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.
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])
- Anna expresses skepticism that Airbnb alone causes over-tourism. Rafaat and Felix highlight two key drivers:
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.
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]
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
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.
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.