By Trace Mayer, on October 6th, 2010
What is absolutely required during an interaction with Customs? … Like muscles as you flex your rights they become stronger; so use them or lose them.
This article is mainly just some very helpful hints with some slight economic analysis. Being an entrepreneur who enjoys creating wealth and building from scratch I have a special empathy for those engaged in similar work. One entrepreneur that has added value to my life is Scott Jordan, CEO and Founder of Scottevest. As I traveled almost 100,000 miles in 2010 I found my Scottevest incredibly helpful and it has saved me plenty of money from the evil airline’s ridiculous fees. Of course, when there are lucrative profit pools the entrenched interests will almost always by hook or by crook attempt to stifle innovation and advancement but in this case there some helpful travel tips we can apply to save time and money.
It’s still true: Delta Airlines sucks.
SCOTTEVEST ADVERTISEMENT DENIED
Years ago I decided to never fly Delta again. Then somehow I ended up with a free Delta ticket so I used it. It’s still true: Delta Airlines sucks. So when I received an email from Scott Jordan on 2 October 2010 I figured I should lend the fellow entrepreneur a friendly voice.
The New York Times reported that “the fee frenzy, which generated nearly $8 billion for American carriers last year.” Scott’s awesome travel clothing help owners ‘Beat The System’ so when he attempted to advertise in the airlines magazines the advertisement was canceled at the last moment. Seriously, what did Scott Jordan expect would happen when he advertises a value-adding product that attacks an extremely lucrative profit pool? Even worse Scott’s media agent pleaded with him to not press the issue. I am not sure the media agent gets it.
But it seems Hap Klopp, founder of North Face and chief adviser to Scott, gets it because he hit the nail on the head with an excellent economic analysis. “Scott, this is classic David vs. Goliath. Their reaction shows how touchy of a subject baggage fees are for them. You’ve found a way for everyday people to get around their crazy policies, and you just put a fork in their cash cow.” Forutantely, Scott took Klopp’s advice and remarked, “Hap’s comments solidified it for me: this was a big story, and the cat was out of the bag.”
If you have a quality product that adds value to the customer then in the Information Age with social media, blogs, YouTube, etc. the story will get out. The economic concept of creative destruction was first introduced by the Austrian School economist Joseph Schumpeter in his 1942 book Capitalism, Socialism and Democracy. For those that have not noticed, the newspapers evaporated through creative destruction so the era of screwing your customers and getting away with it because the media gatekeepers will protect you is over. And when it is a David vs. Goliath story then almost everyone roots for David, especially when David is engaged in creative destruction in an attempt to save them money on baggage fees!
Time is the most valuable commodity.
THRIFTY RENT-A-CAR’S SLEAZINESS
Another thing the airlines are often doing is bundling products and making it difficult to discern what fees actually apply and which goods or services are actually mandatory. Airlines love to privatize the gains and socialize the losses to their customers which are often incurred by wasting your time through delays, cancellations, bumps, etc. The rental car companies seem to play a similar game.
For example, I was recently in Dallas, Texas meeting with a few friends who run various hedge funds. At the airport I went to rent a car and they wanted to charge $150 for what I had earlier researched on the Internet to cost about $50. Not being able to book at the counter at $50 I booked through my iPhone and then had to wait about 20 minutes, which was worth it to starve the vampire squid, for the reservation to get into their system. When I went to pick up the keys the desk agent asked me, “And which type of insurance do you want, minimal, medium or comprehensive?”
Because she did not mention none and because it is reasonable to assume that insurance may be required in Texas and because ‘minimal’ implies the least amount required therefore I replied, “Minimal.” She then said the total would be $120. This was surprising because the Internet reservation was for about $50 and said all I needed to provide was a driver’s license and the reservation.
So I responded, “Is the insurance required?” At first she dodged the issue by trying to explain probabilities, risk and reward. Seriously, as an investor who calculates probabilities of risk and reward for a living do I really need that advice from a desk agent who has probably never taken a statistics class and has a conflict of interest? So I responded with a little sterner tone of voice, “Is it required?” She said, “No.” and I responded, “Then no insurance, please.”
I get annoyed when people, institutions and organizations waste my time pitching me products I do not need and add no value to my life. After all, time is the most valuable commodity. Vacations are great when you take the airlines, car rental companies and hotels with their $8 bottled water and $15 potato chips out of the equation. Guess what the car company’s lucrative profit pool must be? Yep, insurance! So keep that in mind next time you rent a car and Thrifty’s was very clean and ran well.
SCOTTEVEST REVIEW AND HELPFUL TRAVEL TIPS
Many people have asked how I pack so light and efficiently. Nothing is worse than going on a trip and having your airline suck your luggage into the engine. On one trip to Guatemala one of my travel companion’s luggage was lost and seemed to always be a day behind us as we traveled around the country. Very annoying for them! I no longer check luggage and it has made an tremendous difference. Eliminate all but the essentials and you will have a lot less stress on your trips.
After doing a ton of research and getting plenty of products which were a waste I have winnowed down my travel infrastructure to: (1) Rick Steve’s Convertible Carry-On, (2) Scottevest Essential Travel Jacket, (3) Eagle Creek Pack-It Garment Sleeve and (4) a few Eagle Creek cubes of varying sizes. With this infrastructure I have ample space for either a weekend or a six weeks to either Europe or Argentina.
There are a few other reasons I really like my Scottevest. In the morning I like to take a walk in the brisk air. The Scottevest has pockets for both my iPhone and iPad which keeps them out of my hands as I search for a place to read. It is a great tool for my morning routine. So from one entrepreneur to another; I hope Scott Jordan appreciates this free review.
Like muscles as you flex your rights they become stronger; so use them or lose them.
HELPFUL TRAVEL TIPS FOR CUSTOMS
Casey Research is having another investment conference at La Estancia de Cafayate on 20-24 October 2010 and I hope to see you there. What that means is another international trip and another interaction with Customs which seems like just another case of government sending ‘hither swarms of officers to harass our people, and eat out their substance.’ Responsible law abiding citizens need to be wasting neither their nor customs official’s time by even talking to them or answering their questions because this results in increased spending and drives up the federal debt.
Thus, when I came across Paul Karl’s extremely popular article, even being discussed on The Economist, about being detained by Customs for refusing to answer their questions my interest was immediately sparked and I even began to formulate the question: What is absolutely required during an interaction with Customs?
So my co-author of How To Vanish, CA attorney Bill Rounds, and I began to research the issue. The result of our work is this handy tab which fits right in your passport with the applicable binding law outlining your rights and tips on how to politely apply them. I hope you find it helpful. To help save the customs officer’s time feel free to print this PDF and distribute it widely, perhaps to everyone on your plane. Remember, like muscles as you flex your rights they become stronger; so use them or lose them.
For data I find Dropbox and Truecrypt a very effective combination.
It is always about the money.
CONCLUSION
The Internet is changing the way news, products and information is distributed. Gatekeepers can no longer protect the lucrative profit pools by refusing to discuss the issues or actively trying to prevent the market from learning about value adding products. As a result, entrepreneurs with good products that add value to the customer have a greater chance of penetrating the marketplace and this leads to David having more leverage against Goliath.
As the greater depression continues and intensifies coupled with the evolution of the Information Age it will be even more critical for companies to truly add value to their customers. Those that do not will encounter swift and powerful damage to their brands as sleazy business and governmental practices are quickly brought under scrutiny. Individuals are getting extremely tired of this crap, the depression is making disposable income tighter and some are even intentionally fighting back with the misumer movement to silently and peacefully starve the vampire squid. After all, with the civil rights movement it was not the protests but the boycotts that caused massive social change. It is always about the money.
For example, Dollar Thrifty Automotive Group made $45M in 2009 compared to their $340M loss in 2010. Delta lost $8.9B in 2008 and $1.2B in 2009 for a reason. Perhaps these sleazy companies and governments should try adding more value to the customers? Better yet they can go bankrupt or cease to exist and be replaced by fresher companies that to add value to their customers and have a good culture. No one will miss them.
So please, tell me how you feel about the airlines, car rental companies, customs and please contribute any helpful travel tips!
By Trace Mayer, on April 20th, 2010
“Black Swan flight 10 is arriving at gate B5.” One of my friends works for United Arab Emirates Airlines and has been stranded in a European airport for the weekend because of the volcanic ash from Eyjafjallajokull. According to Eurocontrol about 80% of normal flights have been cancelled. This is a visual representation of the dark clouds looming over the global economy. 
GROUNDED FLIGHTS
With the vast majority flights in Europe grounded there should be a noticeable effect on economic activity. The effects on tourism, collaboration and business will likely be long-lasting. This is an example of why individuals and businesses should work to minimize their risk to geographic location and discrimination.
Despite the obvious that you have to be somewhere; in my own situation I have largely completely eliminated the effect of geography on my own lifestyle and, to a large extent, my businesses and investments. Volcanos, hurricanes and earthquakes are not the main risk I desire to minimize but instead geographic discrimination like what recently happened in Colorado.
GEOGRAPHY AND YOUR HEALTH
Since you have to be somewhere, why not choose a physical location that is good for your health? As opposed to coloured coupons like Icelandic kronars or FRN$s, physical commodities such as wheat, corn, oil, soybeans, water, etc. must also be somewhere. Many highly populated areas, like Linfen, China; Sukinda, India; La Oroya, Peru; Norilsk, Russia; Chernobyl, Ukraine; Tokyo; Mexico City; Los Angeles; Sao Paolo; and etc., are extremely polluted and prolonged exposure to the pollutants can be hazardous to your health. Additionally, some of the inhabitants may actively be your liability.
 Can you image breathing that ash? Can it possibly be good for your health?
EYJAFJALLAJOKULL, KATLA AND FAMINE
Oftentimes when Eyjafjallajokull erupts the other much more volatile and powerful volcano Katla also flares up. Oftentimes it seems that natural phenomenon seem to coincide with social, political and economic factors and the overall effects are exacerbated. When it rains it pours. For example, as The Guardian observed:
The Laki volcanic fissure in southern Iceland erupted over an eight-month period from 8 June 1783 to February 1784, spewing lava and poisonous gases that devastated the island’s agriculture, killing much of the livestock. It is estimated that perhaps a quarter of Iceland’s population died through the ensuing famine. … Across the Atlantic, Benjamin Franklin wrote of “a constant fog over all Europe, and a great part of North America”.
What was happening during this time frame? Well, France was engaged in wars and running large government deficits. What do government deficits lead to? Taxation through inflation.
It was no different in France. For example, as Olwen Hufton observed in Women And The Limits Of Citizenship on page 25, the Society of Revolutionary Republican Women was particularly interested in “combating hoarding [of grain and other staples] and inflation.”
And what does inflation lead to? Price controls.
It was no different in France. For example, as Robert Scheuttinger observed in Forty Centuries Of Wage And Price Controls on page 45, The Committee of Public Safety first attempted to set the price for only a limited number of grain products but, by September of 1793, it expanded the “maximum” to cover all foodstuffs and a long list of other goods.
And what do price controls lead to? Shortages and rationing.
It was no different in France. We all know, or should know, the story. Louis XVI, Marie Antionette and others of the distant central government were insensitive to the plight of the middle class and poor who were suffering from disease, pestilence and starvation which were largely an effect of the governmental interference by the ruling class.
And what do shortages lead to? If severe enough then starvation and death.
It was no different in France. Marie even callously said, “Let them eat cake.” When someone loses everything and has nothing else to lose then they often lose it. In this case, the French People lost it, heads rolled, leadership changed and the French Republic was born. The black swan of the French Revolution was completely predictable.
WHY HOARD
So it begs the question: Why did people hoard grains and other staples? Because they were safer and more liquid. They also hoarded gold and silver; taking their capital to geographical locations with less political risk. This series of events; government deficits, inflation, price controls, shortages, starvation and death, have played out, at some point in time, in every populated geographic location on earth. Since you have to be somewhere; why be in these geographical locations during those times?
CONCLUSION
In the next few months I was planning on taking a trip to Europe. This trip may have to be canceled if Eyjafjallajokull or Katla keep burping. I am fortunate enough to choose where to be at what times.
Iceland has already experienced the collapse of their banking system and currency. There has been civil unrest in Iceland. I bet many Icelanders wish they had a life hedge.
I do wonder what effects these volcanic eruptions might have on Europe’s food production over the next few years? With floods in the Midwest, droughts in South America and Australia, desertification in China and tremendous inflation taking place through quantitative easing to fund government deficits for bailing out failed financial institutions; I wonder what effect there will be on the worldwide food production and distribution system. So beware Goldman Sachs; you never know when those black swans will fly in and the current flight 10 landing at gate B5 is just a minor distraction from the real issue.
DISCLOSURES: Long physical gold, silver and platinum with no interest in GS, the problematic SLV, gold ETF or the platinum ETFs.
By B.P.T., on August 2nd, 2008
We’ve all heard the old saw, when you’re given lemons, make lemonade. The travel industry is no doubt attempting to do just that, given the current economic woes and high gas prices. The Smith Travel Research Global is reporting hotel occupancy rates are down 3.9% to 66.7% for the first half of 2008 in the Americas. The company reports that the “malaise in the U.S. economy seems to be affecting a large number of countries” and that there are drops in occupancy in 3 out of 4 world regions. The only region to see an increase in the past six months is, interestingly enough, the Middle East/Africa region, which is up a reported 4%.
Travel specials and promotions are nothing new, even in a booming economy. But when the stock market is down, gas prices are up and the general economic outlook is cloudy, travel and other disposable income dependent industries must sometimes step up their efforts. In an attempt to lure travelers and even capitalize on the trend to take vacations closer to home, hotels and resorts are offering a myriad of interesting freebies, gimmicks and other specials in attempt to recapture some of the travel market that may be losing steam as a result of a sagging economy. Here are a few of the most interesting.
While hotels have used the “extra night free” special for years, a plethora of deals is available these days, from free third night to free seventh night, and offers often include “kids eat free,” “kids stay free,” free parking and free breakfast as well.
One attempt to ease the pain at the pumps is the free gas offer that has proliferated throughout the travel industry. Recently the Mississippi Gulf Coast, a visitors and convention bureau based in Gulfport and Biloxi, Mississippi, is running a $50 gas card special for anyone who spends two nights in a qualifying hotel. Choice Hotels (the chain that includes Comfort Inn, Sleep Inn, Clarion and a few others) is also offering a $50 gas card after three individual stays at its hotels. The free gas promotion is one of the hottest gimmicks around right now, with everyone from Best Western to the Texas Campground Association to Expedia getting in on the act.
Wyndham Vacation Resorts is offering add-ons for their travel packages to Destin, Florida. For instance, couples staying three nights have the choice of a $50 dining certificate or a pair of dolphin cruise tickets. Marriott will give visitors a $25 gift card for travelers spending a weekend at certain hotels.
Credit cards are partnering up with hotels and other travel industry groups for promotions as well. MasterCard has a long list of specials for those willing to leave the house on a jaunt, and these are not limited to budget properties. These promotions include a “Special VIP Experience” at any designated Small Luxury Hotels of the World (SLH) and include such experiences as spa treatments, culinary activities or other local activities; the Sofitel “chic picnic” deal for European properties, which includes an upgraded room, a VIP gift and a special “enchanting moment,” is filled with gourmet goodies.
A few other creative offers include free cocktails, activity or entertainment credits or tickets. In Vegas, the offers get even better and include such gimmes as free chips or slot play, VIP passes to certain nightclubs, room upgrades and perhaps the best – a future flight credit of up to $350 to the Luxor or the $300 Flyback offer at the MGM Grand, which gives a $300 credit for return trip airfare.
Travel specials can be found not only in the United States but around the globe as well, with rail travel specials in Canada and Europe, Exotic Dubai travel packages that include a free desert safari with a BBQ dinner and free river cruise passes in Singapore.
Whether these specials, gimmicks, promotions and offers will help shore up a stinging travel industry remains to be seen. Perhaps the cleverest, however, is the Lehigh Valley area of Pennsylvania. This area’s lodging members offer special travel packages under the “Pain in the Gas” promotions, which consist of free gas cards or rebates with qualifying stays. A pain in the gas indeed.
By B.P.T., on July 19th, 2008
Europe has long been a favored travel destination for American travelers. In spite of the dollar’s downward spiral, Americans continue to flock to Italy, the UK, Germany and a few other favorites. As the dollar passes the $1.56 mark against the euro (remember the days when they were essentially equal?), travel has been only slightly hindered for Americans.
In fact, in 2007, according to the U.S. Department of Commerce’s Office of Travel and Tourism Industries (OTTI), the number of Americans traveling abroad grew by 1% from 2006 to 2007, increasing for the fourth year in a row. However, the first quarter of 2008 could hint of change as the economy continues to weaken and the euro strengthens. Combined with higher fuel prices, and hence higher airline prices, travel to the Continent is starting to get quite expensive.
OTTI reports a .2% decline for American travelers to Europe in the first quarter of 2008, as compared to the same period last year. Interestingly, however, in a few areas where the dollar remains relatively strong, such as South Africa, Mexico and South America, travel has increased. Americans traveling to Central and South America have increased in numbers by over 6% from last year, Mexico is up more than 8% and visitors to Africa are up a whopping 47.9% over 2007.
Against All Odds
And while many Americans who choose to vacation abroad are still traveling, that trend is likely to drop off especially if the economy continues to limp along. The Air Transport Association has reported that jet fuel prices have increased a head-spinning 70% through July 3 in comparison to 2007.
The New York Times reports that airlines industry analysts expect cuts in flights by nearly 10% for the year. And what about those economic stimulus checks? The Y Partnership, a travel industry PR firm, in cooperation with the Travel Industry Association, found in a recent survey that one in six of those receiving a check would spend it on travel.
So where are Americans choosing to vacation? For luxury travelers, high-end hotels, African safaris and River cruises in Europe are still popular. But for the average traveler who cannot afford the currently expensive euro, destinations such as Central and South America are looking very good. Many, however, are also choosing to stay in the States. Travel + Leisure magazine’s latest issue may be the harbinger of travel trends to come. Typically aimed at an upscale market of travelers, the July 2008 issue is draped in red, white and blue, and the headline reads “50 Fabulous U.S. Travel Ideas.” The editor’s regular column acknowledges the precipitous drop of the dollar against the euro and offers ideas for meaningful travel within the 50 states.
Travel Bargains
Arthur Frommer, long known for his budget travel guides and magazine Arthur Frommer’s Budget Travel, presented with his daughter Pauline at the April 2008 Atlanta Travel Expo. Their topic was travel bargains. Among the top picks were China, Vietnam, Kenya and Panama in addition to the American system of National Parks.
Exploring less frequented areas can offer a more authentic view of culture as well as a more favorable cost. Panama, which had an iffy reputation for travelers back in the 1980’s Noriega years, has transformed itself into a country ripe for visitors, with both rainforest jungles and sparkling beaches. (Disclaimer: travelers to foreign countries should always check with the State Department before departing.) The Panama Canal, which was handed over to the Panamanians by the U.S. in 1999, has experienced its busiest year ever in 2007. Furthermore, even though Panama uses the Balboa as currency, U.S. dollars are widely accepted, dispensing with the whole issue of currency exchange. With a beer that can easily cost under $1 and a wide range of tropical activities, Panama is becoming a popular destination.
Africa is becoming popular as an alternative to Europe too. For visitors who stay in a standard tourist hotel, rooms can be had in South Africa for under $50 per night, according to solotravel.org which offers cost guides for a number of countries. This is in sharp contrast to France, where a mid-range hotel will easily run you over $100 per night. Travelers who enjoy going abroad can also find great deals in other areas around the globe – such as a tourist hotel in China for about $30 or less and $20 in Vietnam.
By B.P.T., on July 7th, 2008
Exploding gas prices, a housing burst and the shaky state of the stock market have all combined to create a tenuous economy that has already had a direct impact on travelers and vacationers in the U.S. In addition to the weak dollar with respect to the euro, the cost of flying across the pond seems to increase on a daily basis. In an effort to combat high fuel prices, United Airlines has recently joined American in the latest fee taxed upon travelers for what has long been a complementary service – a flier gets to bring his luggage with him!
Not only has international travel been impacted but domestic travel as well, with one of the hardest hit areas being family summer vacations. With gas prices exceeding $4 per gallon, families are rethinking and reorganizing the family road trip. The Travel Industry Association, which develops an annual Travel Price Index, estimated a 6% increase in travel prices in April from one year prior. The major driver of this increase is, of course, gas prices which have increased well over 20% in the past year. This is all in contrast to the Consumer Price Index which increased a seemingly mere 3.9% during the same period.
Families who take the quintessential Great American Road Trip have been directly impacted by these increases. Indeed, AAA recently released a report that estimates the cost of driving a new car at 54.1 cents per mile – a 1.9-cent increase from last year. AAA’s sensitivity to fuel prices is reflected in its online travel planner which lists current gas prices at over 100,000 gas stations in the U.S.
At Lake Bruin, Louisiana, Memorial Day weekend was a crowded day on the lake. A rural oxbow lake near the Mississippi River, the lakeshore is dotted with family homes and holiday camps. Vacationers in the local bait and gas shop were heard discussing the increased number of people. “We think it is because families who usually drive down to the beach or go somewhere else have stayed closer to home this time – gas is just too high!” lamented lake-goers. “There seems to be far more people here for a holiday weekend than normal,” agreed another.
From Hollywood to Reality
Another vacation method families have long used to both limit costs and heighten the vacation experience has been the home exchange. While not a new concept, the idea was popularized in the 2006 movie The Holiday, starring Cameron Diaz and Kate Winslet. The premise is simple: potential vacationers are matched via a website based on where they live and where they would like to visit – and they stay in each other’s homes.
A quick read-through of some of the most popular websites that handle these exchanges, such as HomeExchange.com and 1stHomeExchange.com, will show that most of these homes are very nice abodes. Most profiles tell a bit about the owners as well, revealing a large proportion of professionals, including physicians, attorneys, professors and retirees; some are couples, others have small children. This seemingly affluent group comes with the expected nice selection of homes as well, ranging from suburban McMansions to Caribbean condos to beach bungalows.
However, even within this group of sophisticated yet frugal vacationers, the dynamics are changing. Whereas a year ago many American homes listed were requesting exchanges in Europe, Mexico, Australia and around the world, many recent updates are sticking closer to home. Listings give site members a spot to list where they are interested in visiting. Although there are still many around the world, a higher proportion now lists areas much closer to home than did a year or two ago.
One particular listing in Sarasota, Florida, for instance, states, “We are looking for a place close to home, due to the weakening economy – two days of driving distance at the most.” Another listing in Georgia lists its preferences as Tennessee, North Carolina and Florida. A Sacramento, California, ad requests, “Anywhere in California.” Several Hawaii listings request, “Any other island in Hawaii.” While these types of listings are not singularly the result of the price of gasoline (some people just like to stay close to home), the increased frequency with which these types of requests appear seems to be.
For now, these changes in the travel habits of Americans seem to be only slight. Vacationers are still traveling, just perhaps for shorter distances or driving rather than flying – a tightening of the belt but still relatively slight. With fuel prices steadily increasing, however, the long-term fallout on the travel industry and the great American summer vacation remains to be seen.
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