Corporate travel prices next year will rise in most supplier
categories, Carlson Wagonlit Travel said in its annual forecast released last
month, with U.S. hotel rates projected to grow as much as 7.4 percent and
domestic economy airfares slated for hikes of up to 5 percent.
The mega travel management company said higher demand,
sustained capacity discipline and anticipated increases in fuel costs would
combine next year to put further upward pressure on airfares, which have
continued to firm from the lows of the past year. CWT expects domestic economy
airfares, international economy fares and international business class tickets
each to grow between 3 percent and 5 percent in 2011.
The only air category in which CWT expects a decline is in
the front of the plane on domestic trips, with fares to decline next year
between 2 percent and 7 percent. "A big decrease in front-cabin volume in
2008/2009 caused these prices to spike, as price-sensitive customers dropped
out of the market," CWT said in its forecast.
CWT expects hotel pricing to swing upward next year, with
average U.S. daily rates to grow between 6.4 percent and 7.4 percent. Rate
growth will be particularly strong in the Northeast, where the travel
management company said rates would grow in excess of 12 percent.
"To date, many buyers are seeing slight upturns in
hotel transactions, while rates remain favorably low," CWT said. "These
low rates have enticed many companies to invest more dollars in travel."
CWT expects Canadian hotel rates to grow between 4.7 percent and 5.4 percent.
CWT forecasts corporate car rental rate changes next year
will be moderate, decreasing by no more than 2 percent. Chauffeured
transportation services, meanwhile, will see price declines between 3 percent
and 5 percent. Rail travel prices in North America are expected to grow between
4 percent and 7 percent.
"The ground transportation industry has indeed been
hard-hit by the weakened economy over the past two years," CWT said. "Along
with demand management issues in business travel more broadly, fleet inventory
issues, fuel prices and car maker crises have created a 'perfect storm' for
ground transportation suppliers. To compensate, the industry as a whole has
been busy right-sizing, and the worst seems to have passed."
CWT said per-attendee, per-day costs for corporate meetings
would increase between 7 percent and 11 percent.
"As corporate revenues and profitability began to
improve in the first half of 2010, M&E spend trended in a similar
direction. This is expected to continue into 2011 and beyond. The market is
likely to return to historical activity levels over the next one to four years,
depending upon the region of the world," CWT said, with the Middle East
returning to 2008 levels by the end of 2010, Asia/Pacific recovering by the end
of 2011, and Europe and North America lagging on the recovery front until 2012
at the earliest and 2014 at the latest.
CWT North America president Jack O'Neill said that during
the first six months of this year the travel management company handled more
than 13 percent more transactions than in the same period in 2009.
"These numbers reflect an improving picture for the
economy around the globe and, depending on our clients' sector of business, a
trend toward 'back to normal,' " he said in a letter to clients, noting
that "business travel has not yet returned to pre-recessionary levels and
it remains to be seen whether it ever will."
CWT said the consensus is toward slow economic recovery,
with spending on travel not likely to reach 2008 levels until the second
quarter next year.
This report originally
appeared in the Sept. 6, 2010, issue of Business Travel News.