Brian Jewell (00:00.686) All right, everybody. My guest today is a journalist, entrepreneur and business content expert. He is the CEO of Skift, a travel industry media company he founded in 2012. There he leads a team of journalists, researchers and other professionals who provide some of the industry's most critical news, data and events for stakeholders around the world. Rafat Ali, welcome to the podcast. Rafat (00:26.377) Thank you, Brian. Thank you for having me. Brian Jewell (00:28.138) I'm so excited to have you here. Skift is absolutely essential reading as far as I'm concerned. is certainly part of my morning routine to tear through every part of that morning newsletter I get every day. So thank you, number one, for the service you've provided to our industry. It's really been invaluable. There's a lot I want to talk to you about today, but before we get into sort of topics of the moment, I'd love for you to tell our audience how you made your way from background in computer science to journalism and now ultimately, you know, being a media mogul in the travel industry. Rafat (01:01.263) Yeah, I don't know the mobile part, but thank you for that. Thank you for that gender center. So, born in UK, grew up initially in US, and then grew up for most of my childhood and early youth in India, my family's Indian, which is where I did my computer engineering, what they call BTEC here. And didn't want to be a programmer because back in those days, just a long time ago, in India, the opportunities where you work for like an outsourcing firm and I didn't see myself sitting behind a desk, which ironically we all sit behind a desk now. but, and coding in hindsight, I'm just reading all the stuff about, how AI is taking over coding. And so anyway, I'm glad I didn't go that path. and so wanted to become a journalist and, and that's what I ended up being. first in India in the B2B media world and then came to US to do my masters in IU and stayed over and I've been here now since 99. So what is it now? 26 or 27 years going into 27th year. And have built a life here. This is my second media information company. I've always spent my life in B2B media. So like you focused on a sector, going deeper into a sector. The first company I built and sold was not in travel. It was in the Brian Jewell (02:07.64) Yeah. Rafat (02:24.401) business of media, was a media company focused on business and media that I sold to Guardian out of UK back in 2008. And then started, left 2010, traveled for two years, started Skifton 2012 as you said, and then now 13 years in. The humble vision back then was we wanted to be the Bloomberg of travel. And I would say we're sort of well on our way. 13 years in, 13 and a half years in, spanning all different parts of the travel industry, news, research, conferences, marketing services, advisory, executive search, a bunch of other stuff, podcasts like you, and virtual, about 100 people in 17 different countries, a very global business. based in New York, but our team is based in all over the place. Brian Jewell (03:09.463) Yeah. Brian Jewell (03:21.859) Yeah. Rafat (03:23.399) A lot of what we focus on is sort of the intersection of tech and marketing, but also larger forces in the world that have an impact on the travel industry. And oh my God, 26 is the year where all of it is happening. And so certainly the larger forces are bearing on travel. Unfortunately, not the best of ways, and I'm sure we're going to talk about that. And so yeah, that's a lot of what we focus on. Brian Jewell (03:49.536) Yeah, well it is really fantastic work. There are so many forces impacting travel right now. You have written a few times over the past couple months in Skift, particularly about the affordability crisis, what I would call a crisis of affordability in travel today. Can you, I'm sure our listeners all kind of intuitively know what we're talking about, but describe the situation you're seeing that makes you say like, guys, something's not okay here. Rafat (04:12.955) Yeah. Rafat (04:19.621) Yeah, I mean, since the start, if you remember back in 20, like 10 years ago, when the sort of baggage fees first came in and this is I'm talking airlines and everything became sort of upsell. And I think this is the we're at the logical other end of that cycle that started, which was unbundling. Affairs. I mean, started a long time ago with low cost carriers, but Brian Jewell (04:43.043) Hmm. Rafat (04:48.071) The baggage fees particularly was just something that consumers grasp onto. And now it's obviously non-controversial, but still people, it's not like people like it a lot. It's just, it's become the norm. And I think travel brands over the years have figured out using more technology and more pricing algorithms and now obviously AI coming in, consumers' propensity to pay whether they like it or not, or their desperation to pay for extra services, if you will. And I think that nickel and diming, if you want to call it that, because it's really not nickel or dime, has caught up with the industry in many ways. Has caught up, I think, in general with the larger economy. I think the article, a couple of stories that I wrote that I know you have read because you messaged me after. Brian Jewell (05:17.43) Hmm Brian Jewell (05:31.803) Alright. Rafat (05:44.519) It was last year when I went to Vegas and just was disgusted by how expensive it's become. And we're seeing the effects. I mean, you know this because you cover the industry as much as we do. Vegas is in trouble. It's not just because the Canadians are not coming. It's because it's become unaffordable to go. If you're going to charge $18 for a bottle of water in a hotel room, there's going to be some effect. Brian Jewell (05:52.486) Yeah. Yeah. Brian Jewell (06:12.728) Yeah. Rafat (06:13.243) And it's going to catch up with you at some point. So I think the affordability crisis, which is happening in cities, I live in New York City. If you know, the last election for the mayor was run on affordability platform. And it is a real issue. It's a real issue. mean, and I think it's being felt across the country. I will even take it further. It's being felt in many different parts of the Western world, particularly. And I think our daily lives are not, our travel lives are not insulated from the daily experience of us living. And it's, I think, boiling over. And as much as travel brands wanted to extract the maximum post-COVID because they were shut and hurt for a while, and there was a consumer demand to pay for it, I think at some point, like if you, Delta just reported the earnings this week, and we're at the start of the year and the earning cycle is starting. And they said like the K-shaped economy in the world is very real in travel as well. As in when they call luxury resilient that also hides a larger truth, which is a lot of people. And the article that I wrote that I think this time you messaged me was about how the US Brian Jewell (07:23.115) Mm-hmm. Rafat (07:40.434) hotel industry has abandoned the middle class. And I purely talk mostly about sort of the chain hotels. And if you look at the history of sort of branded chain hotels in America, middle class consumers, when car became modes of transport and the road trip became a thing, that's where the middle class started traveling in US in more larger numbers. Brian Jewell (07:42.491) Yes. Brian Jewell (07:49.576) Mm-hmm. Rafat (08:09.541) And that middle class has been abandoned by the industry, as you know, because a lot of them have been priced out. And the luxury part of the market is doing well, but you can see in the results, the lower end and the middle end of the market is not doing well. And so that was, I think, long way of saying a lot of the larger issues of affordability in the economy in our daily lives have entered into travel. And why wouldn't they? I the travel will say, Brian Jewell (08:21.69) Yeah. Rafat (08:39.463) labor costs have gone up and cost of everything has gone up. This is obviously true as well. And so I don't know if travel alone can solve it, but at some point this just because you can price tickets and services 10 different ways and upsell 10 different ways doesn't mean it's the right thing to do. But long term for your own brand, I'm not even talking like a public service. As I said, Vegas is a pure example of it. And I know this for a fact that the Las Vegas tourism board is worried and have told their hoteliers who sit on this board that, look, this is what is happening. Brian Jewell (09:13.574) Yeah. Rafat (09:37.767) price out so many people by your habits and there has to be some sort of a reset. So yeah. Brian Jewell (09:43.965) Yeah. So dig in more to the risk to your own brand of continuing to pursue maximum profit from every transaction. How do you see that creating risk for both those large brands, but also everybody else who's following in their footsteps. How long down the road could this take, you know, before it comes back to really hurt people? Rafat (10:09.383) Here's the other part though, which is again unfortunate. As you know, lot of consolidation has happened. So if you're going to fly from, and I don't know the routes from where you are in Kentucky, Lexington, but like I bet 10 years ago, there were a lot more direct flights from Lexington airport to 10 other places, which are gone. That's because these airlines have consolidated. So as much as Brian Jewell (10:29.56) Sure. Yeah. Rafat (10:37.955) me as a consumer may not be satisfied with the service, we don't have a choice. Particularly the Sichuan Airlines. In hotels, it's a little bit different because there's just a lot more choices. here's how it's going to hurt. I'm not going to go to Vegas. Why bother going to Vegas? The only reason for me to go to Vegas these days is just to go for a conference, as you know. And even that, like we... Brian Jewell (10:44.974) Mm-hmm. Brian Jewell (10:55.95) Hmm. Rafat (11:07.971) ourselves as a company have thought of doing conferences in Vegas and we don't do it because it's like our own personal experience has been so bad. I guess Vegas lost money as a result of it. Vegas, not the city, but the people, the hotels that are in there or the spending to in the local restaurants, et cetera. All of that is gone because we've never came into our consideration set. There's direct and indirect effect that happens as a result of it. Brian Jewell (11:21.496) Yeah. Brian Jewell (11:33.382) Yeah. Rafat (11:38.055) Another example, just recently I went with my two young boys literally like three weeks ago to Puerto Rico and I took Delta, assumed that I had booked the tickets and they would put the three of us together. Turns out at the airport and Brian Jewell (11:56.909) Hmm. Rafat (11:59.813) And I bought the whatever, the cheapest rate. was expensive because it's the end of the year. And this is, you know, it's like three times the price of what a regular time would be, but whatever. and, and I got to the airport and they weren't together. Like one is a five year old, one is a 10 year old and me. And so, they weren't charging for it, but again, it leaves a bad taste in the mouth. I'm not going to take, I'm going to take. Brian Jewell (12:06.347) Yeah. Brian Jewell (12:19.256) goodness. Brian Jewell (12:26.062) Yeah. Yeah. Rafat (12:27.557) JetBlue again, which is what I used to take when I go to Puerto Rico. So again, these things, these small things add up in people's minds, especially if they have choices. And then they just go to the place that treats them better. So I think that generally is what it is. I just wrote this article that just published literally right before this recording started that travels wallet share. This is US. data, so credit card data from like three different banks for last year's credit card spending and travels spending as part of it. So one of the things that the conventional wisdom became after COVID is that, people have prioritized experiences over things. I'm sure you have heard the cliche. We have obviously said that a hundred times. Brian Jewell (13:17.646) Mm-hmm. Rafat (13:24.409) The numbers now are showing that Travel's wallet share has decreased in the last two years for 4 % points, from 12 % to 8%, which basically means in the hierarchy of needs and wants of a human being in US, or at least the credit card spending person in US, it's fallen down to what it was before, before the surge of experiences over things happened, which Brian Jewell (13:31.053) Wow. Brian Jewell (13:46.819) Hmm. Rafat (13:52.687) you can parse it 10 different ways, which is one has become more expensive travel to everything else has become expensive. So we better have to spend on our regular daily needs and wants of living. three, that travel has come back to where it was in the hierarchy of needs and wants. So there are many ways to parse it. And I think Brian Jewell (14:04.113) Right. Rafat (14:21.575) people may travel less or just travel to cheaper places. mean, one of the things that, and I'll stop here because I will continue on 10 different threads, but US domestic tourism during summer has been hurt for the last few years because the traveler that can afford is making a calculation that I can go to Europe and for... Brian Jewell (14:30.942) but Rafat (14:49.489) cheaper and not even cheaper, can go at the same price that I was going to spend in US, but get an international vacation versus staying in US because things are just more expensive. So, you know, these are all these threads that we've been covering that I sort of am trying to bring together, not just in stories, but in my own mind as well. Brian Jewell (14:55.81) Yeah. Brian Jewell (15:10.316) Yeah. So how much flexibility do you think travel vendors have? You know, I realize it's different at the airline level than at the hotel level where you've got thousands of independent operators. How much flexibility do they have to say, okay, you know what, we can lower these rates, we can get back to normal, or are they going to say, our hands are tied because our labor costs and our supply chain costs and we can't bring down rates or else we're going to lose money? Rafat (15:35.815) Well, I mean, there's also then the variable that many of these are public companies which have a fiduciary duty to their shareholders. whether it's real or not, that's what they point to. It's like our job is to increase our margins and increase our profits more and more. Airlines can say they make very little profits. There's enough truth to that part. Hotels have sort of more leeway there. flexibilities do they have? Rafat (16:11.527) Probably not. think them divorced from the larger economic reality of the country is hard. And I think the affordability crisis that has become a buzz phrase here in New York is true all across the country. So I think labor shortages are real. The country, without going into the politics of it, Brian Jewell (16:29.179) Yeah. Rafat (16:41.105) has decided that they're going to import less and less labor. So that's going to become even more of an issue. think the only, I mean, as much as we fear about AI taking over jobs, we may have no choice but for AI to take over jobs that are not being filled. particularly service industry jobs, or at least the... Brian Jewell (16:41.774) Yeah. Hmm. Rafat (17:09.831) parts that can be automated. Brian Jewell (17:11.638) Yeah. So if a robot delivers dinner to your table at a restaurant, you're okay with that? Rafat (17:20.679) Personally, I think it depends on the context. If I'm going for a business trip to one of the conferences that you guys are putting together, I don't care. But if I'm going with my kids, well, kids may be happy because they think it's like a gizmo coming in, which they do because there's some of those gimmicks. being to some of those restaurants. And for now, they're just gimmicks, as you know. Yeah, I don't know. I think I may take efficiency because of shortage of labor where things have become so inefficient and takes time, et cetera. And if as a consumer, honestly, if it lowers my costs, I may just be okay with it as bad as it is for other stakeholders in the ecosystem. Brian Jewell (18:06.702) Hmm. Brian Jewell (18:10.838) Yeah. So you mentioned that this is an issue in other parts of specifically the Western, know, developed Western world. Are there... Rafat (18:17.147) Yeah, mean, this is Spain, Italy are being hollowed out, you know, villages are emptied out. In some of the other countries is still a little better only because immigration is coming in. So people have come in and there's labor. But I mean, UK, UK is ground zero for this. Like they did the biggest own goal in history, which is the Brexit thing that they did and people stopped coming. And now they have. challenge with labor all across and the country's in a bad shape. mean, in general, the thing that's going for America, for all the challenges they are in America, the economic power and economic might is still there and continues to, as you know, this year, the last year, the growth has been very, very good. And just if you look at the broader numbers, a lot of it is driven by AI. investments, people are saying as much as half of it is driven by AI investments. And so it may be temporary. But in UK and other Western countries, that's not the case. mean, US economic might still gives it an opportunity to make the underlying social fabric and of the country right in terms of safety net, in terms of affordability, because we just have the money to do it. Brian Jewell (19:27.726) Right. Now, how does that affect the affordability of some countries, let's say outside the developed West? Is it still relatively affordable to visit Thailand or Rafat (19:37.839) It requires a will at this point and at the larger level. In other countries, they don't have a choice because they may not have the money to do it. Brian Jewell (19:57.516) South America. Rafat (19:57.575) Yeah, it is. I mean, look, if you go to, instance, and it depends on the currencies as well. like Turkey, which has become, even in your group travel world, has become a big destination now by many counts as like one among the top five visited countries in the world, which is incredible. The Turkish lira has been low and that's why Americans and everybody else are going there. It has become, the cities have become expensive because these cities are going through a boom, like Istanbul, for instance. Still cheap, but not as cheap as, I don't know, two years ago. South America still continues to be cheap, but again, the prices have risen, whether it's Medellin or Colombia or... Brian Jewell (20:36.846) Mm-hmm. Rafat (20:53.159) where a lot of Westerners have gone and actually are living as expats as well. Southeast Asia, still cheap, they're booming. I Vietnam, I'm sure in your world, you've heard is one of the fastest growing tourism countries in the world. Huge boom going. Japan, the same thing. mean, every second person that I hear is either going to Japan, in Japan, Brian Jewell (21:14.306) Yeah. Brian Jewell (21:20.11) Absolutely. Yeah. Right. Rafat (21:22.191) or just came back from Japan over the last year. I that was the case with Iceland five years ago. And so Japan is the new Iceland and a lot of it is driven by just currency that's there. So I forgot your original question. Brian Jewell (21:31.886) Yeah, I was just asking about places in the world that have a better affordability opportunity. Rafat (21:48.431) Yeah, sure. Yeah. India, for instance. I mean, there lot of challenges with India, but Middle East, obviously Dubai, Dubai and UAE continues to be a driver of tourism into the region. Morocco is booming for group as for in your world. Jordan is back after all the challenges in Middle East. Egypt is back. after all the challenges in Middle East. So yeah, and those are obviously lot cheaper places than, honestly. Again, this is the equation. Do I take a six hour flight from here to California or Oregon or wherever, Washington state? Or do I take a six hour flight this way to Europe or to South America? Brian Jewell (22:40.532) Yeah. Yeah. Rafat (22:45.455) or to the Caribbean and get much better value for money. So I think the value for money part, which again is a cliche, but is real is that, you know, internet and hopefully AI just makes the value for money part more transparent. As in, I have more resources to figure out how to make my dollar go further. Brian Jewell (22:52.268) Yeah. Brian Jewell (23:00.718) Yeah. Ha ha. Rafat (23:13.271) The variable has been that most of the loyalty points, and I think at this point, everybody knows is total scam. That's a strong word. in the sense that the loyalty currencies have been devalued, this is particularly true in airlines, but also in hotels at this point. so again, the story and research that we have done is that credit card loyalties now in US is at the same level now that Brian Jewell (23:30.67) Yeah. Yeah. Rafat (23:43.319) These hotel and airline loyalty programs is just because people are tired of being devalued. And obviously, you know, whether it's Chase, Sapphire Reserve or Amex, Platinum or Capital One, Venture X or whatever others the banks are, they're becoming more more popular as an option to gain their points to then spend on travel or anything else, but usually travel. And obviously they're booming. Brian Jewell (24:03.79) Mm-hmm. Yeah, Yeah, that makes sense. So do you see any way forward where some of this resolves? And if so, you know, what role do people in tourism have to play here? Rafat (24:23.473) I think there has to be concerted. Rafat (24:28.367) understanding that middle class. needs options on terms of payments or packages or flexibility without necessarily like trying to reinvent everything. so, know, BNPL, which is buy now pay later became a thing a few years ago. lot of problems with that from a consumer debt perspective from again, probably beyond my Brian Jewell (24:41.742) Hmm. Rafat (25:04.025) expertise at this point. I do think of flexibility in payments and packages from tour operators or travel industry in general, and particularly tour operators because they have the size of the package and is large enough that there's opportunity for flexibility. I think will be one way that the industry brings the middle class back. Because again, this is at least this part of the American dream is still alive, which is that everybody in middle class dreams to graduate out of middle class. And a lot of them will. And so as they move up the value chain, they will keep spending with the brands that do or at least will graduate to higher offerings of the brands that offer that flexibility. Brian Jewell (25:45.662) Mm-hmm. Yeah. Rafat (26:03.495) So feel like that's a long-term, there is no quick fix, but I think it's a long-term bet that, which is why I think group travel has a better chance because of the economies of scale in which it operates, it still has the ability to negotiate lower rates than you as an FIT traveler will do. And honestly, I think in an age where, Brian Jewell (26:26.207) Yeah, yeah Rafat (26:33.649) people are more isolated, et cetera. So all the stuff that we've also written about, a lot more single people in the world, group travel should have a bright future for all these reasons, including loneliness, including affordability, including opportunity to create long lasting community friendships, et cetera. Brian Jewell (26:56.058) Yeah, well, we see those same things and we're optimistic for those same reasons. So I'm glad to hear you share that optimism. I could talk to you about this all day. I'm going let you get on to other things. What is the best way for people to follow your work or get involved with the Skiff community? Rafat (27:12.103) Well, I mean, easyskift.com. So definitely there's the daily newsletter. We have over the years become primarily subscription sites. So if you do want to get the full benefit of Skift, our daily news or research, just go to skift.com. You'll see it. I am very active now only on one social platform, which is LinkedIn. And so if you, if you just search for my name, you'll, you'll see me there, follow me, connect with me, et cetera. So I share a lot of things about travel. And then our conferences that we do our big one. It's a skipped global forum in New York. It's where all the big CEOs come. It's sort of a big picture view of where travel is and where it's heading. And then we do conferences on AI or we do regional conferences in Asia or Middle East, India, et cetera. Brian Jewell (28:01.996) Yeah, wonderful. We will link to all those resources in our show notes. Before we let you go, we have some questions we ask everybody and these are just for fun. no pressure. When you book travel, do you book a window seat or an aisle seat? Yeah, and what's the thought process there? Rafat (28:11.333) Let's do it, yes. Rafat (28:15.794) I'll see. just I'm getting older and I need to go pee. That's a simple thought process. Brian Jewell (28:22.638) You and me both, buddy. found myself, I was on a three hour flight the other day and I found myself in the bathroom twice in three hours. That's right. That's right. What's one thing in your carry on you would not travel without? Rafat (28:30.981) Yeah, you gotta do what you gotta do, yeah. Rafat (28:37.857) the thing that I'm having tea. So I'm Indian. So I have the chai, what they call. And so I carry my own tea bags. I carry my own milk. I carry everything except hot water. I even carry like a hot water element, like the heater element. So I have my cup, everything. Brian Jewell (28:40.131) yeah? Brian Jewell (28:50.188) Ha ha ha. Brian Jewell (28:53.816) Yeah. Yeah, so you don't have to count on anybody else to get your tea right. If they can get you water. Rafat (29:00.025) Except water. Yeah, except water. they can get me water, I can boil it if I have an electric plug and then I can do everything else. Brian Jewell (29:05.58) Yeah. that's wonderful. Now, if you had a free airline pass and a week with nothing else going on, where would you go? Rafat (29:16.195) if it was short haul, I would go to Puerto Rico just because I love Puerto Rico. It's there's just so many great parts of it. It's not the beach that I'm talking about. actually the mountains and the other parts that, that I'm talking about. If it's a long haul, I would, Sukutra Island off the coast of Yemen is this Island that, is unfortunate in the news right now because of some of the challenges going on there. Brian Jewell (29:25.357) Hmm. Rafat (29:45.489) but is one of the most remote islands in the world and has the most unique flora and fauna in the world because it's so isolated. And Yemen is obviously tons of war and stuff going on, but there they were until recently fly from Abu Dhabi. There we just got canceled and they got moved to Riyadh, but that's a whole different. But Suggutra Island is where I would love to go with my son who's turning 11. So a dad and a son trip in the near future when things. Brian Jewell (29:59.642) Hmm Rafat (30:15.068) Settle down. Brian Jewell (30:15.813) Yeah, that sounds wonderful. Hope you're able to do that. My last question, what is something you have seen or done on the road that you wish you could experience again with somebody you love? Rafat (30:26.787) we did this with my wife, in 2014 or something. We went to Algeria, my wife and I, and went to the Sahara desert. And we didn't know this, but in this town, was this, what we later learned was an annual music festival of North African, Tuareg, which is the Tuareg tribes music. And it was such a surreal experience that we went with this French couple who knew a little bit of English and it's like. Brian Jewell (30:48.951) Wow. Rafat (30:56.621) locals dancing in their full like tribal garb with like electric electric guitar musicians on stage because that's the sort of the music that happens there but they play the guitar in a little different way and it was the most surreal experience that that we had and would love to do that again. Brian Jewell (31:15.322) That sounds amazing. Well, Rafat, it's been a pleasure having you. Thanks so much for joining us. Rafat (31:21.009) Thank you, Brian.