Corporate travel prices next year will increase in
most supplier categories, Carlson Wagonlit Travel said in its annual forecast
released on Tuesday, 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.
Domestic economy airfares likely would grow between 3 percent and 5 percent in
2011, while CWT expects international economy and business class tickets also to
increase between 3 percent and 5 percent.
The only air category in
which CWT expects to witness a decline is in the front of the plane on domestic
trips, with fares to decline next year between 2 percent and 7 percent, CWT
said, noting that "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 expects hotel
pricing to swing upward next year, with average daily rate to grow in the
United States 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 travel 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, meanwhile, expects Canadian hotel rates next year 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 (see correction). Chauffeured transportation services, meanwhile,
will see price declines between 3 percent and 5 percent, as rail travel in
North America is likely 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, for the most part, the worst seems to have passed."
Meanwhile, CWT said that the per-attendee,
per-day cost 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 this year, 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.
Editor's Note: An earlier version of this story incorrectly said corporate car rental rates were forecast to increase by no more than 2 percent; the forecast actually calls for such rates to decrease by no more than 2 percent.