Corporations to retain hotel buying power into 2010: study
Published: 04 Nov 2009
Average ticket prices (ATPs) for corporate travellers to top business travel destinations are expected to increase globally, with a 5 to 10 percent increase anticipated in key North American cities, according to Egencia’s 2010 Corporate Travel Forecast and Hotel Negotiability Index.
Despite continued depressed demand for front of cabin travel, increased low-cost competition and ancillary fees contributing downward pressure on ATPs, several factors are likely to push corporate travel prices upward, including: the post-recession economy impacting corporate travel demand, airlines maintaining capacity discipline, recent airline industry mergers, and the persistent inflation risk. Conversely, average daily rates (ADRs) for business travelers are expected to stay flat or decrease up to 5 percent year-over-year for key cities.
The study looks at city-specific data to help business decision makers gauge travel programme opportunities while planning. This year’s Index analyses corporations’ buying power in nearly 40 global cities. The study evaluates global industry trends, macroeconomic factors, in-depth research of supplier markets and capacity to deliver a current report on air, hotel and car rental trends in both domestic and international destinations.
“Overall, we expect to see some year-over-year recovery of business travel in 2010 as economies stabilise around the world,” said Rob Greyber, president of Egencia. “The resulting demand coupled with suppliers maintaining capacity discipline is expected to push air prices higher in many business destinations.”
The study suggests that 2010 will remain a buyer’s market for corporations during at least the first two quarters. The majority of major North American business destinations will maintain high negotiability, with the exceptions of Boston and Washington DC.
Europe
Pricing for both corporate travel ATPs and ADRs in top European business travel destinations are expected to rise slowly. European cities have shown signs of positive growth, and business demand will begin to increase in travel especially in finance markets. Recent airline capacity cuts, increased focus on carrier profitability and recent shifts in the airline industry including the Delta/Northwest merger and Air France and Air Italia consolidation are also contributing upward pressure. Hotels located in these business hubs are likely to benefit from the increased demand.
Asia-Pacific
Corporate travel ATPs are expected to rise just slightly across Asia-Pacific cities due to increased demand outstripping supply. However, Egencia expects fewer business travelers to the region to mean lower to flat ADRs, with the exceptions of Sydney and Singapore, which may see a small rebound in pricing.
Travel management trends
Egencia surveyed more than 100 travel managers on cost control measures, travel spend and expectations for 2010. According to survey respondents, 59 percent say company travel has slightly or significantly reduced this year, compared with 48 percent a year ago in October 2008. Ten percent reported a slight increase in business travel compared with only 3 percent a year ago.
The top cost-cutting measures travel managers are using include:
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