his administration has outlined a dozen areas of permitted travel. Three U.S. airlines have begun commercial service, and five more are expected to start by year’s end. Consumer demand is expected to be strong, and U.S. airlines have rushed for access to the island, where only 110 daily flights from the U.S. are allowed. The American Society of Travel Agents estimates at least 2 million Americans would visit by the end of next year if restrictions were lifted.
So far, though, the big online travel companies have eschewed selling those flights. For one thing, it’s not a financial priority: As airlines have dramatically curbed commissions on ticket sales, online agencies’ margins from selling airfares have contracted, making lodging far more lucrative. And although three-quarters of U.S. travelers shop for flights using the online agencies, only 26 percent of fare shoppers ultimately book with an agency, with most travelers purchasing directly from airline websites, according to a July paper by research firm Phocuswright Inc.
Only one major player in online travel has so far made much of a splash in the Cuban market, and that's Airbnb Inc., the accommodations platform. In March, the company announced it was adding 4,000 private lodgings, or casas particulares, in Cuba, calling the nation “the fastest-growing market in Airbnb history.”
As for the big online travel agencies, “many of them are working on it,” said Emily Cullum, a spokeswoman for the Travel Technology Association, the trade group that represents online travel agencies, but she gave no details on why Cuba commerce had proved vexing.
Expedia and Orbitz are “eager to fulfill demand” for Cuba and have a team “taking every step to ensure that the solutions align with the laws governing travel between the countries,” said Tarran Street, a spokeswoman for Bellevue, Wash.-based Expedia Inc., which bought rival agencies Orbitz Worldwide Inc. and Travelocity last year. Street said the company was not ready to discuss when Cuba inventory would be available.
The Priceline Group Inc. is working to add Cuba flights this year but wants to be cautious about meeting legal and regulatory requirements, spokeswoman Leslie Cafferty said Wednesday. “We’re just being really careful with crossing the t’s and dotting the i’s,” she said. “We’re not risk-takers on the legal front.”
Priceline has been using its top accommodations site, Amsterdam-based booking.com, as a “test case” to sort out credit card and bank payments for Cuba, given that U.S. banks don’t do business there, because of the embargo. Priceline’s “meta search” site Kayak shows Cuba itineraries, links to a State Department page outlining rules for Cuba travel, and sends shoppers to airlines or European-based Kiwi.com to buy.
Google Flights is working on the technical aspects of Cuba travel and plans to make searches available soon, a spokeswoman said. And a spokesman for TripAdvisor Inc. said the company had no “details to share” about when it would add Cuba to its network of travel sites. That's after TripAdvisor sent several executives to Cuba back in June for a “fact-finding and cultural exchange mission” and issued a statement urging Congress to let Americans travel there freely.
One likely reason these companies have been slow to embrace Cuba ticket sales is the welter of U.S. regulatory stipulations that cover these itineraries, given the embargo. But like U.S. airlines, ticket sellers bear no legal liability if a customer lies about his reason for a trip to Cuba. And industry experts say it’s unlikely the U.S. government will audit Americans’ travel there.
The regulatory considerations have forced airlines and global distribution systems—the technology platforms that distribute airline, lodging, and rental-car inventory to travel agents worldwide—to customize their booking pages for Cuba. That means programming new language and interfaces to account for the legal attestations travelers must make that they are eligible to travel to Cuba.
The Treasury Department also requires travel providers to retain customer information for at least five years on Cuba travel. Airlines are doing this, and corporate lawyers are likely debating whether online travel agencies must, too, said Jeff Klee, chief executive officer of CheapAir.com, a smaller online travel agency that sells tickets to Cuba.
Legal issues aside, such companies as Google, Expedia, and Priceline are, after all, technology enterprises, renowned for their innovation and technical chops. The global systems that power online travel agencies are ready when it comes to presenting unique new booking channels for Cuba itineraries, said Erika Richter, a spokeswoman for the American Society of Travel Agents. Earlier this month, Sabre Corp., which is based in Southlake, Texas, and is one of the largest global distributors, said it was the first to release a travel certification process for Cuba itineraries.
“I’m really surprised,” Klee said of the delays by his bigger rivals. “I don’t know what’s going on. I don’t know if there’s some reason that they’re reluctant to get into the Cuban market.”
Another consideration could also be how much information to display about trips to the island. The Cuban government requires U.S. travelers to have health insurance and a visa, although regulators don't require ticket sellers to post this information. Delta Air Lines Inc. includes these notices on its booking page for Cuba flights; American Airlines Group Inc. does not.
American, JetBlue Airways Corp., and Silver Airways Corp. have begun flights to four Cuban cities, while United Continental Holdings Inc. starts its service to Havana on Nov. 29, to be followed two days later by Delta and Spirit Airlines Inc. Southwest Airlines Inc. plans to announce its Cuba schedule and fares this month. Alaska Air Group Inc. has not yet determined when it will begin its daily Havana flight from Los Angeles.
Klee, the CheapAir.com CEO, said that when Obama made clear last year that scheduled air service to Cuba would resume, his 105-employee firm in Southern California was “rushing to beat everybody” among the online travel agencies.
“When this option first came up, we were very determined to be first,” he said. “Because we’re small, we like to be first at things, to say, ‘We can do this, get it onto the site.’ And here we are, 15 months later.”
http://www.bloomberg.com/news/articles/2016-09-14/cuba-confounds-the-online-travel-agents
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