2014 Business Travel Forecast and Insight
Introduction
Welcome to the Travel Leaders 2014 Business Travel Insight. As
2013 draws to a close, it is important to begin to assess what
trends will impact 2014, and how changes in the travel industry
may affect individual clients in the upcoming year. The Travel
Leaders Consulting Team constructs this Insight document each
year to help our clients understand some of the travel
developments that may take place in the near future. To do this,
our team analyzes an assortment of well-known global travel
sources and incorporates data patterns we see that are specific to
Travel Leaders clients to create a customized Forecast for our
clientele. By taking the information in the 2014 Insight into account
and working with the guidance of an experienced travel account
manager to develop a sound strategy—we hope each client will
have true insight into the future of the business travel program
and will be proactive about optimizing their travel programs for
the coming year.
Travel Leaders Consulting Team
November 12, 2013
Consulting@travelleaders.com
Timeline of Upcoming
Business Travel Insight
Updates:
January 2014: Quarter 4
Insight Updates released
April 2014: Quarter 1
Insight Updates released
July 2014: Quarter 2 Insight
Updates released
October 2014: Quarter 3
Insight Updates released
November 2015: Full 2015
Business Travel Insight
released
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Table of Contents
Overview:................................................................................................................................................ 4
2014 and Beyond: 6 Trends to Watch .............................................................................................. 4
Trend: Making Big Data Work ............................................................................................................................ 4
Trend: Increase in Mobile .................................................................................................................................... 4
Trend: Growing Internal Communication........................................................................................................ 5
Trend: Gamification ............................................................................................................................................... 5
Trend: Duty of Care ............................................................................................................................................... 5
Trend: Focus on Loyalty Programs ................................................................................................................... 6
North America Outlook 2014 ............................................................................................................. 6
Industries to Increase Travel Spending in 2014 ............................................................................................. 7
Airline Travel .......................................................................................................................................... 8
Travel Leaders Data: Airline ................................................................................................................................ 8
First/Business Class ................................................................................................................................................ 8
Delays ........................................................................................................................................................................ 9
Increase of Fees on the Horizon ........................................................................................................................ 9
Re-bundling Trend ...............................................................................................................................................10
Airline Market Share ............................................................................................................................................. 11
American Airlines Merger ...............................................................................................................11
Lodging ................................................................................................................................................ 12
Travel Leaders Data: Hotel .................................................................................................................................12
Hotel Fees, Extras and Upgrades ......................................................................................................................13
Mobile Hotel Bookings ........................................................................................................................................13
Ground Transportation ...................................................................................................................... 14
Travel Leaders Data: Car Rentals ......................................................................................................................14
Rail Travel ................................................................................................................................................................ 15
Meetings ............................................................................................................................................... 15
New Meetings Technology ................................................................................................................................ 16
Mobile Technologies .......................................................................................................................... 16
Late Adapters .........................................................................................................................................................16
Mobile Policy .......................................................................................................................................................... 17
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Security ................................................................................................................................................. 17
Automation ............................................................................................................................................................. 17
Liquid Scanners ................................................................................................................................... 18
Personnel .................................................................................................................................................................18
Personal Electronic Devices (PEDs) ..................................................................................................................19
Global Trends ......................................................................................................................................20
Travel Leaders Data: International................................................................................................................... 20
Airline ................................................................................................................................................. 20
Hotel .................................................................................................................................................... 21
Ground Transportation ................................................................................................................... 21
Outlook for the Europe Region 2014 ............................................................................................................. 22
Air Transportation ........................................................................................................................................... 22
Hotels ................................................................................................................................................................. 22
Ground Transportation .................................................................................................................................. 22
BRIC Spotlight: Russia .................................................................................................................................... 23
Outlook for the South America Region in 2014 .......................................................................................... 23
Air Transportation ........................................................................................................................................... 23
Hotel ................................................................................................................................................................... 23
Ground Transportation .................................................................................................................................. 23
BRIC Spotlight: Brazil ...................................................................................................................................... 23
Outlook for the Asia/South Pacific Region in 2014 ..................................................................................... 24
Air Transportation ........................................................................................................................................... 24
Hotel ................................................................................................................................................................... 24
Ground Transportation .................................................................................................................................. 24
BRIC Spotlight: China ..................................................................................................................................... 24
BRIC Spotlight: India ....................................................................................................................................... 24
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Overview
An impressive 84% of Travel Leaders agents who specialize in business travel indicated
that 2013 bookings were equal to or better than 2012. So will growth carry over into 2014?
All of our data indicates that the number people traveling for business will continue to
increase over the next year. This growth may be diluted by uncertainty and caution about
the business travel marketplace, and the economy as a whole. The recession still casts a
broad shadow on business travel budgets, and the recent government shutdown
increased hesitation in an already tentative business travel marketplace. Still, airline
passenger traffic, hotel stays and rental car reservations are all slated to grow in 2014. With
this growth comes higher prices, new technology and an increased need to plan and
adapt travel programs to the ever-changing business environment.
2014 and Beyond: 6 Trends to Watch
Global trends can have a major impact on the way businesses operate, manage their
resources and, of course, travel. By examining some of the major socioeconomic trends
we’ll see in 2014, we can predict ways they will affect the way people travel and the
influence they will have on the business travel suppliers in 2014.
Trend: Making Big Data Work
“Big Data” refers to the collection of large, complex sets of data.
Organizations are already looking for ways to capture, store, study, and use
huge quantities of data, and even more organizations will look for ways to manage and
use their data in 2014.
Impact on Business Travel: Reporting will become increasingly important to managed
travel programs. Organizations may want visual examples of travel trends within their
individual programs. The necessity to capture all travel data (including travel bookings
made outside of a managed program, such as “open bookings”, ancillary fees, and other
forms of leakage) will become even more important.
Trend: Increase in Mobile
In 2014, more people will have smart phones than traditional cellphones, and
Blackberry users will be forced to convert to other technology. More and more
consumers will use their mobile devices to browse for information, make purchases, share
experiences and rate products.
Impact on Business Travel: Look for big shifts to browsing and booking travel online.
Business travel suppliers will spend 2014 improving their brand’s presence in the mobile
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
marketplace. Meanwhile, consumers will look for apps and sites that remember their
preferences and allow them to find information and book easily on a smaller screen. Also,
look for a rise in last-minute reservations and travelers using GPS information to find
restaurants and entertainment convenient to their locations. This translates into less
planning in advance and more planning on the go.
Trend: Growing Internal Communication
With work-at-home employees and offices scattered across the country (or
the globe) management may be placing added emphasis on in-person
events. A boost to travel budgets may inspire companies to get more social in an effort to
generate new ideas and improve cooperation between employees.
Impact on Business Travel: Get ready for the meeting revival. Affordable meeting space will
be a coveted commodity in 2014. Moreover, organizations will want to make the most of
their meetings. Crowdsourcing tools for sharing, voting, and more will become even more
popular, mobile apps will be widely used to connect attendees, and post-meeting
attendance and participation analysis will be even more important.
Trend: Gamification
Gamification is the trend of applying game mechanics (challenges, points, levels, and
leader boards) to encourage frequent use, engagement, loyalty and brand advocacy, and
consumers and employees will begin to see it frequently in 2014. Internally, organizations
will be testing to see if gamification can improve productivity among their workers
and help them adapt to new technology and policies faster.
Impact on Business Travel: In previous years, most organizations were focusing on
Visual Guilt and penalizing travelers when it came to non-compliant travel booking.
But recently some organizations have begun to experiment with gamification and
rewards in an attempt to reduce leakage and curb bookings made outside a managed
program, so it’s likely that employers will be looking for ways to recognize and reward inpolicy travelers in 2014.
Trend: Duty of Care
Duty of Care will be essential for organizations in 2014. In the case of a lawsuit, an
organization must be able to demonstrate that Duty of Care was present in
order to not be liable. The requirements for Duty of Care are different in every
state, but regardless of their location, employers will be working on defining and
communicating their safety and security practices during 2014.
Impact on Business Travel: Employees traveling for work face increased risk, and yet, this
group is notoriously one of the most difficult to manage in terms of safety. In 2014, many
organizations will try to refine their Duty of Care policy, leaning on new technology to
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
track travelers, as well as disruptive events, to keep their travelers safe and out of harm’s
way.
Trend: Focus on Loyalty Programs
Experts estimate that there are over 2.7 billion loyalty memberships that exist
in the United States today. With the average American household tied to 22
loyalty memberships, suppliers are vying for a share of these loyal
consumers. And while suppliers and vendors have always recognized the
value of return and existing customers, in 2014 there will be an increased
emphasis on how to keep customers loyal in an increasingly digital world. Expect suppliers
to be reaching out even more to their brand-loyalists during 2014. Companies recognize
that it’s going to be difficult to advertise to new customers in the mobile marketplace, and
they are likely to focus on keeping their current customers happy and interacting with the
product through multiple channels.
Impact on Business Travel: Experts questioned the importance of loyalty to business
travelers during 2013, and most found that travelers were just as likely to follow a good
deal as they were to stay loyal to a particular brand. Traveler loyalty will be in the spotlight
in 2014 as brands compete against third party booking websites and apps. Suppliers will
work to make brand loyalty easier for participants, and it’s likely that many will introduce
apps in 2014 as well as a gamification element to their loyalty program.
North America Outlook 2014
The United States continues to lead the globe in business travel spending. Therefore the
North American business travel market will be crowded and sometimes costly in 2014. To
succeed, organizations will need air-tight agreements with suppliers, especially in key
business travel marketplaces. Travel managers will not only have to focus on daily rates
and ticket prices, but the fees associated with these purchases. When they can,
organizations will be looking to smaller cities and more remote venues to host events and
meetings in 2014, as these areas will be less congested and will offer better rates. All in all,
the travel industry will thrive in 2014, and travelers will have more options while on the
road than ever before. However, all of these changes can take a toll on a travel program
that is not properly equipped to navigate these changes, so hands-on travel management
will be crucial during the upcoming year.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Industries to Increase Travel Spending in 2014
As a whole, business travel in the United States is expected to grow in 2014, but some
industries will see a greater increase than others. Travel in the real estate industry is
expected to gain a major boost from the recovering housing market, along with the
construction industry, which is also being aided by the improving economy. The Global
Business Travel Association projects these two large-scale industries will experience some
of the most substantial growth over the course of the next five years, increasing their
business travel spend by about seven to nine percent.
Meanwhile, the education sector is projecting rapid growth as well. The World Youth
Student and Education Travel Confederation revealed that education-based student travel
spend has increased by 40% since 2007. The way students travel has changed recently as
well. They are staying abroad longer; the number of trips over 60 days has increased
several points during the past five years. This reflects a larger trend of students travelling
for more purposeful reasons such as internships, service projects and school/university
sponsored educational experiences. (Note that students traveling purely for vacation and
leisure has fallen from over 75% in 2007 to just 47% today.)
Another industry with a fast emerging business travel market is manufacturing (specifically
rubber, plastics and paper products). This trend is in line with the manufacturing industry
itself, which has recently experienced growth attributed to a fall in energy prices.
Veteran travel industries such as finance, food service, social services, utilities, equipment
rentals, transportation services, and many more will increase their travel spend during the
next few years.
Agriculture, forestry, and printing and publishing are expected to have a lower travel
spend in 2014 and going forward. The United States government typically has the highest
actual travel spend of any industry, but it may curb the amount they travel in 2014. Major
departments such as Defense and Human Services have announced that they will try to
reduce travel during the upcoming year. The government shutdown shed light on just how
much government agencies contribute to travel spend in America. During the 16-day
partial government shutdown, the U.S. Travel Association estimated that the United States
travel industry lost about $152 million per day ($2.2 billion dollars total) as a result of
limited travel-related activity.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Airline Travel
Domestic airline travel in 2014 will be challenging. Options for fares and flights may be
limited, but options for extras and upgrades appear to be seemingly endless. Determining
what ancillary fees travelers require will be key to negotiating successful supplier
relationships in the airline industry. Travel management will need to take a proactive
approach to ticketing instead of waiting around for fees to show up on expense reports.
Travel Leaders Data: Airline
Travel Leaders Group data shows that domestic air prices increased steadily throughout
2013, and this trend is likely to continue into 2014. Pay special attention to second quarter
rates, which are typically higher due to summer holiday travel.
Airline ATP
$411 $400 $395 $424 $444 $412 $405 $417 $443 $443
$370 $367 $393
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2014+
Quarter1 AirlineATP
Quarter2 AirlineATP
$362
$393
$424
$417
2010
2011
2012
2013
$370
$400
$412
$443
2010
2011
2012
2013
2014
$389
$411
$444
$443
2010
2011
2012
2013
$367
$395
$405
2010
2011
2012
Quarter3 AirlineATP
2014
Quarter4 AirlineATP
2014
2013
2014
First/Business Class
The Travel Leaders Fall Survey found a 4.6% increase in the number of business travelers
booking first class or business class tickets during 2013. The majority of business travelers
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
still fly coach, but it’s been some time since we’ve seen a tangible jump in upscale
bookings. The top reasons cited by Travel Leaders Group's survey for why a business
traveler would fly coach were “company policy” (52.6%) followed by “cost” (43.1%). In
2012, this Travel Leaders trend was reversed: “cost” (50.6%) followed by “company policy”
(44.3%). This reversal indicates that while the business travel marketplace is becoming
healthier financially, policy creation and enforcement had a major impact on air travel
bookings during 2013, a trend likely to continue in managed programs during 2014.
Delays
According to Travel Leaders Group’s annual survey, the #1 concern for business travelers
was delayed flights, with almost 90% of respondents indicating that this was a major
concern. There is some reason to worry. During 2013, over 20% of flights were delayed by
at least 15 minutes in the United States. Nationally, the most common causes for delays
were Aircraft Arriving Late (8%), Air Carrier Delay (6%), National Aviation System Delay
(6%), Cancellation (1%), and Extreme Weather (0.5%). While most delays cannot be
avoided, data from the Federal Aviation Administration indicates that some carriers have a
better track record than others when it comes to flights leaving on time:
Percentage of Flights On-Time by Carrier
Delta
AirTran
Southwest
United
American
JetBlue
85%
82%
80%
78%
75%
74%
Source: FAA Data ranging from August 2012-August 2013
Frustrated with delayed flights, many travelers have turned to apps, such as GateGuru and
FlightAware to receive notifications about delayed or cancelled flights. Some organizations
have incorporated flight delays into their Duty of Care policy, and opt to have travel
counselors notify their travelers as soon as a delay is detected by the system.
Increase of Fees on the Horizon
The projected ancillary fee revenue for airlines in 2013 is over $27 billion, and numbers for
2014 will be even higher. The chart on the following page shows some of the most
common fees paid by road warriors, along with the percentage of Travel Leaders agents
who indicated they were popular among their current clients.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Changing
Flights
Baggage Fees
(1 bag)
Premium
Seats and
Upgrades
In-Flight Wi-Fi
(Domestic)
Inflight Meals,
Snacks, Drinks
% Indicating top
purchase for clients
American
Delta
Southwest
JetBlue
United
85.1%
$75
$150-$300
$0
$50-$150
$25-$75
71.6%
$0-$25
$0-$25
$0
$0
$9-$99
61.5%
$4-$159
$9-$180
N/A
$10-$99
$9-$299
25.4%
$14 per day
$14 per day
$8 per day
Coming
soon.
$14 per day
15.2%
$3.29-$10
$3-$10
$3-$5
$6
$2.69-$10
As for those pesky baggage fees, the next generation of baggage fees may not look like
ancillary fees at all. United Airlines recently rolled out a baggage plan that offers customers
the option of an annual subscription. For $349 a year, a traveler can check one standard
bag per flight—the equivalent of about 13 checked bags a year on United. While individual
travelers will have to weigh the benefits of a baggage subscription, this new prepaid
baggage fee is part of a larger trend appearing in 2014: re-bundling.
Re-bundling Trend
Ancillary fees have become the new norm for airline passengers. In 2014,
airlines will begin to offer bundled packages again—advertising ancillary
fees as “extras” included in the cost of higher-priced tickets. In other
Bundled Fees
words, now that travelers have grown accustomed to paying the price of
fees, airlines are likely to recognize that re-bundling will be an
effective way to market multiple upgrades. We saw glimpses of this
Unbundled
trend in 2013 when American Airlines introduced Choice bundles,
(Ancillary) Fees
allowing passengers to pay $68 extra for a ticket, which would give
them the option to change flights without a change fee (typically
$150-$200). More recently, Delta introduced a $199 Smart Travel Pack
Re-Bundling
Fees?
that includes a checked bag, priority boarding, access to preferred
seating, 20% more bonus miles and the option to upgrade to economy
comfort for half price.
In terms of value, re-bundled fee packages will have to be examined closely by travelers
and travel managers. The concept of re-bundling fees could potentially be attractive to
travel departments, as airlines have not made it easy for travelers to report additional fees
and upgrades in the past. For that reason, the return of bundled airfare could theoretically
help organizations predict traveler spend and track T&E more effectively. Travelers who
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
frequently make ancillary purchases may find bundling more convenient as well.
Furthermore, airlines are likely to use “complimentary” ancillaries to draw in customers
during 2014 to boost their loyalty programs.
All of this bundling will have to be closely monitored during 2014. Whether or not these
programs can save travelers money will have to be determined individually, but one thing
is certain: airline ancillary fees will be a hot commodity in 2014.
Airline Market Share
Fees, service and ticket prices are all
tied in to the airline marketplace
environment itself. As you can see
from the chart on the right, four
major airlines (pending the American
Airlines/US Airways Merger) control
almost 70% of industry. 2014 will
reflect
this
rapidly
shrinking
marketplace—driving up prices and
eliminating options.
Percentage of Domestic Marketshare
SkyWest
AirTran
ExpressJet
Alaska
Jet Blue
US Airways
American
Other
Southwest
United
Delta
2.30%
2.40%
2.50%
4.10%
5.10%
8.40%
12.80%
15.00%
15.40%
15.70%
16.30%
Source: Research and Innovative Technology
Administration: Bureau of Transportation Statistics
American Airlines Merger
A year ago, the American Airlines merger with US Airways seemed to be progressing as
planned, but an antitrust lawsuit stalled the process during 2013—meaning this merger will
be a major focus (again) at the beginning of 2014. Although the merger was recently
approved, the Department of Justice has asserted that the merger could potentially lead to
higher fares and fees for customers and reduce competition on over 1,000 domestic
routes. Meanwhile airlines have argued the merger was necessary to compete in an
industry that has thrived on consolidation in recent years.
Most were not surprised that the merger was approved. The Justice Department has
allowed previous large-scale airlines mergers to go through in the past (Delta and
Northwest in 2008; Continental and United in 2010). However, in this case, the settlement
will require low-cost carriers such as Southwest and JetBlue to be given greater access to
major airport hubs to increase airline competition in locations where the new American
Airlines was set to have a sizeable advantage.
It’s unlikely that individual consumers will experience a dramatic impact from this case
during 2014, but it will set an important precedent for the U.S. travel industry during the
next few years. Now that the merger to create the world’s largest airline has succeeded,
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
the industry can count on a continuing culture of mega-mergers and conglomerates
influencing the price of travel in years to come. That being said, the Department of Justice
has introduced new rules that we have not seen in previous cases, meaning that mergers
and acquisitions may be more restrictive in the future.
Lodging
In 2014, hotels will be a seller’s market, and prices are expected to rise steadily. Occupancy
rates remain extremely high. Business Travel News reports that travelers can expect an
average occupancy rate of 62% at domestic hotels in 2014—and this percentage will often
rise to 80% or more in key business travel markets. With no shortage of demand, it is
unlikely that hotel prices will drop before the conclusion of 2014.
Travel Leaders Data: Hotel
Hotel Average Nightly Rates (ANR) have swelled in the United States since the beginning
of 2013. The high occupancy rates we mentioned earlier have gradually driven up prices.
Relief may be in sight. With the effects of the recession subsiding, new hotel properties are
in planning and many are already being constructed. In the future, the introduction of new
properties is likely to curb occupancy rates and drive down ANR costs. However, this is
unlikely to take place during 2014, so it is expected hotel rates will continue to rise-especially in key city business markets.
Hotel ANR
$128
$133 $134 $134 $135
$140 $140 $139 $138 $141 $140 $140 $140
$144 $144
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2014+
Quarter 1 Hotel ANR
$128
2010
Quarter 2 Hotel ANR
$135
$138
$140
2011
2012
2013
$133
2014
2010
$140
$144
$134
2010
$134
2011
2012
$141
$144
2011
2012
2013
2014
Quarter 4 Hotel ANR
Quarter 3 Hotel ANR
$140
$140
2013
2014
2010
$139
$140
2011
2012
2013
2014
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Even with the rising rates, it’s unlikely that we will see drastic changes in terms of ANR
during 2014. Many economists point out that healthy competition that still exists between
numerous hotel brands. Unlike the airline and rental car industries, where a handful of
brands control the majority of the domestic market, the hotel industry is less
consolidated—which can work in favor of the consumer in 2014. This abundant
competition between large numbers of hoteliers and the transparency of the Internet is
likely to keep actual rate growth steady during 2014.
Hotel Fees, Extras and Upgrades
United States hoteliers will collect $2.1 billion in ancillary fees in 2013, more than ever
before, and this trend is expected to
What new hotel fees can you look for in 2014?
roll over into 2014. Because travelers
 Basic Internet—and a new upcharge for
can now easily see and compare
high-speed Internet
nightly rates online, hoteliers may push  Gratuity fees for housekeeping built into the
to squeeze incremental revenue out of
bill
ancillary fees, which are not nearly as  Upgrade to a better view
visible to travelers browsing the web  Allergy friendly rooms
or booking over the phone. What’s  Upcharge for smoker-friendly rooms
more, some cities also impose heavy  Resort fees
hotel and/or tourism taxes that cannot  City-based taxes used to fund local projects
be avoided.
Another reason hotel ancillary fees are succeeding is a shift in traveler behavior. As with
airlines, travelers are quickly becoming accustomed to some of the most common hotel
fees. In-room Internet, for example, is no longer considered a luxury. Many travelers view
Internet access an absolute necessity, and they are more likely to pay a fee than go
without.
It seems that corporate travelers are becoming increasingly inclined toward upscale
properties as well. Travel Leader’s Fall Survey indicated a 3.5% increase in the number of
business clients staying in either “luxury” or “upper upscale” hotel properties while
traveling.
Mobile Hotel Bookings
Hotels are currently the most popular business travel commodity that travelers are
purchasing via mobile technology and the number of bookings continues to grow.
PhoCusWright has projected that as many as 20% of all hotel bookings will be made via
mobile apps during 2014. The popularity of mobile hotel shopping is tangibly linked to
last-minute hotel bookings. The majority of reservations made via mobile are for the day
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
that they were booked, indicating that travelers are becoming increasingly comfortable
with “unstructured” and last minute travel plans.
Ground Transportation
While bikes, trains and other business transportation trends increased in popularity during
2013, rental cars will be the main focus of business travelers during the upcoming year.
The rental car industry today generates about $24 billion in the U.S. Three major rental
car companies (Avis, Enterprise, and Hertz) represent nearly 80% of the United States
rental car industry. These companies have kept rates steady for most of 2013, and also
created a level of uniformity among car rental suppliers. Avis made some attempts to raise
rates during 2013, none of which were successful. It seems that if one of these companies
raises rates or adds new fees, the other companies may match the rates in a very short
amount of time. If other companies do not jump on board with new rates or fees, the
outlaying company is likely to drop them altogether. Conversely, if rates do go up,
successfully, it’s very likely that all companies will increase prices at once, creating a sudden
surge in rental car rates, and, most likely, making a substantial dent in travel budgets.
Travel Leaders Data: Car Rentals
Car rental prices have been declining steadily since 2011, and according to Travel Leaders
Group data, 2013 was a great time to negotiate car rental agreements, as rates were at a
Rental Car ADR
$45
$45
$45
$45
$45
$45
$46
$45
$43
$44
$43
$43
$42
$42
$42
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2014+
$45
2010
$45
Quarter1 Car ADR
2011
$45
$43
$42
2012
2013
2014
2010
$45
2011
Quarter3 Car ADR
$45
2010
2011
2012
$43
$42
2012
2013
2014
Quarter4 Car ADR
$46
$44
Quarter2 Car ADR
$45
$45
2010
2011
$42
2013
2014
©2013, Travel Leaders Franchise Group, LLC
$43
2012
2013
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2014
2014 Business Travel Forecast and Insight
three-year low. The introduction of car sharing programs, hourly rates, business loyalty
programs and consistent fuel prices have all contributed to keeping Average Daily Rates
(ADR) low. Industry veterans know rates cannot stay low forever, and organizations that
have not acted on this trend are running out of time to secure lower rates.
Rail Travel
During 2013, Amtrak set its 10th ridership record in 11 years, with more than 31.6 million
riders. A third of these passengers can be attributed to a small portion of the Northeast
corridor, which includes New York, New Jersey, and perhaps most importantly, the high
speed Acela Express service—where 70% of the ridership is business travelers.
Even though historically the majority of business travelers opt for rental cars or
flying, Amtrak has consistently added new perks to their routes to appeal to
corporate travelers and commuters. Notably, Amtrak has been working to
equip as many trains as possible with AmtrakConnect Wi-Fi. They’ve also
scrapped most baggage fees, security hassles and long wait to appeal to business
travelers.
Meetings
Meeting demand will continue to experience modest growth during 2014 in the United
States. In a survey conducted by the International Congress and Convention Association
(ICCA), 30% of organizations reported that
Top Meeting and Convention Destinations
they would be running more meetings in
1. Orlando, FL
6. New York, NY
2014 than in 2013, and 47% were projecting
2. Chicago, IL
7. Washington, DC
higher attendance. Less than 7% of
8. Dallas, TX
respondents said they were planning fewer 3. Las Vegas, NV
9. Miami, FL
meetings, and just 9% predicted their 4. Atlanta, GA
5. San Diego, CA
10. Phoenix, AZ
attendance would be lower.
--CVENT Supplier Network
While these numbers indicate that positive growth is expected, there are still many
financial hardships slowing down meeting growth. Much of the problem is looped in
directly with rising hotel costs. Because of the high occupancy rates in many key business
markets, meeting planners may need to get creative about the location and dates of these
events during 2014. It’s likely we will see a slight shift to smaller cities and more remote
venues next year.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
New Meetings Technology
Meetings apps will be essential during 2014. While apps have already been useful when it
comes to posting itinerary, maps and other essentials, in 2014 meeting planners will push
to make these apps more interactive. They will be soliciting feedback, polling the audience,
sending out instantaneous updates and more. In an effort to make the most of meetings
and conferences, some organizations are experimenting with mobile gamification and
reward techniques to keep their attendees fully engaged. These sorts of ideas generally
involve scoreboards, trivia, checkpoints and other gaming features that organizers hope
will motivate attendees to stay more active and focused during an event.
Mobile Technologies
There is a reason many companies
are scrambling to rein in their
travelers’ mobile bookings. Mobile
booking is one of the fastest
growing trends in the business
travel market. Mobile bookings
worldwide are projected to top $26
billion dollars in 2014—up from $8
billion in 2012. Travelers will almost
certainly be more likely to book
travel via a mobile device in 2014,
and hotel, rental car and airline
suppliers will be scrambling to find
new ways to appeal to mobile
users. In addition to mobile
purchases, mobile loyalty and
frequent traveler programs will also
become popular in 2014.
Late Adapters
Percentage of Travel Booked via Mobile Device
16%
Car Rental
5%
20%
Hotel
7%
15%
Airline
5%
0%
5%
10%
15%
20%
Projected 2014 Percentage Rate
Actual 2012 Percentage Rate
Source: Business Travel News/PhoCusWright
**Percentages represent Hotel/Airline/Car Rental
provided sources only--no third party apps.
With all the attention mobile travel
has recently received, it’s easy to forget that many travelers do not opt for mobile travel
options. And while mobile is here to say, studying the reasons why some travelers do not
follow their tech-happy colleagues can predict some of the enhancements we are likely to
see in 2014. Mobile websites that are not compatible with small screens, apps that don’t
work consistently, and any un-user-friendly apps or websites will lose market share quickly.
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©2013, Travel Leaders Franchise Group, LLC
25%
2014 Business Travel Forecast and Insight
Apps that remember profile and billing information, require minimal typing and update
seamlessly will quickly rise to the top.
Mobile Policy
While individual travelers have been quick to embrace mobile technology, many
companies have been slow to adapt it into their travel policy or make it a part of their
managed travel program. According to Business Travel News, only about 20% of
companies have a mobile policy in place for their travelers. This means that during 2014,
many companies will opt to add clauses about mobile booking and secure application use
to their travel policies.
Security
Automation
With the splash TSA PreCheck made in 2013, it’s not surprising that other security
clearance programs have appeared in airports across the United States. CLEAR is a
privately owned company that was recently reintroduced into five major airports, and
automates the identity check process by scanning a member’s fingerprints and irises.
Similar to PreCheck, CLEAR allows members to bypass the regular security lines in favor of
a designated lane or simply moving directly to the front of the line. Frequent flyers in
Orlando, Denver, San Francisco, Dallas, and Westchester may have formed some loyalty
with the CLEAR brand before it went bankrupt in 2009, and therefore may want to return
to the program now that it has been reinstated. Unlike TSA PreCheck, CLEAR is
guaranteed with every flight, and it may be a good solution for airports that do not have
TSA PreCheck lanes. However, TSA PreCheck continues to grow its customer base and
add new locations. More importantly, CLEAR charges $179.00 for an annual membership
(twice as expensive as enrolling in TSA Precheck for five years). So while CLEAR has
announced an expansion to a handful of new airports, it’s uncertain if CLEAR or any other
new airport security programs will survive in the shadow of TSA PreCheck.
The popularity of TSA PreCheck
might ultimately be what opens
the door for competitors. The
TSA itself continues to flaunt the
effectiveness of the program. In late
2013, they announced plans to implement PreCheck operations at 350 U.S. airports by
mid-2014, more than tripling the current number of PreCheck locations. Travelers (over 15
million of them) have also flocked to the service, which boasts shorter security lines and
allows frequent travelers to keep their shoes, belts and jackets on and their liquids and
2013
97 U.S.
Airports
2014
350 U.S.
Airports
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
laptops packed in their carry-on. However, the attractiveness of PreCheck diminished near
the conclusion of 2013, when travelers began reporting a handful of TSA PreCheck lanes
where the lines were longer than the traditional security checkpoints. Other travelers
began to question how useful PreCheck could be when so many people were using it.
2014 will test PreCheck’s success, and determine whether or not the program will continue
to grow—or simply grow beyond its means.
Liquid Scanners
The TSA’s newly purchased Bottle Liquid Scanner (BLS) units will make their debut in 2014.
These units can scan and identify hazardous liquids in sealed bottles within 20 seconds.
The units will be used primarily to screen medically necessary liquids in quantities larger
than 3.4 ounces. Unfortunately for most travelers, these scanners will only be used to test
medicine, so passengers should not expect to bring bottled water or other luxuries
through security any time soon.
Personnel
The TSA has long been the target of unhappy consumers, and, in 2013, a new report was
released by the GAO (U.S. Government Accountability Office) that publicized
approximately 9,600 cases of employee misconduct on the part of the TSA over the course
of three years, a growth rate of 26%. Violations ranged from sleeping on the job to theft,
unauthorized security clearance for friends and family, to not showing up for work. The
TSA also hired about 3,200 airport-assigned employees during that time. The TSA has
accepted the recommendations of the GAO, so efforts to effectively train employees
evenly throughout the system may be more apparent in 2014.
Notably, TSA employees weren’t the only ones behaving badly.
According to a report issued by Airlines for America, the primary
trade organization of U.S. airlines, record passenger numbers are
Level 3:
translating into a high incidence of passenger misconduct. The
Weapons; Lifethreating behavior
most common offenses? Excessive alcohol consumption before or
during a flight was the most prevalent offense by a wide margin.
Smoking violations and failure to follow crew instructions
Level 2:
pertaining to carry-ons, seatbelts, Personal Electronic Devices
Physical contact
(PEDs), or pets were also popular. Threatening behavior was also
widely reported. However, about 75% of all reported “threatening
Level 1:
behavior” incidents were Level 1, while the remaining quarter of
Verbal or written
incidents fell into the more serious Level 2. A fraction of incidents
threats
were classified as Level 3. It’s difficult to say if episodes of
passenger misconduct will rise during 2014. While the FAA and TSA
have both relaxed certain policies to an extent, the effect it will have on passenger
Level of Threatening Behavior
Level 4:
Breach of flight
deck
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
behavior is still unknown. PEDs, for example, have been cleared by the FAA for gate-togate usage, which should cut down on the number of PED-related violations; however,
opponents to the policy changes suggest they could also inspire passengers to further test
the system—resulting in even more passenger misconduct.
Personal Electronic Devices (PEDs)
Throughout 2013 there were clues that suggested the
FAA would relax policies regarding the use of personal
electronic devices aboard planes, and in October of 2013,
the change finally arrived. The FAA has reported that
passengers can safely use PEDs during all phases of
flight, and they have provided airlines with
implementation guidelines for making the change. By the
beginning of 2014, all travelers are expected to be able to
use devices in airplane mode from take-off to landing.
of
travelers oppose
inflight phone
conversations.
30% of Americans surveyed
admitted to accidentally
leaving a PED turned on
during a flight.
—Airline Passenger Experience
Association (APEX) and the
Consumer Electronics Association
The new rules allowing PEDs do not apply to cell phone calls,
which are still prohibited. About 10% of travelers will be
disappointed by this news. The majority of travelers do not want
voice phone conversations to be permitted during flights. In one
2013 survey conducted by Travel Leaders, almost 80% of travelers
said they did not want their fellow passengers to have phone
conversations in flight.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Global Trends
The United States leads the globe in business travel
spending. But many other countries, namely China,
continue to garner attention for their own rapidly
expanding corporate travel industries. Pay special
attention to the BRIC countries (Brazil, Russia, India,
China), as they continue to increase spending at a
much faster rate than veteran business travel
markets. Three of the BRIC countries are already in
the Top 10 Business Travel markets, and Russia,
which did not make the list of top 10 is ranked 13th
in the world.
Top 10 Business Travel Markets
(in Billions)
1. United States
$262
2. China
$196
3. Japan
$65.2
4. Germany
$50.5
5. United Kingdom
$40.2
6. France
$35.7
7. Italy
$32.7
8. South Korea
$30.5
9. Brazil
$30.1
10. India
$22.1
Source: GBTA
Travel Leaders Data: International
Airline
According to Travel Leaders data, the Average Trip Price (ATP) for airline tickets is nearly
four times that of domestic flights. Data in this category is also much more sporadic than
domestic air travel, making it much more difficult to predict in 2014. Overall, look for
increased prices in South America, where the business travel marketplace is expanding,
and also in Asia, where flight capacity is being downsized to cut down on empty seats. The
introduction of new aircraft in the Middle East will improve prices, and Europe will also
post lower air ticket prices due to competition from low cost carriers.
Intenational Airline ATP
$1,757
$1,727
$1,715
$1,646
$1,710
$1,657
$1,636
$1,591
$1,712
$1,714
$1,698
$1,622 $1,614
$1,624
$1,652
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Hotel
Hotel prices outside the US appear to be trending downwards. Quarter 3 boasted the
lowest Average Nightly Rates (ANR) Travel Leaders Group has seen since 2010. In 2014,
prices will reflect where you book. Lower rates will be found in parts of Europe, as well as
Asia, which currently has much more capacity than demand for space. Places like the
Middle East and South Pacific have less space, creating more demand and elevating
prices. South America, will see some of most impressive growth, and it’s likely that even
with the addition of many new hotel properties in that region, prices will increase
substantially during 2014 and years after.
International Hotel ANR
$209
$200
$215
$223
$228
$228
$226
$216 $214
$213
$221
$214
$207
$202
$191
Ground Transportation
Ground transportation costs are leveling out abroad, reflecting a similar pattern to what
we’ve seen in the United States. During 2014, prices for rental cars and other modes of
ground transportation such as high speed rail and even bus trips are likely to increase in
Asia, where the much higher costs of flights and widespread delays have frustrated
travelers. South America may also see a bump in car rental costs as traveler traffic
increases, especially because this region does not have a lucrative rail system.
International Rental Car ADR
$69
$67
$55
$55
$56
$59
$75
$55
$53
$52
$56
$49
$52
$50
$53
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Outlook for the Europe Region 2014
Overall, Europe will have some of the most modest growth in 2014. Economic uncertainty
is likely to drive down prices, as well as corporate traveler traffic. Still, with one of the
highest number of countries—Germany, France, Italy and the U.K.—on the list of the top
10 business travel marketplaces, Europe should not be counted out in 2014—though it
may be outshined.
Air Transportation
Airfare costs in Europe are low, and low-cost carriers are partially responsible. Ultra-low
cost, no frills airlines were popularized in Europe over the past two decades. But customer
pushback and the introduction of new competitors have forced even the most back-tobasics airlines to rethink their business plans. For example, Ryanair responded to sinking
share prices and customer complaints by adding assigned seating to their boarding
process. This move ended the universally hated scramble for seats, and demonstrated that
even the carrier with the highest passenger count in Europe is willing to compromise their
policies to please customers. However, Ryanair, like many other carriers continues to
grapple with whether or not price or perks are more important to the customers buying
tickets in the low-cost marketplace. While Ryanair generally still boasts the lowest prices in
Europe, it’s loosing considerable ground to competitors like easyJet, which offers perks
such as business class packages, speedy boarding and seat selection tools.
Hotels
The European hotel marketplace is weak compared to the rest of the globe. Lower
occupancy rates in some cities will generally translate into lower prices. This could inspire a
shift in meeting space and large group events to this region, as many organizations will be
eager to take advantage of bargains.
Ground Transportation
Rental cars companies in Europe continue to experiment with ways to distinguish
themselves from rail providers and low cost carriers. One European trend that is catching
on is coupling rental car services with mobile Wi-Fi hotspots. Hertz Corp. now provides the
option of mobile hotspots along with vehicles at most of their German airport locations,
and they recently became available in Italy and Spain. For an average daily rate of $13, the
portable Wi-Fi units are designed to provide travelers with prepaid Internet access, which
can help them avoid fees that may apply in hotels or other venues. Also important to note:
the units support up to eight devices at once—a perk for tech savvy travelers, who often
travel and use multiple devices simultaneously.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
BRIC Spotlight: Russia
Russia is the lowest ranking BRIC Nation, but it’s about to get a major boost in
2014 thanks to the Sochi Winter Olympics. In preparation for this event, over 25,000 new
hotel rooms have been added in the region. Following the Olympics, Russia is likely to
become a hotbed for resort developers and hotel investors, who can inexpensively take
advantage of new properties.
Outlook for the South America Region in 2014
Expect growth in all categories in South America this year. Travelers and suppliers will both
be focusing on this region during 2014 and years after, eyeing its already healthy business
travel environment and its tremendous potential for growth.
Air Transportation
Similarly to the United States, major airlines in South America continue to consolidate. This,
combined with increased international traveler traffic, will likely push up prices of SouthAmerican based flights during 2014.
Hotel
South America is slated to undergo the most dramatic hotel growth in the world during
2014. In certain areas, such as ever-popular Brazil, the demand for hotel space far exceeds
the current supply, making it not only expensive to secure hotel space, but often nearly
impossible.
Ground Transportation
As business travel continues to grow in South America, so will rental car rates. Unlike
Europe, Asia or North America, South America does not have a competitive rail system to
offset the prices for rental cars. International vendors, including popular North American
rental car companies, continue to vie for South American market share; however, popular
Localiza currently controls 42% of the car rental market in key locations like Brazil, and is
likely to be the primary supplier during South America’s business travel boom.
BRIC Spotlight: Brazil
Brazil currently ranks 9th in total business travel spend, with $30 billion dollars recorded in
2012. In 2014, Brazil is poised for double-digit growth in the business travel marketplace.
This will be aided by a healthy economy (GDP projected to grow by 3.5% in 2014) and a
handful of major multinational events set to bring visitors and revenue to Brazilian soil. The
2014 FIFA World Cup, which will take place in 12 Brazilian cities, is projected to sell over
three million tickets. For the Rio Olympics in 2016, about 7 million tickets will be sold. These
major international events have also sparked a surge in the business travel industry, as a
significant number of inexpensive airline routes, hotel rooms, transportation options and
meeting spaces are being created at a rapid rate.
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
Outlook for the Asia/South Pacific Region in 2014
As a region, Asia is still at the forefront of business travel with four countries listed in the
top 10 business travel spenders. China will gain extra attention in 2014, as both its
economy and its business travel spending continue to grow.
Air Transportation
Business Travel will be a focus of Asian airlines during 2014. Prices should remain steady in
Asia, and may even include perks for international business-class travelers. A growing
middle-class economy in places like China has led to an increase in leisure travel, which
could potentially crowd airline capacity and generate rate hikes in 2014.
Hotel
The creation of abundant new hotel space in mainland Asia has led to lower prices,
despite increased occupancy. However, Australia and New Zealand are still seeing very
high occupancy rates, which will frequently swell above 80% in major cities during 2014.
Ground Transportation
The shift in passenger traffic from airplanes to bullet trains in Asia has been dramatic.
According to statistics, in China, which coincidentally was ranked #1 in flight delays with
25% of all flights departing late, customers are more likely to opt for trains. Popular bullet
trains rarely suffer delays and loyal customers will attest that easy access to electricity and
Internet allows them to get more work done in transit. A ticket on one of these trains is
typically less than half the price of a domestic flight. This might explain why after only five
years of operation, this high-speed rail system transports almost twice as many passengers
than airlines in China.
BRIC Spotlight: China
China is a shining star in the business travel marketplace, and will be a major focus during
2014. China ranks second in worldwide business travel, spending $196 billion annually (75%
of what the United States spends each year). Experts project that China will overtake the
United States to claim the #1 spot over the course of the next three to five years. This
boost to the Chinese business travel marketplace can be attributed to impressive GDP
growth, projected to increase by 7% during 2014.
BRIC Spotlight: India
India’s business travel marketplace has not gained as much attention as its sister BRIC
countries, but GBTA predicts it will be the fastest growing business travel market by 2015.
One of the newest trends emerging from India isn’t new at all. Long-haul bus capacity in
India has doubled since 2010, making it a $3.5 billion industry in India. The matrix of
available routes are especially popular with young professionals and companies that are
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©2013, Travel Leaders Franchise Group, LLC
2014 Business Travel Forecast and Insight
attracted to the fact that the average bus ticket in India costs about 30% of the price of
flying to the same location. As a result of the renewed popularity of travelling by bus,
suppliers have upped the cool factor—adding enroute entertainment options, wireless
cabailities, luxury seating and a multitude of other ancillary options. Suppliers such as
redBus, one of the fastest growing bus companies in India with over 4,500 routes, project
that bus travel in India will grow at an annual rate of 20% in the coming years.
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©2013, Travel Leaders Franchise Group, LLC