2012 Business Travel Survey

Corporate travel always has been a key segment for travel and payment providers, perhaps never more so than in 2011 and early 2012. Despite obstacles around the globe, corporate travel volumes following the robust recovery of 2010 generally have held or grown further. Airlines and hotels in particular have leaned on that sustained activity to raise prices and generate more revenue, even as their own capacity growth has been modest at best.

[Please click here to view the digital edition of the 2012 Business Travel Survey, featuring all charted data, downloadable as a pdf.]

Of the 33 travel management companies that agreed to share their ARC air sales for 2010 and 2011, 31 showed a year-over-year increase. Twenty-eight of those 33 had an increase their number of ARC air transactions in 2011. But sales totals generally rose more noticeably than transactions, which in some cases only were marginally higher.

That's been a common theme throughout the corporate travel industry. Decent corporate demand, limited capacity growth, new fees and surcharges levied especially by airlines and a more analytical approach by suppliers when structuring deals have meant higher fares and rates.

HRG, for example, for its financial year to March 31 reported a 2 percent increase in client travel transactions but a 5 percent increase in spending among those clients. According to an AirPlus International report based on a late 2011 survey of 1,701 travel managers in 20 countries, more organizations expected overall travel costs to increase in the coming 12 months than expected greater trip volumes. "The fact that this year spending expectations outstrip those for trip volumes implies growing fears of increased costs per trip," according to AirPlus, which noted that such a divergence practically did not exist in surveys from three previous years.

The report also indicated that among U.S. respondents, 37 percent said they have negotiated airline deals, down from 54 percent in the previous year's survey. The average corporate airfare discount reflected in the new survey was 15 percent, "down from a consistent 18 percent to 19 percent for the past three years. Airlines seem to be becoming much more careful about their discounting, perhaps explaining in part why travel managers foresee the cost of flying rising."

In the lodging sector, "corporate travel continues to be the bedrock of recovery," according to an April report from hotel technology and services firm Pegasus Solutions. "Rising rates are compelling evidence that the profit potential of business travel continues to endure." Given limited new supply and overall industry performance that is outpacing the general economy, hotel executives said they expect corporate negotiated rates to continue rising.

The rental car companies only can envy the pricing power enjoyed by their airline and hotel counterparts. Though corporate travel volumes continue rising, the hypercompetitive nature of the sector has prevented suppliers from raising negotiated rates.

Looking ahead at business travel as a whole, 58 percent of 541 senior finance executives polled in February by American Express and CFO Research Services said they expect to spend the same or more during the next year. That's down from 64 percent in 2011. Respondents in the United States were more bullish than the global average, with 71 percent saying they would spend the same or more on business travel during the next 12 months.

The 2012 Business Travel Survey explores these and other trends impacting buyers and suppliers. As always, BTN appreciates the executive leaders and owners of the 33 TMCs who authorized ARC to release data. BTN also thanks ARC for furnishing that data in order to help create consistency in tracking and comparing TMC data.

This report originally appeared in the June 4, 2012, edition of Business Travel News.