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U.S. travel firms flex marketing muscle to lure travelers seeking sun and sand

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© Reuters. FILE PHOTO: Travelers wearing protective face masks to prevent the spread of the coronavirus disease (COVID-19) reclaim their luggage at the airport in Denver, Colorado, U.S., November 24, 2020. REUTERS/Kevin Mohatt

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By Nilanjana Basu and Aishwarya Nair

(Reuters) – U.S. travel booking firms are spending heavily on marketing to get more people to book flights and accommodation on their apps and websites as they look to make the most of a post-pandemic boom in tourism during the upcoming summer season.

After becoming one of the biggest victims of the health crisis, companies including Airbnb Inc, Booking Holdings (NASDAQ:BKNG) Inc, Expedia (NASDAQ:EXPE) Group Inc and Tripadvisor Inc have quickly turned a corner due to unprecedented demand for travel from pandemic-weary Americans.

About six in 10 Americans have made plans to do at least one summer trip this year, according to monthly data from non-profit firm U.S. Travel Association released in April.

“This could be the biggest summer of travel in our lifetime and the last thing anyone would want to do is miss out,” Bernstein analyst Richard Clarke told Reuters.

The U.S. travel industry is expected to spend 14.2%, or about $4 billion, of their marketing budget this year for digital advertising, according to market research firm Insider Intelligence.

Although the boost in spending is expected to create a dent in profits in the short-term, benefits from the effort may far outweigh costs in the coming years, as travel demand is only set to soar.

GRAPHIC: Revenue set to jump from travel demand https://graphics.reuters.com/USA-TRAVEL/SUMMER/gkplgkrgavb/chart.png

“Customers are ready to pay premium prices for bookings. There’s been a lot of savings over the last two years … so even with inflation, there’s enough customers that will pay higher prices just to get some travel in,” HotelPlanner Chief Executive Tim Hentschel told Reuters.

For example, ticket prices in March for U.S. domestic flights were 15% higher month-on-month, according to Adobe (NASDAQ:ADBE) Digital Economy Index, but that rise has not hit demand for flying, suggesting Americans are shrugging off the impact of surging inflation at least for now.

RIDING A BOOM

Travel firms are going all out to woo vacationers and are taking all possible measures from sprucing up their websites to offering innovative services.

Earlier this month, Airbnb finance chief Dave Stephenson said the company was increasing its “marketing dollars”, though it would stay relatively consistent as a percentage of revenue.

On Wednesday, the San Francisco-based company revamped its app and website to allow travelers to split their holidays between two properties and book homes by browsing through an extensive list of categories without the need of entering a destination.

Meanwhile, Booking said it expects marketing spend in the second quarter to form a slightly bigger percentage of its gross bookings versus pre-pandemic levels whereas rival Expedia expects to “spend into the (travel) recovery”.

Marketing and advertising costs form the bulk of the overall expenses at most travel companies, which have to look for new and innovative ways to keep people interested in their products.

Booking’s marketing expenses accounted for about 46% of its total operating expenses in the first quarter, while Expedia’s selling and marketing spend was nearly 60% of costs and expenses.

GRAPHIC: Soaring expenses https://graphics.reuters.com/USA-TRAVEL/SUMMER/lbvgnykbjpq/chart.png

“We think that this year, in a recovering travel marketplace, there’s potentially once in a generation opportunity to really lean into both marketing and merchandising,” Booking Chief Financial Officer David Goulden said earlier this month.

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Tata Steel says India export tax could alter output targets

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© Reuters. FILE PHOTO: A company logo is seen outside the Tata steelworks near Rotherham in Britain, March 30, 2016. REUTERS/Phil Noble

By Aditya Kalra

DAVOS, Switzerland (Reuters) – India’s Tata Steel is concerned New Delhi’s sudden decision to impose an export tax on some steel products could force it to review its production targets, if the levy remains in place for a long time, its CEO told Reuters on Tuesday.

India imposed an export tax of 15% on some steel products over the weekend, at a time steelmakers are looking to make up for tepid local demand by increasing market share in Europe, where the Ukraine conflict has hit supplies.

The taxes were part of a series of measures India has taken to rein in retail inflation, which has hit eight-year highs. But India’s top steelmakers body has warned the new duty will “adversely impact” mills that have been aiming to boost exports and widen global market share.

T. V. Narendran, chief executive of India’s biggest steelmaker by revenue, said that while Tata Steel understood the inflationary concerns, such measures can hit the steel industry over the longer term.

Tata Steel has plans to double its capacity from around 20 million tonnes per annum (mtpa) to 40 mtpa in India, but Narendran said it had baked in an assumption that 10-15% of that would be exported.

“If there is a long-term direction that exports of steel will be discouraged, then we’ll have to take a call – then you will only build as much capacity as you need for the domestic market,” Narendran told Reuters in an interview at the World Economic Forum in the Swiss Alpine resort of Davos.

“Whether we need to be at 40 million or 35 million, we will decide … In the medium-to-long term, India should encourage exports,” he added.

As part of industry delegations, Tata Steel will hold talks with the government to “find a common ground” which addresses New Delhi’s concerns as well as the industry’s, Narendran added.

Tata Steel also has operations in Europe, where it says it is one of the largest steel producers after buying Anglo-Dutch Corus Group for 6.2 billion pounds in 2007, but Narendran said India was its best performing business in terms of profitability.

“Our growth ambitions will be fulfilled best in India.”

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Denmark stocks lower at close of trade; OMX Copenhagen 20 down 0.76%

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Investing.com – Denmark stocks were lower after the close on Tuesday, as losses in the Personal & Household Goods, Healthcare and Software & Computer Services sectors led shares lower.

At the close in Copenhagen, the OMX Copenhagen 20 fell 0.76%.

The best performers of the session on the OMX Copenhagen 20 were GN Store Nord (CSE:GN), which rose 11.15% or 25.90 points to trade at 258.10 at the close. Meanwhile, Vestas Wind Systems A/S (CSE:VWS) added 3.71% or 6.08 points to end at 170.20 and Danske Bank A/S (CSE:DANSKE) was up 0.45% or 0.50 points to 111.30 in late trade.

The worst performers of the session were Ambu A/S (CSE:AMBUb), which fell 6.29% or 5.92 points to trade at 88.20 at the close. Pandora A/S (CSE:PNDORA) declined 3.90% or 20.20 points to end at 497.20 and Coloplast A/S (CSE:COLOb) was down 3.63% or 30.00 points to 796.60.

Falling stocks outnumbered advancing ones on the Copenhagen Stock Exchange by 103 to 46 and 15 ended unchanged.

Shares in Pandora A/S (CSE:PNDORA) fell to 52-week lows; down 3.90% or 20.20 to 497.20. Shares in Coloplast A/S (CSE:COLOb) fell to 52-week lows; falling 3.63% or 30.00 to 796.60.

Crude oil for July delivery was down 0.49% or 0.54 to $109.75 a barrel. Elsewhere in commodities trading, Brent oil for delivery in August fell 0.08% or 0.09 to hit $110.69 a barrel, while the June Gold Futures contract rose 1.01% or 18.59 to trade at $1,866.39 a troy ounce.

USD/DKK was down 0.41% to 6.93, while EUR/DKK unchanged 0.02% to 7.44.

The US Dollar Index Futures was down 0.31% at 101.79.

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Ralph Lauren expects margins to grow on resilient luxury demand

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© Reuters. FILE PHOTO: A man walks past Ralph Lauren Corp.’s flagship Polo store on Fifth Avenue in New York City, U.S., April 4, 2017. REUTERS/Brendan McDermid

By Praveen Paramasivam

(Reuters) -Ralph Lauren Corp on Tuesday forecast improved full-year margins as demand for its luxury apparel in its biggest markets in North America and Europe stays strong at a time when inflation is denting profits at major U.S. retailers.

The spending power of higher-income customers has stayed unaffected by higher prices of essentials, and they are now splurging on fashion as they return to old routines and venture out more.

“Our consumers are resilient. They’re at the higher end of income demographics, and they’ve proven through COVID that their desire for the brand has increased,” Chief Financial Officer Jane Nielsen said on an earnings call.

The 55-year-old brand also forecast revenue to increase in high single digits, versus Wall Street’s expectation of a 3.6% increase, according to Refinitiv IBES.

Ralph Lauren (NYSE:RL), which said it could raise prices further to counter increased freight and product costs, forecast fiscal 2023 gross margin to increase 30 to 50 basis points on a comparable, constant currency basis.

Major discount chains, meanwhile, have seen their profits dwindle. Walmart (NYSE:WMT) Inc, Target Corp (NYSE:TGT) and Kohl’s Corp (NYSE:KSS) have reduced their earnings expectations.

Ralph Lauren’s shares fell marginally amid broader declines, after the company also forecast gross margin to be down for the first half of fiscal 2023 due to higher expenses and a strong dollar.

The brand said its forecasts take into account a potentially softer European consumer sentiment and the impact of Chinese lockdowns. But it expects its China business to grow this year.

For Ralph Lauren, which increased its quarterly dividend by 9%, fourth-quarter net revenue rose 18% to $1.52 billion, beating estimates of $1.46 billion. Adjusted per-share profit was 49 cents, above estimates of 36 cents.

“We think the company could hold up well amid the current macro uncertainty (benefiting from return-to-office, return-to-events, etc.),” Wedbush analyst Tom Nikic said.

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