Business Travel Insight for 2013
Released: November 2012
2013 Business Travel Forecast and Insight
Index
From the Thermosphere
Page
Worldwide Summary
2
Air Transportation
4
Lodging
6
Ground Transportation
8
Travel Policy Management
10
From the Troposphere
Page
North America Forecast
13
Latin America Forecast
16
Europe, Middle East and Africa Forecast
18
Asia and Oceania Forecast
22
On the Ground
Page
Changes in Dining and Entertainment
25
Mobile and Social Media Projections
26
Duty of Care
28
Meetings and Events
29
Page | 1
2013 Business Travel Forecast and Insight
From the Thermosphere
Worldwide Summary
General Outlook
Travel Leaders concurs with most economic and other forecasters with the assumption that the
negative fears about a collapse of the Euro or the continued economic downturn in China could
cause substantial shift in the following projections. In general, the current state of the global
economy will slow growth in business travel for 2013, despite several regions where business
travel spending is anticipated to grow substantially over 2012. Currently, many global
companies are stockpiling instead of investing, even in the travel industry provider sector. As a
result, there will be little incremental supply in terms of additional seats on airplanes or hotel
beds, causing a gradual increase in the cost of travel next year at a pace in tandem with or just
slightly ahead of global inflation. Global unemployment rates are still above levels experienced
before the economic crisis in all regions with the exception of several BRIC countries. The most
concerning event that is happening currently is that the previously vibrant growth of the BRIC
(Brazil, Russia, India and China) economies is starting to weaken in the wake of the Euro
meltdown.
2013 Overall Insight
Expect moderate demand increases in 2013, but a stall in capacity as hesitant investment in
additional inventory continues to be tightly controlled by yield management. Travel Leaders
believes the total cost of travel will continue to increase into 2013 in all sectors and in all
spend categories related to travel and entertainment.
Estimated Increases in Business Travel Airfares for 2013
North America
Latin America
Europe
Middle East
Asia and Oceania
Premier Class
Economy Class
Premier Class
Economy Class
Premier Class
Economy Class
Premier Class
Economy Class
Premier Class
Economy Class
Domestic
3%
6%
6%
7%
2%
4%
5%
5%
4%
4%
International
3%
4%
7%
7%
2%
3%
6%
6%
2%
2%
For every $10
increase in oil
prices, airfares will
increase by
3%
Page | 2
2013 Business Travel Forecast and Insight
Gross Domestic Product Predictions
According to the Economist Intelligence Unit’s (EIU) Global Outlook Summary report released in
June 2012, after a strong first quarter in most world regions, the second quarter was
significantly weaker. There are strong indicators in Europe that some of the EU countries are
may consider exiting the euro at some point in 2013, which will deepen the current union crisis
further. The EIU expects the Eurozone GDP to shrink an additional 0.7% by the end of 2012 and
only incrementally increase 0.3% into next year. Europe’s economic problems have a ripple
effect in other regions. The EIU predicts the U.S. will grow GDP by 2.2% by the end of fiscal
2012 and increase another 2.1% through fiscal 2013. Indicators suggest that even China, which
has been a dominate exporter, is forecast to have an 8.2% GDP in 2012, which is the lowest
percentage since 2001, and it will climb marginally to 8.4% in 2013. India is only slightly more
promising according to the EIU with anticipated GDP to perform at 8.5% in 2013.
Eurozone
0.3%
North
America
2.3%
China
8.4%
Latin
America
5.9%
ROW
3.7%
Global Security
At time of publication, no foreseeable health, security or safety risks are expected to bear any
impact on the business travel forecast for 2013. In the event that the Iranian nuclear crisis
escalates, global demand and yield could be impacted, especially the cost of crude oil. The
recent conflict in Syria has resulted in few worldwide implications related to business travel.
Possible changes in China’s leadership in 2013 could also result in further issues related to
safety and security.
Risk Outlook for 2013
Demand for travel is directly influenced by
three primary areas of risk:
1. The State of the Global Economy
2. The Price of Oil
3. Security
Page | 3
2013 Business Travel Forecast and Insight
Air Transportation
Yield
Nearly all the global legacy airline carriers have greatly improved the ability to optimize yield by
quickly reducing or eliminating under-performing services, and they have been diligent about
launching new ones. Inventory control, for the most part, has been unprecedented, and the
disciplined capacity management for U.S.-based carriers has resulted in several price increases
in 2012. Overall, in North America, domestic average ticket prices have increased nearly six%.
Actual 2012
U.S. Airfare Price
Increases: 4
+
Estimated 2013 U.S.
Airfare Price
Increases: 8
=
Global Average Airfare
Increases of
4.5% in 2013
Demand
In 2013, Travel Leaders anticipates that overall demand will be greatest through most of Latin
America, and especially Brazil, which will drive-up the yield – as much as 7%. Demand for air
travel will be lowest in the Eurozone, with average prices climbing only 2% on average. North
America falls in between at 5% and Asia around 4%. Part of what will skew demand in all
regions is the growing dominance of some Middle Eastern airlines. U.S. business travelers are
reaching a ceiling of how much more they will spend for air travel. The International Air
Transport Association forecasts that premium-class seats will be hit harder than economyclass, which could result in travel policy changes for many firms to control costs.
Supply
In 2012 demand has outpaced supply in all regions but especially in North America, and to
some extent Europe. Consolidation of the airline industry in the U.S. will carry further supply
issues into 2013, as the newly merged companies, such as Continental/United further
normalize systems, labor issues and products. The entrant of many new low cost carriers in the
Asian market is weakening the hold legacy
carriers have in that region. Technology has
In 2013
enabled airlines to adapt and reduce schedules
and aircraft size where demand has weakened,
• Minimum and Saturday night stays
more cautious about adding new fleets, and more
are making a comeback.
likely to only replace aircraft to improve fuel
• Emissions Trading Scheme could
efficiencies. Increasing effective competition by
further hike airfare costs to/from
three big Middle East long-haul carriers:
Europe.
Emirates, Etihad and Qatar Airways, is further
• Ancillary fees are here to stay, but
impacting the global supply in key international
airlines may be more willing to
gateway airports.
negotiate discounts.
Page | 4
2013 Business Travel Forecast and Insight
Global Alliances
Price setting among the three global alliances will
continue to disadvantage the business traveler in
2013. Each alliance has small and large players who
collaborate on long-haul and short-haul yield. These alliances continue to set higher thresholds
and tougher requirements for qualifying corporations to achieve any cost reductions. Travel
Leaders expects the major alliance programs to really put the screws on corporate travelers
once the global economy is normalized. Major alliance hold-outs in Asia and Latin America may
come together in late 2013 to form a fourth global airline alliance. Overall, global alliance
airline deals are extremely complex, and this makes it difficult to measure performance. Many
commodity buyers are now looking at alternatives, such as negotiations with individual airlines
and moving market share to low cost carriers as a way to improve cost controls.
Distribution
The future of how carriers will work with the legacy global distribution systems in 2013 remains
somewhat off course, in part, due to 2011 lawsuits still pending with the U.S. Department of
Justice. The International Air Transportation Authority (IATA) has launched a new provision
titled New Distribution Capability (NDC) to enable airlines to offer more flexible and
personalized services to travelers with a limited number of booking cases offered through
traditional distribution systems.
Ancillary Fees
Since 2008, airlines have supplemented their revenues by charging a wide range of fees for
services that in the past were free. In 2010, baggage fees alone contributed an additional $2.7
billion in incremental revenue. Currently, two U.S. regional carriers – Allegiant and Spirit – now
charge passengers for carry-on luggage.
Common Ancillary Fees Charged by North America-Based Airline Carriers (in USD)
Carrier
Air Canada
Alaska
American
Delta
Frontier
JetBlue
Southwest
United
US Airways
WestJet
Ticket Change Fee
$50 - $150
$75 - $100
$25 - $75
$150 - $250
$50
$50 - $100
$0
$75 - $150
$150 - $250
$50
Direct Connect
Transaction Fees
$0
$15
$25 - $35
$25
$0
$20
$0
$25 - $30
$25 - $45
$0
Premium
Economy Seating
$16 - $46
NA
$9 - $19
$80 - $180
$5 - $50
$10 - $65
$10
$9 - $63
NA
$5 - $30
In-Flight Premium
Food and Beverage
$3 - $7
$6 - $7
$2 - $10
$2 - $10
$5 - $14
$5.99
$5
$6 - $9.49
$3 - $8
$2.25 - $6.50
Source: Envision @ Travel Leaders October 2012 research project
Page | 5
2013 Business Travel Forecast and Insight
Lodging
Yield
Corporate rate negotiations for the 2013 season will be the toughest yet mainly due to the gap
between buyer and supplier expectations. In general, hoteliers are looking to hike average
corporate daily rates as high as 9% in best case. However, with the continued leveraging and
bargaining of corporate buyers coupled with the current economics of the world, the final
outcome of rate increases for 2013 may raise no more than 7%. Most of EMEA (with the
exception of the Middle East) will see a much lower yield in the form of average daily rates.
Business hotspots such as Chicago, New York, London, Singapore and Hong Kong will be at the
higher rate hike range, but Brazil will see the biggest spike in average room rates for the second
year in a row by as much as 20%.
Forecast Lodging Average Daily Rate Increases for 2013
Eurozone
3%
North
America
6.5%
Asia
6.5%
Middle
East
7.5%
Latin
America
11%
Bottom Ranking
Orlando, FL; Portland, OR and San
Diego, CA averaged less than 2%
average daily room rate increases
over the period. Phoenix, AZ
reported an average room rate
decrease of 3%.
Source: Envision @ Travel Leaders October
2012 research project
Africa
4%
Oceania
9.5%
Top U.S. Cities with Biggest Rate Increases of
Average Daily Room Rates through Second Quarter 2012
2Q2011 2Q2011 Increase
$195
15%
Los Angeles
$169
San Francisco
Boston
Philadelphia
Las Vegas
Dallas
Chicago
Denver
Seattle
Houston
$213
$240
$177
$133
$132
$206
$145
$163
$141
$244
$273
15%
14%
$194
$145
10%
9%
$143
$221
8%
7%
$154
$172
6%
6%
$148
5%
Page | 6
2013 Business Travel Forecast and Insight
Demand
Available sleeping rooms will continue to be an issue into 2013, especially in key business
markets (see From the Troposphere for local details) where demand exceeds supply. In all
regions, demand will increase in 2013 by 4% in most markets. Tough negotiations may result in
stand-off situations where hoteliers must decide to walk away from continued business and
proven customers demanding additional price breaks, or compromise with middle-ground rate
deals.
Supply
Travel Leaders anticipates the overall lodging demand in 2013 to increase rapidly in Latin
America, at a moderate pace in North America and Asia, and little in Europe. A continuing
trend within the industry is the consolidation of smaller independent properties by branded
chains, either through acquisition or through franchise. There will be substantial increases in
hotel supply Brazil with the FIFA World Cup coming in 2014 and the Olympics in 2016.
According to Travel Weekly, hoteliers in the U.S. will put about $5 billion into capital
expenditures in 2013. The expected spending is up 33% over 2012 figures and 85% over
spending in 2010. The good news is that some of this spending is going toward fun items such
as in-room iPads, flat screen TVs, redesigned lobbies, upgraded restaurants and whatever else
is left in the till after hoteliers pay to upgrade in-room devices to accommodate the new iPhone
5 connectors.
Corporate Negotiations
Global occupancy in
Last room availability (LRA) used to be a good feature to
2012
will reach 71.5%
ensure that in tight markets, corporate negotiated
rates would be applicable to the very last room any
Source: Starwood Hotels
given night. Starting in 2011 and progressing into 2013,
many hoteliers are now limiting the LRA based on many
variables: seasonality, peak demands such as large local events, or changing the definition of
what “Standard Room” is. Cost managers are looking for other ways to decrease the average
daily room rate by downgrading their travel policies and steering travelers towards limitedservice hotels, or to hotel chains that are considered second-tier and third-tier. In exchange for
lower average daily room rate concessions, commodity buyers are having more success
negotiating discounts for many in-room and at-property services and products like free parking,
meal vouchers, fitness club access and complimentary Wi-Fi (though many properties are now
offering Wi-Fi at no cost, and local hotels must compete in this area for corporate business).
Survey: Do you think paid in-room
Internet fees are here to stay?
In 2013
•
Source: SmartQuote
Hoteliers are trying to change the game
with RFPs: Extending rate quotes only up
to 90 days before a signed contract and
only re-bid with a client once.
Page | 7
2013 Business Travel Forecast and Insight
Ground Transportation
Yield
In North America, where 80% of all rental cars are used by global business travelers, the three
big corporations, Hertz, Avis and Enterprise Holdings, have kept daily rental rates nearly steady.
Travel Leaders anticipates this trend to carry into at least the middle of 2013. For
commodity buyers who have not sourced their corporate rental car programs in more than two
years, now is the time to go to market. Most rental car firms are following suit with the airline
industry in better capacity management. Additionally, lower fleet costs are in line with the
demand and an uptake on leisure travel car rentals. Ancillary fees are also contributing to the
bottom line with the exception of GPS rental, which has eclipsed with the onset of mobile
global tracking devices.
The cost of a taxi in New York has increased by 16% in last quarter 2012 with the average fare
between Manhattan and JF Kennedy Airport at $52. Black cab fares in London also rose by 16%
from 2011.
Demand
Many cost managers are encouraging travelers to utilize local public transportation and shared
shuttle services when feasible. While private rental cars are in less demand in some Latin
America and Asian countries, renting a car and a local driver is creating more demand in places
like Brazil and China. In Europe rental car usage in 2013 is forecast to decrease even more over
2012. This is partly due to the competitive nature of intra-continental rail service. More
companies in all regions are looking for ways to be greener in regards to the environment, and
rail over private car is a key objective in many places if business travel is from city-center to
city-center.
Supply
In the core business travel category, nowhere else has mobile technology gained substantial
market through various apps that enable travelers to book, locate and pay for hired car services
and taxi services, like Taxi Magic with
In 2013
smartphones. A fairly new entrant into the sharecar market is Zipcar, which rents vehicles by the
• Rental car companies will get
hour, all serviceable by mobile devices, and locates
tougher about vehicle damage.
and unlocks vehicles with an electronic key. The
further consolidation of U.S.-based rental car
• Fewer new cars will be introduced
firms, such as Hertz/Dollar/Thrifty could result in
into fleets, so wear and tear will be
upward pressure on corporate rates and impact
more common on older vehicles.
supply based on availability. Legacy U.S. rental car
firms are exploring off-shore market growth in Latin America and Asia, and continued
expansion will be a key opportunity in 2013 for some rental car companies. Eurocar in the UK is
increasing its fleet of vans.
Page | 8
2013 Business Travel Forecast and Insight
Corporate Negotiations
Commodity buyers are leveraging both daily rates as well as city surcharge rates in their
negotiations. There seems to be incremental opportunity in 2013 to negotiate better ancillary
costs, including refueling surcharges, into new corporate deals.
Hertz On Demand provides an economical, convenient and socially conscious
alternative to car ownership. It has approximately 150,000 members, is
available in six countries and on approximately 50 university campuses.
Rail Transportation Insight
High-speed rail service will continue to win market share where it directly competes against air
travel, as well as green initiatives by some companies favoring carbon-friendly transportation
over oil-based modes of transportation. Fast check-in, improved onboard catering and free WiFi are also marketing features that are gaining converts. For 2012, the average rail cost in
Europe has risen by 5%, and similar increases are forecast for 2013. The strategy to increase rail
for regional transportation throughout mainland China has hit a roadblock with several recent
safety and corruption issues. Competition between rail operators will remain limited in 2013,
and the continued issue of content outside the individual rail system’s distribution will continue
to make full access to all rail fares for buyers outside of the operator’s home market.
Page | 9
2013 Business Travel Forecast and Insight
Travel Policy Management
On the Road Experiences
With the prevailing issues of flight cancellations, missed connections, unfamiliar locales and
interrupted Internet access, business travelers are more stressed over the conditions associated
with business travel than ever before. Considering all that can go wrong and what employees
do to perform their own core duties when traveling, increased demand for basic comforts,
methods and policies that enhance productivity in balance with the corporate travel budget
will be key challenges for travel policy stakeholders in 2013.
Industry Leaders
Travel professionals are playing an increasingly large and influential role in shaping and
controlling business travel expense categories. This development is fueled by downward
pressure from finance management to reduce travel and entertainment costs, and it is being
aided by technologies, such as online booking tools and real-time compliance reporting. The
Global Business Travel Association (GBTA) conducted its third annual survey (1,500+ business
travel professionals from across the globe) to learn how travel commodity professionals are
adapting to new and evolving business requirements. Sixty percent of the surveyed participants
indicated that they had more control over travel policy performance compared to the first year
study.
Ten Top Definitions of Travel Policy Control
Global
Drive savings and controlling costs
Setting policies
Managing compliance behavior
Corporate technology usage
Preferred vendor usage
Managing traveler behavior
Building a long-term strategy
Out of policy consequences
Reporting noncompliance
Authoritytodrivepolicychanges
61%
41%
35%
31%
30%
29%
25%
12%
10%
9%
North
America
62%
42%
40%
31%
29%
32%
23%
10%
11%
9%
Latin
America
73%
54%
27%
24%
24%
12%
37%
15%
12%
7%
EMEA
64%
36%
31%
38%
30%
32%
26%
9%
9%
8%
AsiaOceania
54%
47%
31%
23%
32%
22%
26%
19%
9%
8%
Source: GBTA Annual Travel Professional Survey 2012
Three factors contributing to greater control are stronger executive support, broader role
within the enterprise and visibility of traveler activity in real-time. Given these improvements,
only 19% of those surveyed have implemented or are considering non-reimbursement for
noncompliant expenses.
Page | 10
2013 Business Travel Forecast and Insight
Gamification versus Hard Mandates
Beginning in early 2011, large-spend corporations explored and successfully implemented
various incentives to drive program compliance without substantial capital investment through
friendly internal competition. Gamification is the use of game mechanics and game design
techniques in non-game contexts. Typically gamification applies to non-game applications and
processes, in order to encourage people to adopt them, or to influence how they are used. The
corporate online bookings tools also helped further drive compliance through messaging and
sound bite education. Smaller corporations are finding gamification an inexpensive alternative
to time and resource management of hard mandates and forced compliance control.
Rethinking Traditional Travel Policies
Mobile technology and social media are the impetus of changing the way management thinks
about cost control and policy compliance. The trade-off is that management may regain some
of their control over travel bookings while the traveler gains more power over purchasing
decisions influenced by obligations, duty and team performance and peer competition. The
challenge in 2013 will be for cost management to bring travel policy to employees in real time
or risk deterioration of compliance. Rather than fighting the growing flow of information
available to employees today, compliance management must increase opportunities to educate
travelers at every step of the process, and make them aware of good and bad decisions during
the process.
Supplier Management
The business travel category has been more complex than ever in contract negotiations and
supply chain management. Corporate buyers can improve their negotiation tactics in 2013 by
better understanding how employees can be influenced to purchase travel at optimum times
(advance purchase). Visibility into missed opportunities in lodging (booked outside of the
managed program) can be a way policy compliance can be optimized.
Program Management in 2013
With demand outpacing supply and yield increasing incrementally as Travel Leaders forecasts
for 2013, it is critical that travel commodity managers strategically examine and test every
opportunity to control costs internally as well as through effective supply chain management.
Page | 11
2013 Business Travel Forecast and Insight
Three Key Areas Cost Managers Should Practice in Each Top Travel Spend Category
Spend Category
Airline Spend
Lodging Spend
Ground Transportation Spend
Cost Control Opportunity
• Understand airline inventory management
• Consider alternative low-cost airline carriers
• Examine total cost to fly
• Understand evolving supplier strategies
• Less versus more local hotel properties
• Focus on total cost of stay
• Consider new ideas
• Benefit from competition
• Negotiate on ancillaries
Recognizing Intangible Costs
As companies continue looking for opportunities to contain costs, many are vested in ensuring
that travel policy decisions are truly cost effective and are looking beyond the cost of the trip,
focusing on the overall impact on the travelers within their organization. Stress, missed
meetings and unorganized or poorly arranged travel plans can result in bigger corporate losses
in productivity and successful business ROI.
Survey of Travel Expenses Covered Under Corporate Reimbursement Policies
First checked bag
Hotel room Internet access
Mobile device
Rental car provided GPS
Inflight-purchased meals
Inflight Internet access
Second checked bag
Expedited airport security access
Airline seat upgrade
Priority boarding
Airport lounge membership
Hotel room upgrade
Inflight entertainment
None of the above
91%
79%
63%
60%
51%
48%
40%
28%
27%
16%
12%
10%
9%
2%
Source: BTN Survey 2012
Page | 12
2013 Business Travel Forecast and Insight
From the Troposphere
North America Forecast
Regional Summary
The economies in Canada and the U.S. continue to make slow but steady recovery, which will
result in a fairly flat to moderate increase in the cost of business travel in 2013. Corporations
with ties to the Eurozone will be especially cautious about their travel budgets. Continued
unpredictability of crude oil prices and U.S. stock and housing markets can influence slight
shifts into the following Travel Leaders predictions. Both legacy airlines and low cost carriers
continue to look for unbundling price opportunities to leverage more ancillary income, and this
will carry into 2013. While the technology is now available, few airlines seem to be willing to
enable advance ancillary purchases for most services during the initial booking process, with
the exception of premium seating requests. Part of the reason is that airlines are not taxed on
elements of the flight service that are not directly connected to the ticket purchase price, since
they are charged separately as “extras.” There will continue to be additional consolidation in all
business travel supply categories in 2013.
Demographics of the typical North American business traveler:
• Male (59%)
• Average age 38
• College educated (71%)
• Works for a company with 4,000+ employees
Canada
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 2.2%
Lodging Cost = 2.8%
Rental Car Cost = 1.6%
Overall price inflation is expected to moderate significantly compared to 2012, with an increase
of 1%, at most. Like their business counterparts to the south, Canadian firms are increasingly
embracing the strategic meetings management approach, leveraging transient hotel volumes
when negotiating meetings and group events. The western provinces of Canada will experience
a particularly higher demand in 2013 over the other central and Atlantic regions due primarily
to the influx of off-shore demand to that region’s energy and mining resources. Canadian
average daily lodging rates will increase slightly over the other two spend categories. Canadianbased airlines have been slow in 2012 to increase capacity, leading to record load factors.
Competition in 2013 will remain high with Air Canada announcing the launch of a new low cost
carrier subsidiary.
Page | 13
2013 Business Travel Forecast and Insight
AnticipatedAverageAirlineTicketPriceIncreaseinKeyMarketfor2013:
Calgary – 0%
Montreal – 2%
Toronto – 2%
Vancouver – 2%
AnticipatedAverageNightlyLodgingRateIncreasesinKeyMarketfor2013:
Calgary – 2%
Montreal – 1%
Toronto – 3%
Vancouver – 4%
United States
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 3.5%
Lodging Cost = 3.7%
Rental Car Cost = 2.9%
The Airline Reporting Corporation, that handles the payments between travel agencies and the
airlines, was up less than 1% in transaction numbers in the first seven months of 2012, which is
in tandem with the percentage of additional inventory of new airline capacity. U.S.-based
airline carriers are introducing new aircraft, but overall fleet sizes are not anticipated to
increase much in 2013, as the fleet replacement is tied directly to retired equipment. With a
pending merger of yet another airline system – American and US Airways, and potential
cessation of JetBlue Airways and Alaska Air, average ticket prices will progressively become a
moving target. However, these anticipated changes might not hit the corporate travel budget
until 2014 because of delays in approval processes and the scale of the pre-planning required.
This is evident with the recent merger of Continental with United, which is still working out
program specifics and additional changes in equipment, personnel and systems. Capacity
reductions in Los Angeles, San Francisco and Houston will contribute to less competition and
increases in average ticket prices, whereas Philadelphia will continue to see a decrease in the
number of low cost carrier seats, resulting in a 2013 forecast of a 7% average trip cost increase.
Middle Eastern-based Emirates launched non-stop service to and from Washington in March of
2012.
Anticipated Average Airline Ticket Price Increases in Key Markets for 2013:
Atlanta – 1%
Houston – 7%
Phoenix – 8%
Boston – 5%
Los Angeles – 9%
San Diego – 6%
Chicago – 8%
Minneapolis – 5%
San Francisco – 7%
Dallas – 6%
New York – 4%
Seattle – 6%
Rental car fleets will also be slightly impacted in 2013 by significant cost per unit in the U.S.
used car market. Meetings and events will continue to grow incrementally. The number of
attendees is anticipated to increase by 5% or more in 2013 as more corporations loosen purse
strings on event budgets.
Anticipated Average Nightly Lodging Rate Increases in Key Market for 2013:
Atlanta – 6%
Houston – 2%
Phoenix – 0%
Boston – 8%
Los Angeles – 5%
San Diego – 4%
Chicago – 3%
Minneapolis – 3%
San Francisco – 12%
Dallas – 2%
New York – 2%
Seattle – 4%
Denver – 4%
Philadelphia – 4%
Washington – 2%
Page | 14
2013 Business Travel Forecast and Insight
The demand for upscale and luxury accommodations is not anticipated to increase much in
2013, but the average hotel nightly room rate for properties in that category is anticipated to
increase by 11%. There will be a continued trend in 2013 for U.S. business travelers to seek
alternatives to airline travel. More travelers going less than 700 miles will be choosing either car
transportation, or in the Northeastern corridor, Amtrak’s high-speed Acela trains.
Average daily rental car
rate in the U.S. in 4Q12:
$45.71
Page | 15
2013 Business Travel Forecast and Insight
Latin America Forecast
Regional Summary
The Roman Catholic World Youth Day event in July of 2013, the World Cup
in 2014 and the Summer Olympics in 2016 are all occurring in Brazil, and the
ramping-up is resulting in continued escalation of supply for this region.
Chile is also anticipated to have a significant increase in costs for all business
travel categories, whereas Argentina, Colombia, Mexico and Peru are
anticipated to have moderate decreases in the cost of travel next year The
newly-formed LATAM Airlines Group (mergers of Chile’s LAN Airlines and
Brazil’s TAM Airlines) will take off in its first full year of new operations. This
will make it the world’s second largest airline specifically in market value at the
end of 2013. This will continue into the following year, when they complete the
merger and disengage from one or both of the world airline alliances they separately belong to.
Many of the regions independent hotel properties do not participate in the global
distribution systems (GDS) which makes lodging negotiations especially difficult.
Meetings and events are also expected to have healthy growth potential in
frequency and numbers of attendees across all countries in the region, especially
again Brazil, with group sizes growing as much as 9% in 2013, but meeting event
durations are anticipated to shorten during the same period.
Argentina
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost = 0.5%
Lodging Cost = 3.0%
Rental Car Cost = (3.7%)
Brazil
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 3.8%
Lodging Cost = 13.8%
Rental Car Cost = 2.8%
Overall travel spend within the country in 2013 is anticipated to top out around USD$34 Billion,
In 2012, over 80% was spent on domestic travel, but in 2013 and beyond, the international
percentage is anticipated to double in the wake of an improving global economy. Rental car
markets throughout the country will also change as major U.S.-based suppliers expand
operations to take advantage of the increasing demand. Brazilian-based Localiza Rental Car is a
significant regional player, and will meet the new competition head-on.
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2013 Business Travel Forecast and Insight
Chile
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 3.8%
Lodging Cost = 5.7%
Rental Car Cost = 6.1%
Regional air travel between Chile and Brazil will most likely see a negative impact with the TAM
and LAN merger, resulting in fewer seats. Increases in average nightly room rates in Chile will
be second to Brazil in 2013, but very modest with stagnant increases in supply.
Colombia
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 1.4%
Lodging Cost = 3.5%
Rental Car Cost = 4.5%
Mexico
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost = 0.9%
Lodging Cost = 3.5%
Rental Car Cost = (2.8%)
Peru
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost = (1.6%)
Lodging Cost =7.4%
Rental Car Cost = (3.1%)
The most significant decrease in the overall cost of business travel for the region will be felt in
Peru, where the national economy is still struggling, especially with the squeeze of its national
airlines and small demand for private rental car transportation--where the favorite mode of
ground transportation is hired private car and taxi.
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2013 Business Travel Forecast and Insight
Europe, Middle East and Africa Forecast
Regional Summary
The Travel Leaders Envision team research reveals that the region’s unemployment rate is a key
contributing factor that directly impacts the business travel forecast for next year. The
unemployment rate in Spain in late 2012 has increased to 25%, Greece is up to 22% and
Portugal has increased to 15%. New taxation occurring across the Eurozone is resulting in a 20%
price disadvantage over non-regional flagship airline carriers. The UK increased the country’s
Air Passenger Duty tax by 8% in middle 2012, and the Emissions Trading System (ETS) has
levied higher fees which eventually trickle down to the business traveler. European GDP for the
region is estimated to climb less than 1% in 2013. On the other hand, Middle Eastern
economies, as well as a handful of countries in Africa, should be fairing reasonably well into
next year. The key business markets in France, Germany, Italy, Spain and the United Kingdom
represent 70% of the region’s business travel revenues. In 2013, Germany, France and the UK
are expected to see a positive GDP growth at approximately 1%. Italy and Spain are currently in
a recession and should remain in such a state until sometime in 2014. The strongest demand
for air travel in the Eurozone will be in Germany and the UK. By early 2013, Greece will have no
non-stop service across the Atlantic.
Anticipated Average Airline Ticket Price Increases in Key Markets for 2013:
Amsterdam – 6%
London – 3%
Berlin – 1%
Madrid – 4%
Dublin – 11%
Moscow – 1%
Frankfurt – 7%
Paris – 0%
Regional carriers, especially Air France and Lufthansa, are struggling to find plans that will make
them profitable. Lufthansa is planning to launch a new low cost carrier in 2013. Iberia Airlines
along with Lufthansa and Air France are transferring short-haul routes to low cost carrier
subsidiaries. European carriers are especially feeling pressure from the
growth in market share of Middle Eastern carriers, which will continue to
grow their global footprint in 2013 and compete for highly competitive
markets in the Asian regions.
Highest Lodging Markets in 2013 across EMEA
Amsterdam
Tel Aviv
London
Paris
Edinburgh
Jeddah
85%
85%
83%
83%
82%
82%
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2013 Business Travel Forecast and Insight
In most cases, rail travel in Europe continues to offer competitive alternatives to regional air
travel. Subsequently, rail travel throughout EMEA will also experience moderate increases in
demand to around 5%, but cost increases for premium-class travel could raise as much as 9%.
Meetings and events throughout the Eurozone will increase, but at a moderate rate compared
to other global regions, with an increase of 2% in cost per attendee. As a result, there is less
pressure on local businesses to reduce group sizes to offset higher costs.
Anticipated Average Lodging Price Increases in Key Markets for 2013:
Amsterdam – 2%
London – 0%
Berlin – 3%
Madrid – 1%
Dublin – 10%
Moscow – 2%
Frankfurt – 5%
Paris – 7%
France
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost – 1.8%
Rail Cost – 5.8%
Lodging Cost – 2.6%
Rental Car – 2.7%
Competition between low cost carriers and high speed rail for outbound and inbound
intercontinental travel should result in only a modest increase of travel costs throughout 2013.
France’s domestic airline market remains fairly stable. Paris will continue to see a growing
demand in lodging, especially in the midmarket properties. Rate increases for accommodations
will increase in that sector slightly as midmarket hotels invest in upgrading their services for
cost-conscience business travelers who would otherwise stay at premium hotels. The 1.4% VAT
increase that hotels implemented in 2012 will require closer cost management.
Germany
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost – 2.3%
Rail Cost – 6.6%
Lodging Cost – 2.4%
Rental Car – 2.8%
Germany’s GDP trade is more globally diversified, and there remains a strong demand for
business travel. Regional low cost carriers Ryanair and easyJet are working to keep cost
increases in check to around 2% for the coming year and changing their ancillary offerings to be
more appealing to business travelers. The cost of rail transportation will grow more in Germany
than in any other Eurozone country. Munich will have one of the region’s biggest price hikes in
the cost of lodging with prices increasing in 2013 as much as 10%.
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2013 Business Travel Forecast and Insight
Italy
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost – 0.6%
Rail Cost – 2.4%
Lodging Cost – 1.7%
Rental Car – (4.3%)
Russia
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost – 3.0%
Rail Cost – 8.5%
Lodging Cost – 1.6%
Rental Car – 3.4%*
* Chauffeured car rental is the most popular mode of private car transportation in this country.
Russia will remain a place of interest for foreign investors through 2013, and long-range Russia
will also host World Cup and Olympic events, which will begin pushing the supply and strong
development pipelines in preparation for the events. Short term, competition will keep overall
growth rate.
Saudi Arabia
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost – 2.6%
Rail Cost – NA
Lodging Cost – 2.9%
Rental Car – 3.7%*
* Chauffeured car rental is the most popular mode of private car transportation in this country.
Strong airline performance and an expanding midscale hotel market is occurring which will
become more appealing to budget-minded business travelers. This supply growth will put
competitive pricing pressure on premium properties and older midscale hoteliers.
South Africa
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost – 2.6%
Rail Cost – NA
Lodging Cost – 3.2%
Rental Car – 2.2%
Spain
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost – 0.4%
Rail Cost – 1.9%
Lodging Cost – (2%)
Rental Car – (6%)
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2013 Business Travel Forecast and Insight
Despite a suffering economy and staggering unemployment rates, Spain will continue to see
travel category rate increases that are higher than the rate of inflation. Within the country
there is minimal competition that gives rail suppliers a price monopoly.
United Arab Emirates
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost – 2.7%
Rail Cost – NA
Lodging Cost – (1.5%)
Rental Car – 2.5%
Regional giants Emirates Airlines and Etihad Airways are both headquartered in UAE. Both
carriers continue to expand their reach at an extraordinary rate, but their business models are
not entirely transparent. Emirateshas acquired shares in SriLankan Airlines and is currently
working an alliance deal with Qantas. Etihad has invested into Air Berlin, Aer Lingus, Air
Seychelles and Virgin Australia. In the last few years, Dubai has developed into a highly-sought
business market, particularly by the Chinese, which will continue to bolster the economic
successes in 2013.
United Kingdom
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost – 2.7%
Rail Cost – 2.7%
Lodging Cost – (1.1%)
Rental Car – 4.4%
Business travel demand for the UK should remain strong throughout 2013. Price increases in
major business centers have been steady, especially during the 2013 Olympics, but hoteliers
will be working diligently to fill room vacancy in the wake of this increase in supply.
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2013 Business Travel Forecast and Insight
Asia and Oceania Forecast
Regional Summary
For the past several years, the Asia and Oceania region has been a strong performer in all
categories of business travel. The economic situation in Europe, along with some downturn in
local economies, primarily China and India, are indicators that 2013 will not be as robust and
progressive as 2012. Japan continues to recover from the earthquake and tsunami disaster of
2010, but is poised to make a strong recovery in 2013. The airline market in this region will
remain dynamic through next year with an ever-increasing number of low cost carriers.
Capacity growth in China, which is geographically situated as a mid-point gateway for the
region to western international business centers, is growing and competing in international
routes with carriers like Air China, China Eastern, and China Southern. Meetings and events for
the region will cost slightly more in 2013 than they did in 2012 in most countries. Group sizes
are expected to decrease as local companies opt for a larger number of smaller meetings over
shorter event duration.
AnticipatedAverageAirlineTicketPriceIncreasesandDecreasesinKeyMarketsfor2013:
Beijing – 6%
Hong Kong – 2%
Melbourne – (2%)
Mumbai – 10% Seoul – 5%
Shanghai – 9%
Singapore – (2%)
Sydney – 1%
Tokyo – 5%
The lodging market across the region for 2013 varies greatly from one country to the next.
Average nightly room rates will increase most drastically in Hong Kong and Sydney, whereas
New Delhi and Mumbai will have a significant lodging decrease partly due to a recent influx of
U.S.-based hotel chains, which built supply that exceeded demand in 2012. More business
travelers are booking their lodging through a designated travel management company now
than in years past, as more regional firms consolidate their business travel with a professional
agency service. In some countries, where individual credit cards are not the norm, business
travelers tend to continue making hotel reservations directly with individual properties, as the
agency booking systems require a credit card to guarantee the hotel reservation.
Anticipated Average Nightly Room Rate Increases and Decreases in Key Markets for 2013:
Beijing – 3%
Shanghai – (5%)
Hong Kong – 9%
Singapore – 3%
Melbourne – 2%
Sydney – 5%
Mumbai – (2%)
Tokyo – (3%)
Seoul – 4%
Australia
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 0.3%
Lodging Cost = 3.9%
Rental Car Cost = 6.0%
Virgin Australia continues to campaign heavily for the domestic business travel market directly
confronting Qantas, and all airlines have improved their yield management to stay in check
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2013 Business Travel Forecast and Insight
with demand. Another contribution to a moderate increase in average ticket prices is the
Australian government’s recent carbon tax imposed on all of the country’s airlines. These costs
are being passed on to the consumer. Qantas is also partnering with Emirates while it
disengages from a long relationship with British Airways. This move should help the airlines
improve market share to many Eurozone destinations through a Middle East gateway. Airline
capacity in Sydney in 2013 should increase by 11%. The domestic rental car market in the
country will remain as strong as it was in 2012. Suppliers have implemented better fleet control
management programs to keep supply in check with the peaks and valleys of local demand.
China
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 1.2%
Lodging Cost = 1.2%
Rental Car Cost = 3.1%
The Chinese economy is experiencing a moderate slowdown, partially induced by the GDP
export to Europe. Airline distribution has taken a positive turn with Travelport GDS selling Air
China and China Southeastern Airlines. The recent increase in lodging supply has not kept pace
with the current demand, which will result in moderate average nightly room rate increases in
2013. The country continues to also invest heavily in the development of a high speed rail
network with the Shanghai Beijing corridor the top priority. However, with recent safety issues
and corruptive management of appropriations, the plans of a rail network have stalled. The
rental car industry in China is primarily local, as all drivers in the country must hold a Chinese
driver’s license. Some of the rental car companies are including a native chauffer in the package
to entice foreign business travelers to use traditional rental cars while in the country on
business.
Hong Kong
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 3.0%
Lodging Cost = 3.0%
Rental Car Cost = 3.6%
There will be relatively high increases in corporate travel expenses for this highly desirable
business market in 2013. Midscale lodging is growing supply due to the increase in middle class
mainland Chinese business travelers flooding the market.
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2013 Business Travel Forecast and Insight
India
Anticipated Spend Category Increases and Decreases Forecast for 2013
Air Travel Cost = 1.1%
Lodging Cost = (3.4%)
Rental Car Cost = 3.5%
India’s airline market is undergoing some challenges with local carriers such as Kingfisher and
Air India, who are both struggling to operate in a negative revenue environment as both
carriers are recovering from overextended growth. The government has conceded to allow for
foreign investment into the ailing airline situation, which could help both airlines profit in 2013.
Also impacting the local cost of air travel is a significant increase in airport surcharges in New
Delhi. Mumbai Airport is attempting to get government approval for similar surcharge
increases in 2013. In the last few years, there has also been an increase in lodging supply,
which in 2013 will result in moderate increases in average nightly room rates. The car rental
industry in India is growing rapidly, even though most international business travelers prefer to
use private car services to mitigate issues with crowded roadways and confusing surface
streets.
J ap an
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 3.8%
Lodging Cost = 5.4%
Rental Car Cost = 14%
In August 2012, All Nippon started a joint venture with Air Asia. This alliance introduced a total
of six low-cost airline subsidiaries across the Asian market.
Singapore
Anticipated Spend Category Increases Forecast for 2013
Air Travel Cost = 4.3%
Lodging Cost = 6.2%
Rental Car Cost = 3.2%
As business travel demand continues to be very strong, the lodging industry in Singapore is
expected to increase in cost at a faster pace than other areas in this region. Corporate hotel
negotiations should be favorable for the buyer in 2013.
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2013 Business Travel Forecast and Insight
On the Ground
Changes in Dining and Entertainment
New Opportunities for Entertainment Specialists
More travel category managers are seeing and exploiting areas of opportunity to influence and
enable business travelers to make sound purchase decisions once they arrive to their business
destinations. New apps that range in services from ground transportation alternatives in
specific locations to where to dine and where to entertain clients are being used to help
business travelers navigate unfamiliar cities. Corporations can save as much as 25% of the costs
associated with dining and entertainment by pushing services to the traveler once they are on
the ground. Many finance departments are exploring mobile messaging services for delivering
timely buying recommendations to travelers based on location in real-time. Social Media is also
changing the shape of this spend category through information sharing of popular eating
establishments, menu descriptions and other business traveler recommendations on where to
dine and entertain clients.
Average Overnight Travel Costs for a Typical U.S.-Domestic Business Trip
Controlling this spend category has traditionally
been much more difficult to manage than
transportation and lodging categories. Credit
card vendors and automated expense
management tools are giving finance managers
much more visibility into the dining and
entertainment spending. Mobile service vendors
such as Dinova and Groupon are enabling
business travelers to pre-arrange dining costs.
Source: Envision @ Travel Leaders
Dining Alternatives
There is a growing sector within the road warrior contingent that is looking for alternatives to
traditional restaurant meals. More hotel properties are negotiating in-room meal services or
advertising takeout food vendors, such as Delivery.com to encourage guests to “dine in”.
Extended stay properties with equipped kitchens are also becoming more popular for business
travelers who have the option of making a single trip to a local grocery store and cooking most
of their meals.
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2013 Business Travel Forecast and Insight
Mobile and Social Media Projections
Mobile Everywhere
There are several visionary technology companies who are anticipating a further revolution in
how mobile integration with global positioning will further enable individual business travelers
have access to real-time information that can help them navigate from one point on the
ground to the next. A perfect scenario is a service that recognizes when a traveler has landed at
London Heathrow Airport, and his or her mobile app instructs the traveler at the point of
arrival to take the downtown Heathrow Express rail service instead of a much more expensive
and slower taxi cab ride into the city. Business travelers will continue to drive innovation in
2013, as the expectation is to be connected all the time via smartphones and tablets, which will
further push suppliers to deliver apps and tools that help road warriors achieve hyper-efficiency
while out of the office and ease the stress of life in general.
A survey by SAP conducted in June 2012 reveals that
companies that actively engage in mobile best practices can
improve their operating margins, see higher revenue growth
and experience overall gains in productivity compared to
companies with no mobile management strategies.
60% of Asian business
travel managers stay
connected with their
travelers during a
business trip.
Geolocation Functionality
More individuals are carrying around mobile devices that connect with satellite positioning to
pinpoint exact logistical details, and corporations and vendors are looking for methods to
capitalize on this technology to promote, track and instruct the business traveler every step of
the way once he or she sets foot off the airplane. With this technology comes the issue of “Big
Brother” intelligence, and the sense that someone else is watching every single move made by
the mobile user that can be used for micromanagement purposes. At its 2012 user conference
in April 2012, Concur revealed the concept of “The Perfect Trip” depicting a smartphone app
that knew exactly when the business traveler arrived, and prompted him with suggestions of
ground transportation, lodging access (keyless using a scanning-enabled hotel room door) and
meal venues built around his preferences, historical data from reservations and expense
reporting data.
Survey of Travel Technology Used by Business Travelers
84%
81%
70%
47%
37%
24%
Use smartphones while on business trips
Access the Internet via mobile phone
Use tablets while on a business trip
Of iPad users who made hotel reservations on their device
Of iPad users who made airline reservations on their device
Of iPad users who made rental car reservations on their device
Source: Results of Phocuswright, Rearden, Concur and Gray Stripe surveys in 2012
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2013 Business Travel Forecast and Insight
Social Media Growing
As the younger, Millennial generation enters the workforce, their style of social connection and
communication will further push for new ways to use social media to share information,
recommend specific destinations and places to eat, be entertained or traverse from one point
to another efficiently. Vendors will capitalize on this opportunity, but will also be concerned
about the impact of negative reviews in an unmanaged communication platform. In 2013,
companies who ignore the way people communicate in their personal lives are committing a
big oversight of cost controlling opportunity. But duplicating the exact way people
communicate for business purposes is also an oversight. The best balance is creating a
corporate platform of social communications specific to work life.
Survey of Companies Supporting Mobile Initiatives inside a Managed Policy
Mobile devices personally owned and not supported by the company
Mobile devices personally owned and supported by the company
Mobiledevicesownedandsupportedbythecompany
36%
25%
24%
Source: BTN Study October 2012
Hewlett-Packard did a global company-wide survey of all employees in 2010 and learned from
the results that Gen-X and Millennial travelers prefer to receive corporate policy information in
sound bites, text messages and other abbreviated methods as opposed to being forced to read
printed manuals and long-phrased web pages. In a similar survey conducted by Southwest
Airlines, almost 80% of travelers younger than 35 stated that they use social media while
traveling, and are more likely than any other age demographic to use social media to connect
with other travelers going to the same destination. Unilever has created a special group within
Yammer where travelers can detail experiences and offer tips to other employees. This social
connection also enables travel program managers to follow-up on preferred vendors with
negative reviews based on the social feedback of its employees. TripIt now allows users to
share itineraries through Yammer and Salesforce Chatter.
Skype Alternative to Global Mobile Phone Usage
Corporations are finding that encouraging or putting the mandatory use of Wi-Fi enabled
communication, such as Skype and other VoIP services can greatly reduce the cost of enabling
off-shore mobile phones and the associated high cost of distant roaming charges. Travelers are
being discouraged from using their mobile devices for Internet services while traveling outside
their home countries to reduce expenses. There is also an added concern about corporate
intelligence leaking during information exchange over the Internet. Other companies with a
high concentration of off-shore business travel, are negotiating multinational telephone
number services, such as Tru, that provide temporary, in-country telephone numbers for
foreign visitors to reduce international calling rates and roaming costs. Appropriate SIM cards
are required to enable such services to work with any given mobile device. Service like this can
save a company as much as 60% in international business calling costs.
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2013 Business Travel Forecast and Insight
Duty of Care
Safety and Security Still Big Initiatives
Travel risk management programs for most companies, especially with growing off-shore
business travel, will continue to broaden and evolve in 2013. Many firms are becoming
increasingly aware of the liabilities of not having a sound Duty of Care policy to formally set
guidelines and accountabilities when employees are on the road for business. These systems
will go beyond tracking where employees are, and will enable specific communication and
action instructions to the individual traveler when circumstances require the activation of an
emergency event. These new travel policies should
provide full disclosure to employees on the risks
A 2012 AirPlus survey
associated with destinations being visited, whether or
revealed that 68% of
not there are current known security risks. This can be
surveyed large enterprises
currently use traveler
accomplished by providing employees with pre-travel
tracking technology.
destination intelligence proactively and in a timely
manner, with updates provided through the duration of
the trip event.
Corporate Laws
As firms are increasingly held accountable by local laws, public opinions and stakeholder
jurisdiction, specific to protection of intellectual property during travel, it is more important
than ever that companies provide proof of disclosure in the event their duty of care initiatives
come under question. This includes thoroughly documenting communications provided to
employees, and the ability to demonstrate that business travelers have been properly informed
about destination risks prior to travel.
Tracking Corporate Assets
Companies like Microsoft are exploring technologies to monitor the locations and conditions of
their employees, not only when they are away on a business trip, but also during personal
vacation time. Their approach is that the company has a corporate responsibility to protect
their corporate assets, including employees, whenever possible. Currently, Microsoft as
deployed Cognito technology, which provides traveling employees localized information,
including transportation alternatives from a certain location to another, pharmacies and other
emergency resources.
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2013 Business Travel Forecast and Insight
Meetings and Events
Supply
New supply, especially for North America and EMEA, will be limited, but there will be growth in
new meeting venue destinations in the other two global regions. Supply for large-scale events
in the U.S. is increasingly hard to find.
Demand
North America will see only a modest increase in the demand for meetings and events,
whereas Latin America and Asia/Oceania will see further increases in meetings demand for
2013, with more frequent events involving a smaller number of participants per event. For most
corporations, small meetings comprise a greater portion of their total events’ budget, but often
these smaller meetings are overlooked by finance managers as cost-managed opportunities.
The Envision team at Travel Leaders sees this as a continued effort in 2013, as companies are
looking more closely at their entire travel and entertainment budget, including meetings.
Yield
A modest growing demand in North America combined with a fairly stable supply will result in
slight cost increases for meetings and events throughout 2013. Major conference and
convention cities like New York and Las Vegas will see the greatest cost increases, as well as
luxury destinations.
The Global Business Travel Association anticipates that group and meeting travel spending will
increase by 6% in 2013 compared to the current year.
2012 Survey Conducted by Business Travel News with SME Businesses on Meetings
Holding Space
Holding space will be more difficult for meeting planners in 2013 as many hotels become more
restrictive on the terms and conditions of blocked meeting space and sleeping rooms without
advance deposits and firm, contracted commitments.
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2013 Business Travel Forecast and Insight
Increase in e-RFP Technology
There continues to be a noticeable trend in the meetings and events industry that more
companies, especially in the U.S., are using third party electronic RFP technology to source and
contract meeting venues. e-RFP solutions can be very efficient sourcing tools, especially if
integrated into a wider strategic meetings management process. The downside is that
inexperienced users of these technologies may be sourcing too many venue options while
looking for the best possible deal. Instead of sourcing the typical 3 or 4 desired venues, some
users are querying as many as 20 or more venues in the same market. This over-sourcing is
causing a problem for both suppliers and buyers. Hotels do not always know where they are
receiving a qualified opportunity where the buyer has chosen a shortlist of appropriate
vendors. Presently, most U.S. hotels are saying that their conversion rate for e-RFPs is in the
single digits, which is a big gap compared to the traditional RFP sourcing conversion rate. Some
properties are declining to bid when a buyer is querying very large numbers of venues.
Incentive Travel
There continues to be a gradual increase in incentive travel based on the research conducted by
the Envision team at Travel Leaders. Companies are again recognizing the value and ROI for
investing in reward travel, which typically appeals to business professionals more than cash
bonuses (taxable). The ostentation of years ago is gone, and venues typically include more
relaxation and freedom to select specific excursions and events during the incentive trip. Social
media also is a top concern for companies who are trying to protect corporate reputation.
Some companies go so far as to tell their entertained employees not to make reference to their
employer while on an incentive trip to limit corporate exposure and potential bad publicity. The
new corporate initiatives surfacing with incentive travel are to promote team-building
exercises and charitable work for larger incentive or reward travel programs that include a
sizable group of employees. Companies in cost-cutting mode are changing their annual
incentive travel pattern to larger groups going every other year.
Video Conferencing
In a survey of meeting planning professionals conducted in 2012 by BTN, 72% indicated that
their companies have a policy to offer video-conferencing or other forms of remote
collaboration in lieu of travel for internal meetings as a method to reduce cost and wear and
tear on frequent travelers.
Survey of Travelers Using Alternative Video-Conferencing for Internal Meetings
Somewhat frequently
Very frequently
Not frequently
Not at all
39%
24%
24%
13%
Source: BTN Survey in 2012
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2013 Business Travel Forecast and Insight
Research conducted by Infonetics Research in 2012 reported that the video-conferencing
market would see a double-digit increase in annual yield based on demand for corporate onsite
video-conferencing systems. In the same BTN survey, 47% of the surveyed business travelers
said that video-conferencing alternatives improved their productivity, with 45% stating that the
option gave them a greater control over work-life balance.
Meeting Technology
Increasingly, companies are requiring technology enhancements from their meeting services
provider. Meeting planning companies are using sophisticated Web-based registration and eRFP technologies to be more competitive than non-automated bidders. Just as attendees
expect online registration for events today, mobile apps are becoming the norm for events too.
The newest technology enhancement, increasingly required by corporate meeting buyers, is eAgenda tools. These tools allow instant publishing of agendas, customized by the attendee and
real-time messaging.
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