Doing the Math on Southwest’s Holiday Meltdown

25.08.2023 - 14:24 / skift.com / Edward Russell / Dennis Schaal / Southwest Airlines / Rashaad Jorden / Sean Oneill / Savanthi Syth / Raymond James

Good morning from Skift. It’s Wednesday, January 4, and here’s what you need to know about the business of travel today.

Apple Podcasts | Spotify | Overcast | Google Podcasts

Southwest Airlines is picking up the pieces from its end-of-the year meltdown that saw the Dallas-based carrier cancel roughly 15,000 flights during the busy holiday season. So how much financial damage could the holiday flight fiasco inflict on Southwest? At least an estimated $500 million reduction in revenue, reports Edward Russell, editor of Airline Weekly, a Skift brand.

Savanthi Syth, an analyst at investment bank Raymond James, estimated the flight cancellations could cause roughly a 9 percentage point drop in revenue for the fourth quarter, possibly about $515 million. Russell writes Southwest’s lack of investment in technology is widely considered to be a major factor in the large number of flight cancellations.

Russell adds that the already steep revenue reduction estimates don’t include the additional cost of reimbursing disrupted customers. Southwest will likely reveal the full cost of the disruptions — including refunds, rental cars, flights, and hotels for affected travelers — before its scheduled 2022 earnings call on January 26.

Next, the European Commission is proposing increased data-sharing requirements for short-term rental providers on the continent. Airbnb would like to see the proposal amended, arguing that Google is escaping the clampdown, reports Executive Editor Dennis Schaal in this week’s Online Travel Briefing.

Airbnb said in a recent statement that Google should be subject to the data collection and sharing rules. However, Schaal writes that Google plays an indirect role in the booking process — not a direct role — by sending would-be vacation rental customers from its site to short-term rental booking platforms.

Schaal adds that Google generally doesn’t have relationships with vacation rental hosts unless they are property management companies operating short-term rentals for homeowners or apartment dwellers. So it’s unclear how relevant Google’s data would be for European authorities. Airbnb also mentioned that smaller short-term rental companies would have less onerous compliance requirements than major players in the short-term rental industry.

Finally, Sonesta, the eighth largest hotel company in the U.S., announced on Tuesday it’s expanding its portfolio as part of its strategy to create greater name recognition, reports Senior Hospitality Editor Sean O’Neill.

Sonesta is launching a new brand named Sonesta Essential, in which hotels provide a room and bed but few other amenities or services. O’Neill writes that Sonesta Essential will be a part of the crowded but profitable limited-service