Business Travel Forecast 2009

The beach from the House, Barbados

"Based on foretasted economic conditions for 2009 and the substantial increase in fares already experienced in 2008, it is possible that airfares in 2009 may decrease," said Hervé Sedky, vice president and general manager, Global Advisory Services Business Travel.

Sedky continued, "Considering airfare, car rental and hotel stay, we expect the average domestic trip to increase 2.8 percent, or $31 USD, to a total of approximately $1139 USD. An increase of 4.3 percent, or approximately $147 USD, is expected for international trips to bring the average cost to $3556.

However, if you include the costs of additional travel expenses including baggage fees, dining, airport parking and even packageBusiness travel shipping, it can add an estimated $400 to the total trip cost."

Global Airfare Forecast
The proliferation of new fees and a delicate supply and demand balancing act will determine whether airfares remain steady, increase or potentially decrease compared to 2008.

"In response to the record energy prices in 2008, many airlines began charging fees for different services such as checked luggage, in-flight refreshments and aisle seating. To help mitigate the impact of these new charges, which can increase air travel costs up to an additional15 percent per trip, we advise companies to consider increasing their focus on demand management to ensure planned trips meet the guidelines designed to promote the most effective use of their business investment," continued Sedky.

  • Capacity cuts are likely to lead to a shortage of available seats at lower price points, while changes in ticketing and minimum-stay requirements, uncertainty surrounding the future price of jet fuel, movement in airline consolidation and alliances and tighter controls over contract performance measurement are likely to drive price increases.
  • Prices are predicted to experience downward pressure due to a slowing global economy, improved demand management by corporations and stronger traveler compliance. The expansion of low-cost carriers, more efficient aircraft and airline operations and the continued liberalization of the industry are also expected to mitigate increases.

Global Hotel Rate ForecastInternational global flights
Although Business Travel forecasts some rate growth in the global hotel industry, most regions will likely experience declines in occupancy, which will keep rate increases below the level of those seen in 2008.

  • The record oil prices that began in 2008 are expected to continue to impact the hotel industry and airline capacity cuts should drive down demand in some markets
  • As new hotels expand global supply and demand decreases in some markets, travel buyers should have increased bargaining power for 2009 rates.
  • Companies should revisit their travel policies to ensure that travelers have a comprehensive guide to navigate the current travel environment.
  • In addition to a tight travel policy, demand management and an increased focus on traveler compliance can deliver savings.
  • Benchmarking that is based on average segment cost or average ticket price is no longer sufficient due to the expansion of airline fees. Companies should benchmark the entire cost of a trip in an effort to minimize expenditures related to business travel.

Meeting and Event Management Forecast
As economic conditions continue to draw attention to meeting and events as a source for savings, senior business leaders are expected to seek further visibility into meetings spending and aim to measure the return on investment of meetings and events for their companies.Meeting and Events

  • Effective demand management tactics and a movement toward shorter events in more local destinations should help corporations achieve the best return on investment
  • Implementing and managing meetings policy is expected to provide companies the ability to drive certain cost-saving behaviors. Based on a recent survey of travel clients, over 70% of companies do not have a stand alone meetings policy
  • Technology developments offer cost-effective ways to supplement meetings and events schedules. Teleconferencing and social networking sites are gaining popularity as tools to strengthen the interpersonal relationships created through traditional meetings.
  • Leveraging transient hotel programs with a meetings hotel program is expected to enable companies to have visibility in both areas and drive savings. Negotiating packages for the preferred properties will likely simplify the process to drive and support compliance.

(Source: Business Travel)

Cost Containment Strategies for 2009
Companies across the globe are seeking new ways to manage their travel investments and maximize the value of their T&E programs.

Travel reviews by JD Power and IBM

Hotels

Hospitality Industry Confronts Impact of Economic Downturn
Occupancy and revPAR levels for U.S. hotels continue to decline through the first week of November (latest available data) though ten top markets posted brisk growth in occupancy levels, room rates and revPAR through October.

Hotels in the United Kingdom as well as in Europe overall registered revPAR declines based on sliding occupancy levels.

The hotel construction pipeline grew 28% worldwide at the mid-year point (latest available data) although signs point to a developing fall-off and in the U.S., the number of guestrooms under
construction decreased by 5% in October.
Car Rental
Car Rental Customer Satisfaction Continues to Decline Customer satisfaction with renting cars at airports has declined considerably for a second consecutive year, according to the J.D. Power and Associates 2008 Rental Car Satisfaction Study.
Avis rent a car
The study looks at six factors: costs and fees, pick-up process, rental car, return process, reservation process and shuttle bus/van.

Overall satisfaction declines significantly from 750 points on a 1,000-point scale in 2007 to 734 in 2008. Staffing and operational cuts are hurting service, according to the study. Enterprise ranked highest for the fifth year in a row, followed by Hertz and Alamo. (Source: J.D. Power press release).

Avis Budget Ups Rates $3 Per Day
Avis Budget Group said it is upping its retail car rental rates by $3 per day and $20 per week at all airport and selected off-airport locations.

The company said the rate increase was a response to escalating costs affecting the car rental industry. Hertz raised its rates in the U.S. and Europe at the end of October. (Source: Avis Budget Press release)

High Lights

Airline baggage fees bug air travelers the most, but many consider general cabin ticket prices and fuel surcharge reasonable, according to a survey by the IBM Institute of Business Value.

  • Seventy-eight percent of travelers consider airline baggage fees the biggest rip-off.
  • Seventy-six percent considered additional charges to redeem miles another major rip-off.
  • But 70 percent called general cabin ticket prices reasonable.
  • Half considered fuel surcharges valid.
  • Fifty-eight percent prefer to pay the lowest possible ticket price, sacrificing all amenities, including food.

(Source: IBM press release)