Friday's Travel InsideOut

Continental CEO Lawrence Kellner, didn’t pull off a merger with United, but won antitrust immunity, and the two carriers will be collaborating -- to the chagrin of many in the travel industry -- within the Star Alliance. Now, Kellner is giving up his post.

Associated Press/Yahoo Finance: Continental CEO Kellner stepping down: DALLAS (AP) -- Chairman and CEO Lawrence W. Kellner will leave Continental Airlines Inc. at the end of the year to return to the private-equity business and will be replaced by company president Jeffery Smisek. Read more

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With occupancy stabilizing at Marriott, pricing still is in the tank. Revenue per available room fell 24 percent globally, and 21 percent in North America in the second quarter.

Travel Weekly: With rates in freefall, Marriott reports 76% drop in net profit: Marriott International reported a 76% drop in second-quarter net profit on weak business travel and falling hotel rates. Read more

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There's been a double whammy for online travel companies and wholesalers in San Francisco. In a surprise move, the city’s tax assessors hit Expedia, Priceline and Travelocity for their vacation-package businesses and not just their standalone merchant-hotel bookings. Also, there are signs that tour operators and wholesalers could be the next targets for San Francisco’s auditors.

Dennis Schaal Blog: Shocker: San Francisco Assessed Expedia's Vacation-Package Business, Too: When Expedia.com and its sibling Hotwire wired in $35.6 million to the City of San Francisco, and when Priceline transmitted its $3.4 million in taxes, penalties and interest today, these assessments included the online travel companies' large vacation-package businesses -- and not just their standalone merchant-model hotel businesses. Read more

Dennis Schaal Blog:Tour Operators, Wholesalers Could Be Next in San Francisco Tax Dispute: The online travel companies label San Francisco's pursuit of them on the merchant-model hotel tax issue as "discriminatory," in part because only OTCs, as far as is publicly known, have been targeted. Read more

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Two analysts, quoted in the article below, have different takes on Carnival Corp.’s prospects. One cites “solid liquidity” and another sees oversupply and pricing as “long-term hindrances.”

TravelAgentCentral: Carnival "Can" Says Analyst: A recession is not enough to put Carnival Corp. down for the count. In fact, the cruise company is doing surprisingly well despite a tough operating environment distinguished by lower pricing power and lack of demand. Read more

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If you missed earlier editions of Travel InsideOut this week, you can read them below.

Thursday's TravelInsideOut

Wednesday's TravelInsideOut

Tuesday's TravelInsideOut

Monday's TravelInsideOut

Travel InsideOut is a Dennis Schaal Blog daily feature. Get a thorough-going look at the day's travel industry top and tangentially interesting stories. Feel free to comment on them below.

Travel InsideOut is Copyright (c) 2009 by Dennis Schaal. All rights reserved.

Shocker: San Francisco Assessed Expedia's Vacation-Package Business, Too

When Expedia.com and its sibling Hotwire wired in $35.6 million to the City of San Francisco, and when Priceline transmitted its $3.4 million in taxes, penalties and interest today, these assessments included the online travel companies' large vacation-package businesses -- and not just their standalone merchant-model hotel businesses.

When San Francisco compiled its assessments of the OTCs, including Travelocity, it assigned values to the hotel components within air/hotel or air/car/hotel vacation packages, in addition to assessing tax liabilities for solitary hotel sales.

Including the OTCs' vacation-package businesses in these tax disputes makes their potential liabilities, if the city prevails, much larger than I realized.

I have been writing about the hotel-tax issue for five years, and this was the first time I've heard that packages were part of the equation.

For Expedia.com, its standalone hotel business is much larger than its lodging bookings within vacation packages, but including its package business in tax assessments considerably ups the ante.

That is especially true if other tax jurisdictions are calculating assessments in a similar manner.

And, it also providers greater weight to my theory that the City of San Francisco would consider going after tour operators and wholesalers next.

Tour Operators, Wholesalers Could Be Next in San Francisco Tax Dispute

The online travel companies label San Francisco's pursuit of them on the merchant-model hotel tax issue as "discriminatory," in part because only OTCs, as far as is publicly known, have been targeted.

To date, no tour operators, or travel wholesalers, which employ the merchant model in selling vacation packages, have been the subject of litigation by cities, counties or states.

But, reading between the lines, I believe that San Francisco eventually will go after tour operators and wholesalers selling vacation packages in the city -- especially if San Franscisco prevails in its tax fight against the OTCs.

Jim Emery, San Francisco's chief of complex litigation, declined to comment on whether any tour operators or wholesalers are subject to administrative proceedings or assessments, or even whether this travel industry sector is on the city's radar.

But, Emery adamantly rejected the notion that San Francisco's tax-collection efforts are discriminatory.

Emery said the city's tax office, like that in any jurisdiction, has constraints on its enforcement abilities, and just "because you haven't gotten to someone else" doesn't mean another entity would not escape scrutiny.

"We go where it's coming to our attention that a tax is due and make resource allocations," Emery said.

He added: "It isn't discrimination against anyone in a taxpayer audit if you haven’t gotten to another taxpayer yet."

I'm interpreting that to mean that tour operators and wholesalers could be next on the City of San Francisco's target list.