Odd, because without capitalism, there would be no (or very little) travel. Without capitalism, airlines, hotels and restaurants would probably be more utilitarian and cost more. Competition has driven down prices and, on the surface, driven up quality. or experience Capitalists push things that sell. Airlines are more likely to offer a free drink while skipping an engine inspection (this probably doesn’t happen, because what airline offers free drinks anymore?). Seriously though, it’s not enough to sit in the cheap seats now, it’s luxury box or bust. As we have moved beyond the lower price, better product end of capitalism, we are now in the lower price, crappier product and a boatload of extras phase of capitalism.
Capitalism in its purest, theoretical form should follow the ECON 101 model of pure competition. This allows everyone freedom and the ability to live the American dream or the Moroccan dream (I actually stayed in the Moroccan Dream Hostel in Fes, where the owner said he borrowed the name from the American Dream). What they don’t tell you is that a pure competition is characterized by three things, (1) very low barriers to entry into the market, (2) no one has pricing power, and (3) no one makes any money. The first simply means that anyone can set up shop and start making/selling widgets. The second means that all products are a commodity and if one producer raises their price, consumers will simply start buying from their competitor. The third is the natural result of being in a industry where anyone can join in with a minimal investment and the products are indistinguishable between vendors. Historically, there have been impediments to purely competitive markets from existing such as advertising, creating a brand, difficulty in being able to price check and location among others. The internet may be helping to lower these. It might be that the closest thing we have to this in real life is the day labor market or the unskilled labor market where there are plenty of workers and plenty of work that employers want done as cheaply as possible. Sorry for the digression.
So, purely competitive markets seldom exist in nature due to factors like those mentioned above. Because the third point is so important, tweaking the first two are important to keeping people from starving. Governments often add barriers to entry in the form of licensing requirements, zoning, restrictions on producers and selling. Producers or merchants often create the second by nice displays or signs, getting a location on a busier street, or in medina and markets in the developing world, by haranguing passers by and haggling over price.
The problem is that capitalists hate competition. Every capitalist would LOVE to be a monopoly. I am sure Sam Walton loved to go to work everyday when he was competing with Sears, Ben Franklin and KMart, but he probably loved it more as he watched those competitors fade to the background. Jeff Bezos probably has a similar feeling about watching Walmart fade.
So how does all of this effect travel? In short, just about every industry and every country has a company akin to Walmart. As competitors gain advantage and have pricing power, they grow, they merge, etc. The US is down to four major airlines, meaning we have neither low fares or good service. Europe and Asia are doing better. Their service isn’t better, but there are many more carriers and their prices are much lower. The airlines have also been very effective at eliminating the competition of rail, which is generally considered to be more environmentally friendly.
Lodging has bifurcated into to (1) chain hotels and (2) AirBnBs. There are also many hostels, guesthouses and boutique hotels are still available in places that are not the US. These often offer affordable options. Chain hotels operate throughout the world and serve to raise lodging prices while making Hanoi look and feel exactly like Atlanta. They tend to start on the higher end, like resorts and business centers and trickle down through the rest of the economy. In the US, there are very few places or market segments that a chain cannot be found. AirBnB started out as the savior to this homogeneity. It offered homeowners a way to rent out a spare room or their second home to generate some extra income. It has now morphed into a system where individuals or companies are buying and/or leasing and subletting houses and apartments to travellers everywhere. AirBnB is typically a very affordable way to travel. Many criticisms have been leveled at AirBnB including destroying the fabric of a neighborhood and creating safety issues because these properties often are not subject to the same standards as hotels. In my opinion, both of these concerns are overstated. The bigger issue is the loss of tax revenue until municipalities update their ordinances to collect hotel taxes. In the US, the Americans with Disabilities Act (ADA) could become a problem for larger operators, as these spaces are often not ADA compliant, but that’s something for an attorney to figure out.
AirBnB has brought down travel costs and in my opinion improved the quality of the experience. However, as more and more people and companies get into the business of managing multiple properties, the properties develop a ‘look’. And that look is Ikea. Ikea offers cheap furniture in a minimalist style worldwide. I have stayed in more than 30 AirBnBs on five continents, some look like an apartment that someone would like in, others look like an Ikea showroom. The problem with Ikea is that their products require assembly and are not that durable. These products are often assembled by people of not great skill and used by a lot of different people with varying levels of care. They don’t last long and are often in varying states of brokeness.
Restaurants and attractions also are becoming more and more homogenous. This is a huge problem in the US and its affecting international tourists coming to the US. People don’t want to eat at the Applebee’s next to the Target in multiple cities after a day of riding the rides at Ye Olde Amusement Park. Other countries are having similar problems. How many cities in Europe now have a Christmas market? Want to book a tour? Most tourist centers feature multiple tour companies offering the same tour. In the medina of Marrakech, shops selling souvenirs, sell largely the same souvenirs. As time goes on, destinations become increasingly homogenous. The shear number of these shops has also increased.
The pressure to buy something is also constant in larger, more tourist areas. Whether it’s food or merchandise, in tourist areas, people are constantly trying to sell you something. In airports, it’s no longer that you’re constantly walking by various shops, but you have to physically walk through the duty free shop to get to your gate at many airports.
You can pay extra to get to the fast line at airport security, for amusement park rides, for more legroom, bigger luggage. In fact, airlines are offering a plethora of additional services that used to be part of the ticket price. This allows the airlines to charge a higher fee by charging for things that used to be included in the ticket price.
So, in order to make more money, vendors are constantly pushing something extra. To me this takes away from the experience. We would probably all be better off if we were content to stand in line a little longer, pay a little more, leave people alone to browse and just to enjoy the experience of life and living. We just need to find a better way of keeping score. To paraphrase Rihanna Gunn-WRight, we don’t have a capital problem, we have a capital allocation problem.