Advertising and Marketing Opportunities with Odyssey Media Group

Travel Management

 October 02, 2008
Advito Releases 2009 Industry Forecast For Business Travel

 Net airfares will increase on average by 6 percent to 8 percent against 2008, while additional fees will increase the total cost of air travel even more. Meanwhile, softening demand in the hotel market will progressively strengthen buyers' negotiation power, according to the just-released 2009 Industry Forecast from Advito, BCD Travel's independent consulting unit.

"We recognize that the current macroeconomic situation is uncertain, but we are publishing the Industry Forecast to provide some guidance to travel executives as they plan and negotiate in a volatile environment," said Mary Ellen George, general manager of Advito. "The continued slowdown in global growth, the high oil price and several other factors are putting a constraint on market player confidence. In this environment, corporations are more actively recognizing the true value of travel executives and buyers in controlling spend."

George also noted market price inflation means buyers will both rely increasingly on accurate travel spend data and experience less success in obtaining year-over-year reductions in average rates: "Any pursuit of savings and cost avoidance requires fact-based analysis of the travel spend and a good understanding of what buyers can offer the suppliers in return. Given the market's volatility, monitoring the program on a regular basis will be more crucial than ever, and managing demand as well as booking behavior will become as important as tracking changes in the business travel marketplace."

The 2009 Industry Forecast builds on Advito's thorough understanding of the business travel market and the influence of global and local factors to provide travel managers and buyers with vital information for planning their travel budgets in the new calendar and/or fiscal year. Additionally, the Industry Forecast serves as a valuable reference for companies striving to source program components and manage travel services in a volatile environment.

The full Advito 2009 Industry Forecast is available at (in the Resource Center section under "White Papers"). Following are a few of the report's key predictions:

• Airfare increases: The airlines will react to the challenging environment by further trying to reduce costs and exploring ways to add new revenues, leading to an increase in the total cost of air travel. "On average we predict 2009 rates to increase against 2008 by 6 percent to 8 percent, but with clear differences by region and trip category," said Bob Brindley, vice president of Advito. "Unlike previous years, unbundling of services and the resulting fees are on the rise, and are projected to add another 3 percent to 5 percent to the total cost of air travel."

• Hotel rates and supply: In 2009, softening demand in the hotel market will progressively strengthen buyers' negotiation power. Rates are forecast to rise by 4 percent to 8 percent, but this prediction is an average of some extremes. In cities where demand is slowing, rates are projected to climb less or not at all. In the Middle East and Asia Pacific, Advito predicts steep rate increases of as much as double the average cited above.

• Meeting costs: Corporate meeting budgets and the number of meetings will not increase, but the cost of conducting those will. Increases are projected to mirror those on the transient side, between 4 percent and 8 percent. Certain markets are again projected to display significant rate variation, with some cities in Asia Pacific and the Middle East predicted to be high-demand destinations.

• Car rental rates: Rental car rates are expected to increase slightly by 3 percent to 4 percent, mainly in the U.S., as rental car companies lift rates and add service fees. In Europe, rates are expected to stay flat due to fierce competition. The highest car rental increases are predicted in the Asia Pacific region.