The Travel Edition

Summary

Slate Money: The Travel Edition – December 30, 2017

Episode Overview

In this edition of Slate Money, host Felix Salmon is joined by co-hosts Anna Shymanski and Jordan Weissmann, along with special guest Rafaat Ali, the CEO and founder of Skift, a major travel industry publication. The episode dives into the modern travel landscape—focusing on Airbnb, over-tourism, the rise of low-cost airlines, the explosive growth of Chinese tourism, and the economic impact of travel on local and global scales. Ali provides insider perspective on how trends, technology, and globalization are transforming the experience and industry of travel.

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Key Discussion Points & Insights

1. Airbnb and Its Impact on Cities

• Gentrification & Transient Populations ([02:58])
  • Felix opens the discussion on whether Airbnb is turning residential neighborhoods into transient tourist zones.
  • Rafaat Ali observes in areas like Alphabet City, NYC, “you’ll find multiple people standing at the corner of streets with luggage back there. So it's a result of, obviously, Airbnb.”
  • Despite local opposition—sometimes leading to riots, as in Barcelona—Ali argues that the economic benefits are significant and that often, “minority shouting the loudest always gets the most amount of attention.” ([06:05])
• Local Spending and Community Effects ([05:13])
  • Jordan prompts: are Airbnb guests more likely to patronize small local businesses?
  • Ali: “Airbnb has a lot of economic impact studies… local communities in Brooklyn or different parts of Queens…” benefit from guests spending outside traditional tourist centers.
• Quality of Life and Gentrification ([07:23])
  • Ali points out real concerns, especially in cities with severe housing shortages: “It has the most concentration of Airbnb in the world. It just happens to be very small, but such that nobody can actually buy anything in Reykjavik, downtown or the city. They're moving out."

2. Over-Tourism and Demand Drivers

• Supply and Demand Dynamics ([09:07])
  • Anna expresses skepticism that Airbnb alone causes over-tourism. Rafaat and Felix highlight two key drivers:
    • Airbnb and short-term rentals make travel easier for families.
    • The real revolution has been the advent of low-cost airlines, making travel accessible to entirely new demographics worldwide.
  • Anna: “...you now have people in India and China who have low cost airfares to get wherever they want in Europe. And so that's what's going to be driving this." ([09:52])

3. Urban Regeneration and Tourist Destinations

• City Planning for Attracting Tourists ([10:31])
  • Rafaat discusses Seoul’s urban regeneration inspired by the High Line in NYC: “They're doing an urban regeneration… taking the High Line model and putting it to scale”. The goal: make the city more attractive to both residents and global tourists.

4. Travel Industry Tensions: Locals vs. Tourists

• Balancing Acts ([11:50], [12:33])
  • Cities want tourism revenue (taxes, jobs), but locals sometimes resent the influx.
  • Rafaat: “Historically, travel has not considered as part of its remit… that locals' lives are getting better. Which never used to be the case.”
  • Efforts are increasing to align economic development and tourism with local quality of life.

5. Low-Cost Airlines: Transforming Travel

• European & American Models ([13:52]-[16:36])
  • In Europe, new carriers like EasyJet and Ryanair sparked a “race to the bottom” on fares.
  • In the US, major airlines copy low-cost models by “unbundling” fares—basic economy with many add-on fees—but don’t truly match European price drops.
  • Anna: “...when I look at them, it looks more like they're charging similar to what the old like lowest tier fare was, but now they're charging more for bags essentially. It's less of an actual discount..." ([16:11])
• Structural Barriers in the U.S. ([17:17]-[18:27])
  • Rafaat cites locked-up airport landing slots, lack of underutilized airports near cities, and the predominance of business travel as barriers to true low-cost carriers in the US.
• Business Travelers & Corporate Contracts ([18:27]-[20:17])
  • U.S. airlines make most of their revenue from corporate clients, who require flexibility, reliability, and service scale that low-cost airlines struggle to match.

6. The Transformative Impact of Chinese Tourism

• Parabolic Growth ([20:54])
  • Felix: “Chinese tourism numbers… all they do is just like they go parabolic.”
  • Rafaat: “150 million new tourists every year, if I'm not mistaken… this is the biggest topic in every part of travel.”
  • The key trend is “travelers within China”—the domestic travel boom—and how international destinations are pivoting to cater specifically to Chinese tourists, from language services to food options.

7. Finding "Authentic" Destinations Amidst Over-Tourism

• Hipsterdom and Hidden Spots ([23:26]-[25:52])
  • Anna laments how quickly destinations go from niche to mobbed.
  • Rafaat: “You would assume that by the time New York Times would write it, or as soon as they write it, it will get demolished… that’s not the case.” ([24:33])
  • Tips include traveling outside peak season, going just a few blocks or miles off the beaten path, and considering destinations not yet served by low-cost airlines.

8. Big Global Companies vs. Local Economic Impact

• Who Gets the Money? ([28:21]-[31:13])
  • Felix questions how much of tourist spending actually stays local versus going to conglomerates like Google, Expedia, or Priceline.
  • Rafaat: “In Google and Priceline's case, keep in mind, they're only taking a cut on top of the actual thing because they're not selling any travel products themselves… So that is a minority of the total revenue pie.”
  • Internet platforms have made it easier for small, local operators and guides to participate in the tourism market.

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Notable Quotes & Memorable Moments

• On Over-tourism and Airbnb:
  "If you're listening to this in an airport, my commiserations. If you're listening to this on a plane… I hope that we will be able to transport you out into a lovely world of not having to… worry about that large person sitting next to you."
  — Felix Salmon, [01:08]

• On Gentrification:
  "So certainly that... That would be the biggest issue. Versus. Are there enough tourists or not? So I think that Airbnb certainly contributes to it in a place like Boston… apartments nobody's going to be able to buy."
  — Rafaat Ali, [07:59]

• On the Real Driver of Travel Growth:
  "Low cost airlines ate the world as well… [They] opened up a huge swaths of society to actually travel for the first time in their lives."
  — Rafaat Ali, [09:28]

• On Urban Regeneration:
  "Highline is probably the most copied urban innovation anywhere in the world."
  — Rafaat Ali, [11:20]

• On Balancing Travelers’ Needs and Local Life:
  "I think that the cities would tell you one thing and some of the locals will tell you another thing. What is happening 100% now is that... the tourism [boards] and the economic development boards… are now working together."
  — Rafaat Ali, [12:33]

• On the Illusion of Scarcity and Cool:
  "You would assume that by the time New York Times would write it... it will get demolished. I will tell you that that's not the case."
  — Rafaat Ali, [24:33]

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Timestamps for Major Segments

• 00:14 – Introductions; travel industry overview; introducing guest Rafaat Ali
• 02:58 – Airbnb’s effects on city neighborhoods and gentrification
• 05:13 – Does Airbnb help local businesses?
• 06:37 – Community sentiment vs. headlines on tourism
• 09:07 – Over-tourism: real drivers and the role of low-cost airlines
• 10:31 – Urban “regeneration” as a tourist draw (e.g., Seoul)
• 13:52 – The spread of low-cost airlines in Europe vs. U.S.
• 17:17 – Barriers to low-cost carriers in the U.S.
• 20:54 – The massive rise of Chinese tourism
• 23:26 – How to find authentic, less-touristed destinations
• 28:21 – Who really benefits? Big travel companies vs. local economies

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Flow and Tone

The conversation is lively, often humorous, and candid. Felix, Anna, and Jordan challenge each other's assumptions, while Rafaat Ali provides the insider industry view. The tone combines practical travel advice with a healthy skepticism toward both industry hype and dystopian narratives about over-tourism.

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Summary for New Listeners

This episode offers a crash course on today's global travel industry, exploring the sharp edges and opportunities presented by platforms like Airbnb, the explosive influence of cheap flights, and the immense impact of rising Chinese tourism. It cuts through headlines to explore how tourism reshapes cities, who truly benefits economically, and how travelers can seek out authenticity even as mass travel becomes easier than ever. Rafaat Ali’s expertise adds depth and realism, providing both a traveler’s and an industry insider’s perspective.

Transcript

[Anna Shymanski]

The following podcast contains explicit language.

[Felix Salmon]

Hello, and welcome to the travel edition of Slate Money, your guide to travel. I guess we have a very special guest on this week. I am Felix Salmon of Fusion. Anna Shymanski and Jordan Weissman, as ever, are here.

[Anna Shymanski]

Hey, guys.

[Rafaat Ali]

Hello.

[Felix Salmon]

Hello. But most importantly, we have Rafaat Ali. Hello, Rafa. You run a publication called Skift, correct? Skiff is. It's a website. It's a magazine, which I have in my hand.

[Rafaat Ali]

Yeah, we do this hot new thing called Print.

[Felix Salmon]

It's a hot new thing called Print. The COVID line on the magazine is Travel in an Age of Perm Anxiety, which I didn't even know that permanxiety was a word, but it seems right.

[Rafaat Ali]

Well, we coined it. We love coining words or whatever they're called.

[Felix Salmon]

You're always. You create the trends. So this is going to be a very special edition of Slate Money. During a time of the year that people spend altogether too much time in airports. If you're listening to this in an airport, my commiserations. If you're listening to this on a plane, which is also possible, I hope that we will be able to transport you out into a lovely world of not having to, you know, worry about that large person sitting next to you. Planes. We're going to talk about planes, we're going to talk about airlines, we're going to talk about the travel industry more generally and the way in which there's this kind of trade off between these wonderful local people who are providing wonderful, valuable services on the one hand, and these big global companies who seem to be extremely good at siphoning off all the profits on the other. But we're going to start with the one topic, which, I mean, frankly, we could spend the entire episode just talking about this one thing, but we're going to pick and choose a couple of things about Airbnb, because Airbnb is the huge story in the travel business, has been for many, many years, is a really fascinating company, and people always are finding problems with it, issues with it. Let's start with the anti gentrifiers. Is it true that Airbnb is taking lovely, cohesive community neighborhoods and turning them into. Into transient populations of tourists and people who don't really care about, like, building a community?

[Rafaat Ali]

Yeah, well, all of us live here in New York City. I mean, you know the story here. And so if you look at Alphabet City, for example, in Manhattan, chances are you'll find multiple people standing at the corner of streets with luggage back there. So it's a Result of, obviously, Airbnb. I think Alphabet City is one of the biggest concentrations of Airbnb here.

[Felix Salmon]

And that's despite the fact that it's actually illegal.

[Rafaat Ali]

Yeah, I mean, you know, where it's.

[Felix Salmon]

Legal, it's even worse.

[Rafaat Ali]

Yeah. So in many cities, especially city centers or places just off city centers where hotels typically are in the city centers, it's had an effect in cities like Paris, like New York, like Barcelona, there.

[Felix Salmon]

Were, like, literally riots in the street in Barcelona.

[Rafaat Ali]

Barcelona this year has been. I mean, I think this year in Europe, certainly the summer. This year, the summer of what we call over tourism. It's also a term we coined last year, has been the summer of over tourism in Europe, which is. The big cities have been overrun by tourists.

[Felix Salmon]

And is that Airbnb's full.

[Rafaat Ali]

Airbnb. Here's what Airbnb would argue that they allow people to be dispersed outside the main areas, because that's where the hotels typically are. The people stay. So people are outside in different communities in the city. You could also argue, and probably the numbers may bear this, which is that more people are. Well, one. More people are traveling. That's an objective fact in general, around the world. And hotel occupancy rates are holding up very well everywhere, pretty much, which means that obviously there are new people coming into the market that are using Airbnb, which means that there are more people in a city. So, you know, if you. If you take that to the logical extreme, of course they're having an effect.

[Jordan Weissman]

Also, I'm curious, do people. Do they know if people who use Airbnb are more likely to use other, like, local services in the city? So then they may actually leave more money in the city than if you're staying at some Marriott or something?

[Rafaat Ali]

Yeah, I mean, I think that that's a fair. I think that's. That would be. Yeah, I think that that would be true. Airbnb has a lot of economic impact studies out there that they fund that essentially says that, which is that the local communities in Brooklyn or different parts of Queens. I live in Queens, Hostoria. So the local places in Astoria. But then, you know, are you going to Starbucks in Astoria? Are you going to a local coffee shop in Astoria?

[Felix Salmon]

I guess the question is, basically, is this a good thing or a bad thing? Right now, we seem to be hearing from a lot of local populations in Barcelona and around the world saying this is a bad thing. For all that you guys might be bringing in lots of money and spending it in local coffee shops. Those of us in Reykjavik Or Barcelona, we don't actually want your money. We want you out of here and we want our community back.

[Rafaat Ali]

I think that. So, as you very well know, minority shouting the loudest always gets the most amount of attention. In this case, I would say that the majority. Net. Net sentiment about Airbnb or tourists in a city long term, either people don't give a shit or the local communities or the businesses do care about, obviously, these tourists being there. So I think that's a general. I would say that would be the general.

[Felix Salmon]

So. So, I mean, so local businesses want. Love making more money. Yeah. There's a few loud opponents. And you're saying the general. If you actually look at the population as a whole, that they maybe aren't so opposed, as the headlines might suggest.

[Rafaat Ali]

Yeah, I would say that that's a general. And then there. There are exceptions, like Barcelona, like Venice, that are there. I mean, New York City, are we. Do we, like, we live here? As I said, take your own sentiment. Do we be honest or. I'm in the travel industry, so I do care. But if you're not thinking about travel the whole time, beyond a certain point, if you're not going to Times Square, do you give a shit?

[Anna Shymanski]

Well, I have a question. So to Barcelona. Are people there worried about gentrification? That people are being pushed out of their neighborhoods by people who are.

[Rafaat Ali]

So that's a real thing. Let's talk about the quality of life issue.

[Anna Shymanski]

Yeah.

[Rafaat Ali]

So the quality of life issue and gentrification is a real fear. Separate. Which. Not separate, but certainly related to the tourist issue. This is true in cities like Barcelona, in New York City, in Reykjavik, a city where people. It has the most concentration of Airbnb in the world. It just happens to be very small, but such that nobody can actually buy anything in Reykjavik, downtown or the city. They're moving out. So certainly that. That would be the biggest issue.

[Felix Salmon]

Yeah.

[Rafaat Ali]

Versus. Versus. Are there enough tourists or not? So I think that Airbnb certainly contributes to it in a place like Boston. One of my very good friends, she owns a bunch of Airbnbs around Cambridge. Sorry, Around Harvard. And I'm guessing those. Those are apartments nobody's going to be able to buy. Right. So.

[Felix Salmon]

Because she owns them and she's not selling them.

[Rafaat Ali]

She's not. Well, she owns a bunch of it, essentially, to Airbnb it.

[Felix Salmon]

Right.

[Rafaat Ali]

And to make tons of money off it. So. Yes, of course. I mean, that's driving up the prices in many ways.

[Anna Shymanski]

So. Because the thing about over tourism that I guess confuses me A little bit is that typically people get angry when a neighborhood just gets reduced to a tourist destination, when it's just totally overrun and all of a sudden the things that were cater to locals disappear. It seems like Airbnb, if you're going to, almost is a fix for that in some ways. Because if you're going to have more people traveling to these cities regardless, you would have to accommodate them somehow and you would have more hotels opening up. You would have the central tourist district.

[Felix Salmon]

The supply creates the demand. The reason why travel is up is precisely because it's affordable a lot more. You can, you can do it, especially now if you're traveling with kids. That was always very hard with hotels. Now that you can find, find Airbnbs and you can cook for them and it's much easier to travel with kids. That increases demand in an, in an artificial way.

[Rafaat Ali]

So that's demand is not just Airbnb. I think demand is low cost. So the biggest effect on demand and travel worldwide, like, you know, Mark, Mark Anderson said software ate the world, right? Whatever that phrase was. You know, guess what? Low cost airlines ate the world as well. So because the, they opened up a huge swaths of society to actually travel for the first time in their lives.

[Anna Shymanski]

So say. To me, it seems I'm a little skeptical of the idea that Airbnb is really driving this. It would be more like, I mean, my naive guess is you now have people in India and China who have low cost airfares to get wherever they want in Europe. And so that's what's going to be.

[Rafaat Ali]

Driving this in Asia. Like Southeast Asia's story is the story. If you can, you know, look for the rise of Air Asia and the rise of Southeast Asia. It's sort of literally parallel to each other.

[Felix Salmon]

I was just looking at the tourist numbers in Seoul, which I never, I have to admit, really consider a tourist destination. But the, but the amount of tourists in Seoul is absolutely astonishing.

[Rafaat Ali]

So it's funny. So last week I was in Malaysia for a conference about urban tourism. This was the whole conference I was in. And I'm still, five days later, I'm still jet lagged, which is a whole different story. The guy who heads tourism for Seoul was there. They're actually doing the same conference, which is in Malaysia next year in Seoul. So he gave a overview of why that's happening. So the story there is they're doing an urban regeneration of the city, which is essentially taking the high line model and putting it to scale, which is all these unused ports or this or that and making them into tourist destinations. And we can talk about that. But Highline is probably the most copied urban innovation anywhere in the world.

[Felix Salmon]

And the Highline was itself a copy of a park in Paris.

[Rafaat Ali]

Is that what it was?

[Anna Shymanski]

I didn't know, but we made it famous.

[Rafaat Ali]

So that's a big part of what's driving there, which is that they're trying to get the. One of the big things they've done is to encourage travel within the locals, meaning as a city, by making the city a lot better for people to spend time in. Not just in Seoul, but also the other other Koreans. And then that has led to a larger influx of tourists from around the world.

[Felix Salmon]

And this is. And this is presumably. Is this something that the broad population of Seoul likes and wants is more.

[Rafaat Ali]

I don't know that level of detail.

[Felix Salmon]

To be but I mean, it's weird. Like you find this a lot is local tourist agencies and cities spending a lot of money and effort trying to create a tourist friendly city. Which is the flip side of, you know, what we were talking about earlier, which is people saying we want fewer tourists, is that there seems to be a bunch of places around the world, even in very rich countries like Korea, saying no, we want more tourists is like, can those two coexist? There does seem to be a tension there.

[Rafaat Ali]

Yeah. I do think that net net travel has a. You know, this is obviously this is our world. So we, we think that travel has a beneficial effect on the world in so many ways. I think cities biggest. One of the biggest sources of revenue is the taxes that they get from. From the tourists in so many different cities. So I think that the cities would tell you one thing and some of the locals will tell you another thing. What is happening 100% now is that historically the tourism organizations, the marketing people and the tourism in different cities and the economic development boards which didn't used to interact ever are now working together in many cities. New York is a very good example of it where they're trying to say how do we make sure that the locals are satisfied as we do promote the tourists. It's certainly the intent is there. There are early efforts there in a lot of different cities around the world. So that's a new change that has happened that historically travel has not considered as part of its remit, which is we better make sure that the locals lives are getting better. Which never used to be the case.

[Felix Salmon]

But let's pick up this question of low cost airlines. These have transformed travel, you tell us. And certainly as A European where we've had them in Europe longer than anyone else, that's unarguable. So I guess a couple questions. One is like, when is this going to reach America?

[Rafaat Ali]

So it has reached America in very different ways than you would imagine. So it's essentially the mainline airlines that are introducing what they call basic economy fares, which is really, really, really low cost. I think there was a story we did yesterday maybe, or was it day before this week that Delta is now marketing basic economy fares to Europe. Really cheap fares. But you're going to pay $60 for a bag. This is the first time they're doing it internationally because internationally at least you're able to carry one bag, whatever, whatever thing you buy. So it's the first time. So the, the answer is I don't think new startup low cost airlines will come into us anytime soon. The, the cost and the structure is just too expensive. But these mainline airlines realize that they have competition obviously here from Southwest, JetBlue, Allegiance, some of these other airlines, local airlines as well, low cost airlines. So they're introducing this basic economy fare. So that's the way that is happening in us. In Europe is a different story. It's the low cost airlines themselves that have eaten up the market. But BA is on record saying they're going to do a race to the bottom. They're going to cut the fares, they're going to cut the services, they're going to compete head on against every other low cost. EasyJet, Ryanair. So in many ways Air France has launched a millennial focused low cost airline.

[Anna Shymanski]

Which total, of course they have serves avocado toast costs a lot. The two things you're describing right there sound so different to me that it seems even hard to compare them. Which is in Europe you have a bunch of cut rate or not cut. Well, yeah, cut rate airlines that are.

[Rafaat Ali]

That have been there for a long time.

[Anna Shymanski]

Exactly. But they compete against the big guys and they have brought down the prices sort of naturally. Whereas in the US with these basic economy fares, you know, when I look at them, it looks more like they're charging similar to what the old like lowest tier fare was, but now they're charging more for bags essentially. It's just, it's less of an actual discount than it is a way to eke out a little bit more. More.

[Rafaat Ali]

I think that, I think that's probably a fair assessment. Yes.

[Anna Shymanski]

So if he's.

[Felix Salmon]

Yeah.

[Rafaat Ali]

So how to, how to get more. You know, it's the unbundling of, you know, cable that happened is happening in the airline.

[Felix Salmon]

See what happened with, with JetBlue, which I think when it started could credibly have been called something vaguely akin to a low cost airline, although with better service. And now, I mean, whatever else you can say about it, it's not low cost. It costs the same as everyone else.

[Anna Shymanski]

It's got a better app.

[Rafaat Ali]

It does have a better. I mean as a user, I would say it has. There are just better people that are servicing it. It looks like they're just more customer friendly in so many different ways.

[Jordan Weissman]

And what would you say are the biggest barriers to having those truly low cost carriers in the United States?

[Rafaat Ali]

So many different things. Airport landing slots are locked up by pretty much all the big airlines that are there. Norwegian is coming in on an international basis and trying to do what, as you probably know, trying to do with secondary airports here.

[Anna Shymanski]

Yeah.

[Felix Salmon]

From Stuart to Edinburgh, like a one.

[Rafaat Ali]

And a half hour, two hour bus ride from here to get to Edinburgh, et cetera. So just the structural issues in US are really, really hard in terms of airports just not being there for. Or certainly not in big hubs like.

[Felix Salmon]

Yeah. In the big cities. One of the interesting things about Europe is it's just a much denser continent and there were a lot of underutilized airports which were still quite close to a lot of people. And that's less common in the US There are an abundance of underutilized airports in the US but they're just not near major population centers.

[Rafaat Ali]

And also keep in mind, so in US the airlines, airlines, the way they make money is not taking money from us occasional travelers, it's the business travelers and companies that have contracts with these giant companies that have contracts with Delta, United, American, et cetera, et cetera. So as long as they're being serviced, US transient travelers are a tiny part of their business compared to the larger business that they have. So can, and this is the challenge JetBlue has always had, which is they were never a business airline. So can they eke out a living by just those occasional travelers at scale? And they have had to over the last, at least I would say three to five years, have now gone heavy into trying to attract business travelers. They launched Mint, which is their first business class product, etc. For transcontinent flights. And so that's the challenge in the US which is can you eke out a living outside of the business travelers? And in general, corporates try to stay away, have historically tried to stay away from low cost airlines.

[Felix Salmon]

And that's why, why have corporates stayed.

[Rafaat Ali]

Away from low cost airlines because all kinds of things. There's this phrase called duty of care, which is a very corporate travel phase, which is are you able to provide enough services at like, it's like an sla. Do you have. Are you providing X number of services to the people, whether you're staying at hotels or taking these airlines? Airlines may not have enough bulk capacity, these low cost airlines, to work with a large company like for instance, Accenture, which needs millions of seats in a year. So there's that. Those are some of the issues historically that have been there. And you would assume business travelers want higher class of service or at least used to. Now, obviously things are changing.

[Jordan Weissman]

Also just a level of certainty and also the ability to change flights and.

[Rafaat Ali]

Also have enough roots because like if, if it's Accenture, for example, you better have flights into every freaking place that their clients are.

[Jordan Weissman]

Accenture McKinsey, all the.

[Rafaat Ali]

Yeah. So they need to really have really wide coverage. Low cost airlines are going from point to point most of the times.

[Felix Salmon]

And because this is Slate Money and we can never have an episode of Slate money without talking about the transformative effect of China. What's the transformative effect? I've been looking at the Chinese tourism numbers and all they do is just like they go parabolic.

[Rafaat Ali]

Yeah. I mean at this point, I think there are close to 150 million new tourists every year, if I'm not mistaken. But this is the biggest topic in every part of travel, whether it's airlines, whether it's hotels, Airbnb. Airbnb's co founder, Nathan is spending now the majority of his time making sure China works for them as a business. And so the action is not so much international travelers going to China, that's actually not a growth area for them. The number of travelers going to China is actually falling. It's the external travelers and travelers within China, the local Chinese within China. So there's just a huge amount of activity everywhere. Australia. The other day, the CEO of Tourism Australia was in our office and this is his number one job is to make sure China is happy or Chinese travelers are happy. That's the only thing he cares for.

[Felix Salmon]

And that's the question is that qualitatively different as the travel industry starts pivoting to make sure that Chinese travelers are happy, whether it's airlines or anyone else, is that going to. Are they going to do things which they haven't done before?

[Rafaat Ali]

Yeah, I think that's. So there's some what you may call customer experience changes because it's a very different culture. So some of these are cliches, but let's run with them. Chinese travelers typically travel in groups, large groups. They are very attuned to shopping, which is what they want to do in many different locations. They want to go typically want to have access to food that they. From their own cultures. So hotels have. And they need English, Chinese to English language translations etc, so that people can understand them. So a lot of hotels have, have programs around that. All the big hotels at this point, I mean, this is 2018. Almost everybody has been doing that for the last five to seven to 10. Airlines have obviously done that quite a bit as well. Airbnb has done that. So, yeah, this is true for pretty much every place in the world.

[Felix Salmon]

Okay, so we're gonna spend the final segment here just talking about travel. Yeah.

[Rafaat Ali]

As a traveler.

[Felix Salmon]

As a traveler, there's. Jordan has a question about. Has a selfish question about.

[Anna Shymanski]

Extremely selfish.

[Felix Salmon]

He wants to maximize his hipster dome.

[Anna Shymanski]

Yes. So. Well, okay, so as you know, I like to try to travel every once in a while, but it feels like places that were cool and not mobbed maybe one year ago very rapidly are suddenly swarmed with tourists. And this is sort of like if.

[Rafaat Ali]

You go to the other side is also true, by the way, if you want to go to Syria, it's completely open at this point.

[Anna Shymanski]

Thank you for the hot tips. Booking. Booking as we speak, for Damascus. So. So my question is, how do you figure out before there's a New York Times 36 Hours article that's going to ruin it for everyone where is actually an interesting place to go that will not have just been totally demolished by a crush of.

[Rafaat Ali]

Well, here's the other thing. You would assume that by the, by the time New York Times would write it, or as soon as they write it, it will get demolished.

[Anna Shymanski]

Yeah.

[Rafaat Ali]

I will tell you that that's not the case. If you, if you had taken the Cuba example, everybody thought Cuba was going to be overrun by tourists by now. It's not a secret by any stretch of imagination. Guess what? There are not that many Americans going. Every airline has cut the number of flights. And in Cuba, if you go outside literally four blocks of Havana, you will be able to find pretty much no tourists.

[Anna Shymanski]

But that's all. Isn't Cuba a weird example, though? Because they have such a lack of infrastructure and people are, when they get to Havana, are really shocked by what actually exists there. They're used to the photos, everything looks very picturesque. And then they find half a city that looks like it's been bombed.

[Rafaat Ali]

Well, let's take Iceland. So that's a better example. Iceland, by the way the airport is structured. Reykjavik, one corner of the country. There's only one international gateway to the country which they're trying to change, certainly Reykjavik. And anywhere south, somehow people only drive south. Turns out south is completely overrun. You go north, literally two hours, three hours, it's empty still.

[Anna Shymanski]

So.

[Rafaat Ali]

This is a thing I've learned as part of just being a traveler. And now the travel industry, even overrun destinations literally are blocks. And just.

[Felix Salmon]

And I.

[Jordan Weissman]

Isn't it also certain weeks and certain months, if you go outside of those times as well?

[Rafaat Ali]

I mean, Croatia as an example. Croatia is, I mean in summer is impossible, but anytime else is empty. So if you want to do a honeymoon in Croatia, which a lot of people do.

[Felix Salmon]

Just don't go in August. And the other thing which I would add is that one, you're absolutely right that it's not that hard to go a little bit off the beaten track. But two, it also depends on where you go, because just had a lovely little trip to Charleston and Charleston is totally covered in tourists. It is very much a tourist city, but it's none the worse for it. And there are places where tourists make a city worse and you're like, oh my God, I can't believe I'm just surrounded by these tourists. And actually to a certain level I can see somewhere like Barcelona is like that. And then there's places like Charleston where tourists really don't make it worse, or Santiago de Compostela or places which manage to really celebrate and embrace the tourism. And it's fine, it's not a problem.

[Anna Shymanski]

I feel like mid sized American cities that are known for their food scenes might be a slight exception when you're talking about international travel that might be also attracting like the Australian teenagers and the Chinese tourists. It's a little bit.

[Rafaat Ali]

We talked about low cost airlines before. Anywhere where low cost airlines are not yet flying. Okay, probably a good bet.

[Jordan Weissman]

Anywhere where it's inconvenient and expensive, convenient.

[Rafaat Ali]

Yet like I was, my wife and I and our son now, by the way, we only stay at an Airbnb because I have a son now. We don't stay at hotels anymore. We went to Faroe Islands, so Faroe Islands is really hot this year. Which is the next. Iceland is what everybody's talking about. But the reality is there aren't like you literally go there and there's outside of some of the main areas, they don't really have any infrastructure to Begin with. So I do think that there's still tons and tons of places that you can find and they don't yet have a low cost airline. They're talking to different airline groups. They are very worried that they will become another Iceland. They're wary of it. It's fascinating with the struggle they're going with on this one.

[Felix Salmon]

So here's the big question which I wanted to ask you, and it applies very much to something like the Faroe Islands, is you spend a lot of time in your day job looking at the big companies which dominate a huge amount of the travel industry. Whether it's, you know, Expedia, Priceline, Hotels.com, these are, well, Google, I've heard of them.

[Rafaat Ali]

By many accounts Google is larger than Priceline and Expedia and everything. Just in terms of the travel.

[Felix Salmon]

Just Google travel. Yeah. And, and the, and the amount of money these companies make is absolutely mind boggling. They're extremely profitable. They're worth hundreds of billions of dollars if you add them all together.

[Rafaat Ali]

Yeah. Certain evaluations wise. Yeah.

[Felix Salmon]

And yet at the same time, when I'm traveling, I feel like I'm spending my money in, in like relatively local establishments. I stay in a local hotel, you know, even if I stay in a chain hotel, it's staffed up with locals. And I guess my question is, to a vague approximation, this money I'm spending, to what degree is it actually really helping the local economy and to what degree is it just going into the coffers of Google and Priceline?

[Rafaat Ali]

Well, in Google and Priceline's case, keep in mind, they're only taking a cut on top of the actual thing because they're not selling any travel products themselves that they own. It's hotels and airline tickets there that they're selling. So, so that is a minority of the total revenue pie in general, if you're, you know, would really depend on what destination there there is. In a city like Delhi, for example, a lot of international tourists are going want to stay in relatively established brands. So probably a big part of international tourist revenue is going to establish brands. This is just completely anecdotal analysis that I'm doing on the fly. In a city like New York, I would imagine outside of the business traveler that stays at a bunch of these hotels, a lot of the money is going to the local establishments as well. You would imagine that people are not coming to New York and getting Starbucks. I hope they're not.

[Felix Salmon]

Oh, they are.

[Anna Shymanski]

A lot of them are.

[Jordan Weissman]

Well, but I also think it's important to remember that when you're talking about the money that tourism brings in, you're not just talking about lodging and the dining, but yet you're talking about all the activities. Yeah, the indirect dollars that are brought in. So that money isn't necessarily going to go to a Google or a priceline that's going towards an activity.

[Rafaat Ali]

So the industry calls it like that is one part, as a huge part of it. It's a very unorganized, small business friendly sector. There are some big companies like the buses that take tourists around, but there are tons of other small, little things as well. I think Internet for whatever other things it's done is also enabled a lot of these small entrepreneurs to, to. To sell their services through all kinds of sites and companies. Like for instance, I was in, as I mentioned, Malaysia last week, kl. And in kl we did a food tour by this, on this site called with locals, which is a. Which as the name says, Sandra, is locals offering their services to take you around the city. And we did a food tour, we did a Malay local food tour and it was completely outside of the main tourist area. And this is almost, I would say, except for the commission that this site took. Everything went to the locals.

[Felix Salmon]

So I think the question I have is like, has this changed?

[Rafaat Ali]

I think as an, as a responsible traveler, I think this is the frontier in terms of if you're traveling, please try and spend money with local businesses. I think this is the next level.

[Felix Salmon]

And has the Internet made that easier than ever?

[Rafaat Ali]

I think so. I mean, in a country like Myanmar, probably not right now with all that's happening, but in a lot of other places. Yes.

[Anna Shymanski]

Like Syria.

[Rafaat Ali]

Well, it's there for anybody to research and find out. That's what I would say. It's there. The information is there. If I, as a responsible, somewhat sophisticated traveler wants to do that, there are ways to do it.

[Anna Shymanski]

Yeah.

[Rafaat Ali]

And I.

[Jordan Weissman]

So I think it's both easier for many tourists to be responsible. And I also think that tourism itself generates lots of capital investment. Tourism itself generates taxes, as you were saying, that from airport fees, hotel fees that then goes to potentially pay for roads and schools and these kind of things. So I think when we're thinking about tourism, we shouldn't necessarily just think about.

[Rafaat Ali]

Just the travelers and the hotels and the airlines and stuff. Yeah. I mean it's by many accounts the world's largest industry, which is why we do what we do.

[Felix Salmon]

Wonderful. This was amazing. Thank you very much, Rafat Ali, for coming onto Slate Money. Thank you all of you. Guys for listening to Slate Money. Keep the emails [e-mail] Many thanks to Dan Schrader and June Thomas, who somehow, between them, managed to produce this show. Go listen to Trumpcast, which is now coming out at least three times a week Monday, Wednesday and Friday, sometimes more, because there's no shortage of Trumpish news. That's Jacob Weisberg, Virginia Heffernan, Jamelle Bowie talking all things Trump. It's worth listening to, but we will talk to you next week on Late Money.