Growth is expected in the coming year but, like the rest of the travel industry, business travel remains in a state of perpetual transition
There is going to be more money around this year, so on the face of it business travel should pick up speed. The Global Business Travel Association (GBTA) thinks it will, after taking a look at global economic prospects, and is forecasting business travel spending to grow by 6.1% against a likely 5.1% in 2017.
Rising consumer and business confidence should encourage businesses to hire more employees, it reckons, and to send them on trips. In turn, this rising demand will allow the industry to push up prices, with airfares forecast to rise by 3.5% and hotel prices by 3.7%.
Business travel spending is expected to grow by 6.1% against a likely 5.1% in 2017
Some analysts on Wall Street, however, see downsides in that and have downgraded the shares of Expedia and Priceline on the grounds that increased business travel would limit room supply. Rob Sanderson at brokers MKM wrote in a note that Expedia’s room-night growth in particular has disappointed: “We think this is related mostly to supply tightness, which is crowding out online travel agency customers and may be driving them into alternative accommodation more and more.”
However, he has just upgraded shares in Hyatt, given the company’s heavy exposure to corporate travel, and already has ‘buy’ notes out on Hilton and Marriott.
Looming on the horizon is one very black cloud - prospects of a possibly even worse Atlantic hurricane season than last year. The extraordinary Atlantic disaster was one of the biggest shocks to the industry, $188bn of damage in all caused by disrupted conference, meeting and event plans as well as holidays. The Caribbean is one of the most popular business travel destinations.
The extraordinary Atlantic disaster was one of the biggest shocks to the industry
“The Atlantic Ocean may be roiling even more strongly next year, if the La Niña that looks likely to arrive in the coming months persists into next summer,” wrote the New Scientist a few weeks ago, after talking to the National Ocean and Atmospheric Administration’s Climate Prediction Center in Washington DC.
Others predicting a stormy time include a London-based consortium of experts who work with the Lloyd’s Insurance Market, Tropical Storm Risk, and these guys are saying that the “2018 hurricane season will be another above average one”.
Also a pessimist is Jeff Masters, director of meteorology at the popular Weather Underground website, who warned readers of the Florida-based Sun-Sentinel to expect a “busier than normal season.” The sweeping US Climate Science Special Report, prepared ahead of the US government’s 2018 National Climate Assessment, too predicts that future storm surges may worsen.
At least this year there is plenty of time to get prepared. Yet, more surprise moves from President Donald Trump or another outbreak of the plague somewhere (like the one in Madagascar in 2017) could still cause some scrambles. In the week following Trump’s initial travel ban, US travel bookings were estimated by the GBTA to have taken a $185m hit, and longer term a $1.3bn one. (Fortunately dollar strength made overseas corporate trips look like good value.)
The shift to AI
AI is expected by all to affect the industry in a big way in 2018, with the GBTA referring to an IBM report stating that more than a third of travel industry majors will have four or more cognitive projects underway. The report refers to ‘one global airline’ that is investing in Siri-like communication with travellers to build a personalised travel plan. Qantas is already using tech to cut check-in times by 90%; Amadeus is building custom offers based on travellers’ social media profiles and Hipmunk has an app you can talk to like a real person! At the same time, start-ups like Lola Tech, founded by former Kayak co-founder Paul English, are also using AI with a human touch to tap what they say is a huge business travel opportunity.
Another major change for business travel that the GBTA also believes may be in prospect is a shift towards the use of private blockchains. American Express has already announced cross-border block-chain-enabled business-to-business transactions. Visa announced a similar move back in October, and MasterCard plans to follow.
Change that is now fully accepted is the sharing economy as part of mainstream travel business. The GBTA comments that this has happened so quickly that at the small company end of the business travel market, saturation may now be approaching. So, it’s time to look for the next trend. Like the rest of the industry, business travel seems to be in a state of perpetual transition.
June 2018, London