Egencia's 2009 pricing forecast, released today, shows across-the-board air and hotel price decreases in 20 top business travel destinations, as predictions of declining demand, oil price stabilization and a worsening economic outlook continue to persist. This most recent industry forecast contrasts with some earlier travel management company outlooks.
Egencia forecasts average prices on domestic fares to decline in 14 of the top 15 U.S. business travel markets, with Seattle the lone exception. Several cities, including Atlanta, Dallas, New York and Washington, D.C., are projected to have year-over-year double-digit percentage-point decreases, while others, such as Los Angeles, Phoenix and San Francisco, are expected to experience single-digit percentage point drops, according to the survey.
The survey views the top five international business travel destinations similarly, expecting average 2009 fares to drop 4 percent to 8 percent on inbound travel to London, 11 percent to 15 percent to Paris and Toronto, 10 percent to 14 percent to Tokyo and 13 percent to 17 to percent Hong Kong.
Egencia expects the decline in average hotel rates to accelerate next year, even in New York—historically immune to broader demand softness—where 2009 average daily rates are slated to drop 4 percent to 8 percent, a figure that Egencia also expects in Washington, D.C., and Philadelphia. The agency expects ADR to rise in only Chicago of the top 15 domestic business travel destinations, with a 12 percent increase.
Egencia expects international ADR to show moderate increases, such as an expected 6 percent rise in London and 4 percent increases in Paris and Tokyo.
Egencia senior vice president of North America Rob Greyber expects the car rental landscape in 2009 to become more competitive as suppliers acquire less fleet, a "depressed used car market" develops and potential consolidation. He expects that to drive chauffeured transportation service providers to significantly reduce prices, as "they will feel the need to compete" with car rental providers.
In late October, American Express Business Travel raised eyebrows with its 2009 forecast, the first to suggest that airfares could significantly decrease in some markets. Those downward pricing predictions differed with earlier forecasts from Advito and Carlson Wagonlit Travel, which were made before Wall Street's meltdown and when crude oil was twice its current price.
Egencia based its outlook on recent supply data, "direct input from field account managers representing about 62 percent of Egencia business" and more recent oil price metrics.
Egencia also evaluated the negotiating outlook in top business travel destinations by factoring in the pricing effects of conventions, conferences and sporting events, which could significantly impact the supply and demand curve, according to Greyber.
During the week of Oct. 13, Egencia also conducted a survey of 200 financial executives that showed 48 percent had not changed their amount of business travel this year due to current economic conditions, while the same percentage reported a reduction. Twenty-seven percent of respondents said their travel budgets would increase next year, while 11 percent are planning for reductions.