2011 Global Travel Forecast Us Final

8/6/2019 2011 Global Travel Forecast Us Final

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Considerations or travel buyers:

Educate your travelers on the value o

being fexible. By opting to leave slightly

earlier or later or to make one stop versus

a direct fight, travelers can nd additional

savings on air ticket prices.

Book early. In an era o constrained capacity

and rising ticket prices in many markets,

booking in advance remains even more

critical.

In 2010 and into 2011, airlines are

expected to place tougher restrictions

on lower price categories, meaning thattravelers need to book arther in advance

to secure less expensive fights.

While not every trip is planned early,

encourage your travelers to book as early

as possible to get their choice o route

options and lower ticket prices. By doing

so, travelers can save up to 50 percent

on ticket prices, according to Egencias

Advance Purchase Advisory.

Consider reminding travelers o the

advantages o Advance Purchase during

the booking process, especially in the

preerred sel-booking platorm. These

can include a dynamic message within the

booking platorm, encouraging travelers

to book early and secure less expensive

tickets.

Take advantage o increased competition

where possible. Certain global markets

and routes are experiencing pricing battles

between established and/or low-costcarriers. This can represent an opportunity

or savings, but organizations should be

cognizant o ticket restrictions rom many

low-cost carriers while ensuring they are

comparing total prices, which include

ancillary ees, when shopping or tickets.

Keep a close eye on class o service

policy. In general, prices or First & Business

class tickets grew at a similar pace to the

Economy class tickets in 2010, as airlines

took a measured approach to attract their

most valuable clientele. Next year, however,

we predict the price or the top o the cabin

will outpace that o Economy class. In light o

that, we recommend travel managers drive

their class o service policy and speciy class

based on the duration o the trip.

Streamline pre-trip approval processes.

Because o constrained capacity and are

accessibility, its important that organizationsrespond quickly and eciently to passenger

requests. By responding in a timely ashion to

trip approval requests, companies can ensure

that their travelers can book and conrm

lower priced tickets.

Monitor airlines ancillary revenue. Nearly

every airline continues the practice o adding

baggage ees, reservation change ees,

and miscellaneous operating revenue (pet

transportation, standby passenger ees).

Travelers should ensure they research the

total cost o a trip with a particular carrier

when comparison shopping.

Airlines may be more agreeable to

negotiating discounts i bookings are

consolidated, supported by strong policy

tools and backed by reporting and historical

data. Airline partners will want a concrete

demonstration that travel buyers have

implemented strong policy controls to

increase share and target incentive goals,allowing corporations to shit business to

preerred partners.

While buyers should ask or increased

discounts or consolidated share, current

trends have created an environment where

2010 Egencia, LLC. All rights reserved. Expedia, Egencia, and the Egencia logo and Get Ahead are either registered trademarks or trademarks o Expedia, Inc. in the U.S. and/or other countries.Other logos or product and company names mentioned herein may be the property o their respective owners.

2011 Global Corporate Travel Forecast and Hotel Negotiability Index

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Advance Purchase Advisory

Asia-Pacifc

Destination Potential Savings*Beijing 25%

Delhi 10%

Hong Kong 16%

Melbourne 20%

Mumbai 14%

Shanghai 28%

Singapore 15%

Sydney 29%

Tokyo 22%

London 32%

Los Angeles 17%

New York 30%

Paris 30%

San Francisco 19%

Long-Haul

* Potential savings if tickets are purchasedat least 21-30 days in advance of travel


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airlines are less willing to expand existing

discounts without expanded share.

In addition to ares, consider negotiatingairline amenities and perks, such as waived

baggage ees, status matches, cabin

upgrades, and sot-dollar unds.

Companies with international business

may want to seek lane ares and/or fat

ares, which allow or a better discount

than standard percentage discounts.

The Continental-United merger continues

to make headlines. However, this

partnership is not likely to take eect until

late 2011. In the interim, it may be best to

secure the benets o the expansion by

negotiating a preerred partnership with

one carrier now.

Summary

I a company can bring incremental revenue

opportunities to a carrier, increased discounts are

possible, though 2011, like 2010, will most likely

be a challenging year. For successul negotiations,

travel managers must have a good understanding

o their travel spend, use strong policy tools, and

have historical data in place to manage their travel

program. While not all classes o service will

receive discounts, travel managers should look

to other areas to nd value, such as waived ees,

upgrades and status matches.

Global Hotel Landscape

In general, average daily rates (ADRs) are

orecast to be up overall in North America, Europeand Asia-Pacic. Corporate demand appears to

be rebounding, along with improved occupancy in

almost every top business market worldwide and

a decreasing amount o new hotel supply available

In addition, the predicted increase in air capacity

will bring more travelers, potentially adding to the

increase in hotel rates.

Egencia orecasts that the largest ADR

increases in the U.S. will be in Seattle (up

8%), Boston (up 5%) and Minneapolis (up6%).

Many European cities are predicted to

show improvement year over year, 2011 vs.

2010, with Glasgow (up 7%) leading the

way, ollowed by Barcelona (up 5%). The

exception is Moscow, as Egencia predicts its

ADR to all 7% in 2011 versus 2010.

Asia-Pacic will most likely ollow the trends

o North America and Europe, with ADRs

slightly up overall year over year; Shanghai

(up 5%), Sydney (up 4%) and Beijing (up 4%)

In essence, the predicted gures are mostly up

by a ew percentage points, except or three

destinations. For example, with Houston, air

capacity is orecasted to decline in 2011, so there

will be ewer travelers, not more. Consequently,

ADRs are unlikely to increase. Furthermore, in

New York, the potential o adding 5-6 percent

capacity in 2011 will likely have a moderating

aect on ADRs, resulting in mere 2 percent

increase year over year.

Sources: Egencia analysis, based on data from OAG,STR, ARC and Expedia, Inc.




ADR Forecast

North America ADR 2011

Atlanta 1%

Boston 5%

Calgary -1%

Chicago 3%

Dallas 1%

Denver 0%

Houston -3%

Los Angeles 4%

Minneapolis 6%

Montreal 5%

New York 2%

Philadelphia 4%

Phoenix -3%

San Diego 0%San Francisco 4%

Seattle 8%

Toronto 2%

Vancouver -5%

Washington DC 6%

Europe ADR 2011

Amsterdam 3%

Barcelona 5%

Berlin 4%

Brussels 3%

Dublin 1%

Frankurt 2%Glasgow 7%

London 1%

Lyon 0%

Madrid 1%

Manchester 1%

Marseille 0%

Milan 3%

Moscow -7%

Munich 2%

Paris 2%

Stockholm 3%

APAC ADR 2011Beijing 4%

Delhi 4%

Hong Kong 3%

Melbourne 3%

Mumbai -2%

Shanghai 5%

Singapore 1%

Sydney 4%

Tokyo 0%


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Supply Outlook Hotel Negotiability

Egencias Hotel Negotiability Index, an indicator o the overall supply landscape in top domestic cities,

suggest that 2011 will be a sellers market or hotels. The majority o major North American businessdestinations will maintain weak to moderate negotiability, with the exception o Houston and Calgary.

The majority o major European business destinations also will maintain weak to moderate negotiability,

with the exception o Lyon, Marseille, and Moscow.

Dallas

Boston

Chicago

Atlanta

Denver

Houston

Los Angeles

Minneapolis

New York

Philadelphia

PhoenixSan Diego

San Francisco

Seattle

Washington DC

Calgary

Toronto

Montreal

Vancouver

Amsterdam

Barcelona

Berlin

Brussels

FrankfurtLondon

Madrid

MunichParis

Milan

Dublin

Glasgow

Lyon

Manchester

Marseille

MoscowStockholm

North America

Europe

Moderate

Strong

Weak

Moderate

Strong

Weak


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The Asia-Pacic region will most likely be the weakest o the three regions, with a large majority o major

APAC destinations maintaining a weak negotiability indication. The exception is Melbourne and Mumbai,

both moderate in the Hotel Negotiability Index.

Lodging Trends

Now is the right time to establish or update a

preerred supplier strategy, which can be achievedthrough the ollowing tactics:

Strict policy management and support

o negotiated rates.By demonstrating

a consistent eort to drive share towards

preerred suppliers, corporate travel buyers

have a stronger place at the bargaining table.

Mandating bookings via an agency o record

will also aid in this discussion.

Monitoring creates visibility and can help

a travel manager stay ahead o out-o-policy practices. Accessible travel program

data can help companies negotiate better

rates and volume discounts, by providing

greater clarity o:

Travelers who routinely overspend

Asia-Pacic

Beijing

Sydney

Melbourne

DelhiHong Kong

Mumbai

Shanghai

Singapore

Tokyo

Underutilization o specic hotels

Top cities or the travel program

Analyze total hotel spend in each marketand on a regional basis. A common best

practice is to consolidate one hotel or

every 500 room-nights or US $10,000 at a

particular property.

Negotiate based on property level.

Although the overall negotiability is relatively

weak in 2011, it is important to look at

potential dierences by property level.

According to the STR Hotel Pipeline

Outlook or the US in July 2010, the

share o upscale and midscale properties

recently opened by hotel chains accounts

or 70 percent o all new rooms.

A similar picture remains among the

properties currently under construction,

Moderate

Strong

Weak


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which is in contrast to the existing market

supply where the share o aorementioned

properties is only 40 percent.

Certainly, conditions will vary rom market

to market, but the data indicates that

negotiations will be somewhat easier or 3

to 4 star properties, rather than the upper-

scale, 4+ star range.

Companies should consider department-

specic restrictions as a way to control

costs. By segmenting traveler groups,

organizations can still provide a solid level o

service and amenities while decreasing costs.

Be strategic. For example, consider tiering-

down within the same hotel chain. Travelers

will still earn rewards and receive the right

amenities -- all while potentially saving

money.

Leverage hotels that oer ree or

discounted amenities. Cost avoidance is a

key strategy or 2011. Encouraging travelers

to book at and leverage hotels with ree

amenities such as Internet service, shuttle

service, breakast, and hosted eveningevents can result in big cost savings.

Property-specic agreements typically

lead to better savings. While chain-

wide agreements provide the advantage

o a regional discount to companies with

geographically dispersed travel patterns,

property-level agreements at individual chain

properties oer greater discounts. Chain-

wide agreements are also very dicult

to negotiate or organizations without

signicant travel spend.

Consider independent hotels. Without the

need to subsidize costly loyalty programs,

these properties may oer better rates and

amenities.

Negotiate or better terms and

conditions. Favorable cancellation terms or

decreased early check-out ees can add up

to signicant savings.

Negotiate last-room availability clauses.

This means that properties must oer

negotiated rates even i only one room type is

available, resulting in lower ADRs throughout

the year.

Regularly upgrade room category pricing

The ADR ceiling or cap in large metropolitan

markets can be tight due to city wide sell-

outs, which are more common in these

business hubs.

Work with your travel management

company to take advantage o powerul

discounts and perks. In many cases, travel

management companies can consolidate

the buying power o a broad range o clients

and oer benets that companies may not

be able to achieve on their own. For example,

many hotels on Egencia eature business

traveler riendly preerred rates, which are

highly competitive and requently include ree

amenities such as same-day cancellation,

Wi-Fi, etc.

Summary

Now is the time to work with your hotel partners.

Companies that can show incremental demand

may be able to negotiate avorable agreements.

However, many hotel rates are already at

rock-bottom prices so it will be challenging to

negotiate urther discounts. There still remains

an opportunity to negotiate or amenities that are

meaningul to your travelers as well as avorable

conditions such as early check-out.

34%

30%17%

6%

12%

22%

28%

31%

11%

8%

SignificantlyIncreased

SlightlyIncreased

Has NotChanged

SlightlyReduced

Europe

North America

Todays Business

Travel LandscapeQuestion: Over the last sixmonths, has your company

changed its amount obusiness travel?

Source: Survey of over 200 EgenciaEuropean clients, conducted August2010 | Survey of over 300 EgenciaNorth America clients, conductedAugust 2010


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Car Rental Price Guidance (RPD)

Due to restored nancing conditions, Egencia

expects a slight increase in car rental prices. Also,US car manuacturers are orecasted to be in a

better economic position in 2011, meaning that

rock bottom prices or inventory may be a thing o

the past.

United States

In the U.S., rates decreased through the rst

hal o 2010 by 5% compared to the year prior.

In 2011, however, Egencia anticipates industry

consolidation and tighter inventory management

will push the RPDs up 3 percent year over year.Increases in surcharges at on-airport rental

locations, particularly in CHI, PHL and LAS, are

also being seen.

Canada

Egencia anticipates rates will stay slightly down

year over year, well into 2011.

Europe

Egencia predicts that car suppliers will maintain

their feets at current levels into 2011 which,coupled with the increased demand, could mean

increased RPDs by about 5% year over year.

Considerations or the travel buyer

Even with the improved economic environment,

car companies will demand value rom accounts

in exchange or discounts. I companies cannot

meet their revenue commitment, discounts will be

reduced. But i a company can bring additional

business to the table, the buyer is in a very good

position to negotiate.

Keep a close eye on uture prices. With the

recent Hertz acquisition o Advantage and a

potential bidding war or Dollar/Thrity, this

could mean decreased competition in the

US car rental market, which usually results in

higher prices.

Prepare data that allows a company to

negotiate additional cost savings. Insurance,

drop-o ees, and surcharges are all areas

that deserve additional ocus. Buyers should

also compare ees across vendors and use

the data in negotiations. Larger companies

may be able to negotiate a reueling cap or

when travelers do not reuel o-site.

Leverage multiple data sources. Typically,

expense systems only provide the amount

spent and the location, but will not provide

all the details needed or negotiations with

vendors.

Summary

Driving policy enorcement and mandating car

rental bookings will allow corporate accounts

to realize savings through compliance and by

negotiating better preerred vendor agreements.

Todays Business

Travel LandscapeQuestion: Are youplanning to increase

or decrease your travelbudget in 2011?

Source: Survey of over 200 EgenciaEuropean clients, conducted August2010 | Survey of over 300 EgenciaNorth America clients, conducted

August 2010

Increase

Reduce

Remainthe Same

Dont Know

52%

7%

13% 28%

18% 34%

4%

43%

Europe

North America


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2010 Egencia, LLC. All rights reserved. Expedia, Egencia, and the Egencia logo and Get Ahead are either registered trademarks or trademarks o Expedia, Inc. in the U.S. and/or other countries.



Travel Management Trends

Egencia surveyed more than 500 travel buyers

in North America and Europe regarding costcontrol measures, travel spend and expectations

or 2011. According to survey respondents, 42

percent o North American buyers and 23 percent

o European buyers have slightly or signicantly

increased travel over the last six months,

compared with a slight increase o only 3 percent

a year ago in October/November 2009.

The top strategies or maintaining or controlling

travel costs in North America and Europe include:

Advanced booking o airline tickets (56

percent North America, 53 percent Europe)

Enorcing policy more r igorously (47 percent

North America, 40 percent Europe)

Actively tracking unused tickets (43 percent

North America, 9 percent Europe)

Requiring pre-trip approval (42 percent North

America, 49 percent Europe)

Encouraging the use o web conerencing

(33 percent North America, 38 percentEurope)

Source: Survey of nearly 500 Egencia clients, conductedAugust 2010 | Survey of over 100 Egencia clients,conducted October 2009

Research Methodology

Data and insight based on the statistical

analysis o the past and present industry trends,macroeconomic actors, market research

and vendors capacity orecasts or 2011. Smith

Travel Research (STR) and OAG lings were

leveraged or a market-level analysis o both

Lodging and Air capacity. ARC, STR and Egencia

Internal Data were used or market-level analysis

o pricing.

Todays Business

Travel LandscapeQuestion: Have youdramatically changed

how/when you evaluateor renegotiate your travelprogram over last year?

Source: Survey of over 200 EgenciaEuropean clients, conducted August2010 | Survey of over 300 EgenciaNorth America clients, conductedAugust 2010

Yes, were makingchanges more frequently

Yes, were makingchanges less frequently

No, but well makechanges next year

No, and we dont haveany plans to do so

I dont know

14%

33%

13%

12%

28%

15%26%

24% 27%

8%

Europe

North America

2011 Global Travel Forecast Us Final

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