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No more dockside deals

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Faw, Larissa            Larissa Faw

CRUISE line Royal Caribbean is stopping last-minute deals. Its new “price integrity policy” refuses to set lower prices for trips that might be 10, 20 or 30 days out.
According to the company, these last-minute discounts have been frustrating travelers who have paid higher prices and, ultimately, damaging its brand.
“We believe that such a policy has to be clear and explicit,” says Royal’s Richard Fain. “Only by setting firm measurable and [explicit] terms can we create the kind of credibility that’s so important to the program success.
“Vague efforts don’t provide the kind of consistency that is so important to our guests and our travel partners.”
Exam teachers
Schools test provider Pearson recently lost its biggest contract, in Texas, which still largely uses paper-based rather than digital tests.
Trying to look on the bright side, Pearson says losing the Texas business frees it up to develop the next generation of better, smarter digitally led assessments.
In the past six months, more than 24 million assessments have been taken online on its TestNav platform, up by 170 per cent from the same period last year.
State and assessment test services account for around 7 per cent of Pearson’s total annual sales and nationally it has 30 per cent of the market, only slightly less than before the USA started its education policy shift from No Child Left Behind to Common Core back in 2012.
Spent oil
Major oil-industry player Schlumberger says its North American 2015 spend will now largely be down by more than 35 per cent, driven by both pricing and activity on land.
Company executives say they do believe that the North American rig count has reached bottom but that the industry will only see a slow increase in drilling and completion activity in the second half of the year.
They say that will not make any material dent in the industry’s massive overcapacity, which means little to no increase in pricing levels and, hence, the market remaining challenging for the foreseeable future.
Off the lot
Car seller Group 1 Automotive’s average used-vehicle selling price increased by $99 to $21,702 during the second quarter, when the company sold more than 31,000 second-hand units.
During the quarter, US used-vehicle inventories stood at roughly 13,800 units, which equates to a 32-day supply. During the second quarter of 2014, the average was 36 days.
On time
According to Alaska Airlines, 88.2 per cent of its flights arrived on time and it cancelled only 0.5 per cent of its flights during the second quarter.
The airline recently launched new services from Seattle to Milwaukee and Oklahoma City and from Portland to St Louis and is to provide new services this fall to JFK, Raleigh, Charleston, Nashville and Costa Rica.
Digging for oil
Fuels major ConocoPhillips’ second-quarter gas and oil production averaged the equivalent of 556,000 barrels of oil per day in the lower 48 states. That’s a 3 per cent increase from the same period last year, including a 9 per cent increase in crude oil production.
The company is now running 13 rigs, with six in the Eagle Ford shale field, four in the Bakken and three in the Permian. That’s down from 32 rigs at the end of 2014 but the company believes it to be the right pace of activity in the current environment.
Executives say they will reassess the activity level later in the year, taking into consideration market conditions, pilot test information and the oil-price outlook.
Blunt talk
American companies typically like to avoid controversy or blunt talk, but European companies are a lot more frank when discussing their finances. Air France-KLM, for instance, says its Brazil market is definitely not recovering and the airline sees no sign of improvement.
Travel between Japan and Europe is also disastrous but the good news is that the impact of Africa’s ebola epidemic is fading and in June it was difficult to find any track of travel disruptions linked to the outbreak.
Going wild
Thirty-seven or 38 per cent of outfitter Cabela’s sales are in general outdoor categories, such as camping, fishing, power sports and home and gifts. Power sports aren’t selling as strongly.
Guns and ammo continue to do well, particularly because gun sales typically skyrocket during election season. “And, if it does, it’s a good thing for our business,” says Cabela’s Thomas Millner.
Tourist travels
Executives at Pebblebrook Hotels say the cities where it receives most visitors are Seattle, Philadelphia, Washington DC, Boston, Portland and San Diego.
The weaker performing markets for its hotels include west Los Angeles, Miami, San Francisco and New York City.
Shopping centers
Mall developer Simon Property Group says it is out of the big-deal business. No more mega-malls.
That said, four retailer categories are continually opening up in malls – international retailers such as H&M, online retailers such as Blue Nile and Bauble Bar that are looking for an offline presence, new bricks-and-mortar retailers such as Mont Blanc, Frye Boots, Jo Malone’s and Suitsupply and existing retailers looking to grow through brand extension.
In the fourth category, Dick’s Sporting Goods has just announced that it has a women’s specialty concept, Chelsea Collective, coming this fall, while L Brands is rolling out White Barn Candle.                             Housing tiers                                                                                                                                               Homes builder DR Horton says houses built under its Express brand, which is targeted at the true entry-level buyer, are being offered in 44 markets and 14 states, with the significant majority of its sales and closings to date coming from Texas, Florida and the Carolinas. During the most recent quarter, Express accounted for 19 per cent of Horton homes sold, 16 per cent of closings and 10 per cent of the company’s home sales revenue. The average closing price for an Express Home was $188,000.

Rain delay no problem for CC
TEXAS’ record spring rainfall negatively affected golf income at Dallas-based ClubCorp and dampened its à la carte food-and-beverage business, even though it recorded record revenues for the second quarter.
“I saw a statistic the other day that the rainfall in Dallas-Fort Worth was a 115-year high so, when people hear it rained in Texas in April and May, they just don’t understand that, in May, it rained 22 days out of the month,” says the company’s CEO, Eric Affeldt.
“With that said, and this again comes back to why we love the private club and membership business model, if you’re in the daily fee golf business in Texas right now, your year is effectively over. You will not make up enough rounds and enough revenues to make your budget for the balance of the year.”

Larissa Faw covers business trends for Forbes, The Motley Fool and other financial websites. She can be contacted at larissafaw@gmail.com.

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