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Corporate travel expenditures next year will fall by an average of 3 percent according to a November Morgan Stanley poll--"less severe" than the firm had expected. A new UBS Investment Research survey suggested "the overall tone" regarding travel budgets for next year is "about as negative as you would expect given economic news."
The fresh polls cap several weeks in which a number of surveys by travel agencies and other industry sources produced various forecasts for demand, airfares and hotel rates. Prognosticators have pointed to both positive and negative trends, but 2009 demand predictions have generally become progressively more negative since September. There are exceptions, including an AirPlus International study released this week that suggested higher corporate travel spending for 2009. The poll itself, however, occurred in May.
The November Morgan Stanley Research Europe survey of more than 300 travel managers in the United States and Europe suggested lower corporate travel volumes but higher corporate airfares next year for both transatlantic and intra-European routes. Europe-Asia routes would experience "broadly flat" volumes with higher prices, while Europe-Middle East routes would see higher volumes and airfares, according to the study.
Overall, half of all Morgan Stanley respondents expected total airline bookings to be down next year, with 10 percent anticipating at least a 10 percent reduction. "Business travel demand will weaken, but expectations that the revenue environment will resemble the demand shock of 9/11 appear overblown," the firm wrote last week. It also noted that "corporate travel volume is expected to increase most significantly in Asia and the Middle East."
According to the UBS research published Monday, three-quarters of 50 corporate travel managers polled in October expected their organizations to reduce air travel in 2009, with the U.S. market identified as "the region with the largest spending cuts planned." More than half expect air travel spending cuts for transatlantic and transpacific routes. The fewest cuts are expected in Latin America. About 35 percent of those polled by UBS anticipated a decline in overall air spending of greater than 10 percent.
For both managed and unmanaged business travel in the United States particularly, an earlier Global Insight forecastpredicted higher spending but fewer trips next year and through 2012.
According to the AirPlus research, 58 percent of 1,500 travel managers from 15 countries anticipated increased corporate T&E budgets for next year, with just 10 percent expecting their organizations to spend less in 2009 than in 2008.
AirPlus cited three reasons for its findings: rising per-trip costs (including higher airfares and more ancillary fees); increased booking volumes at some companies, especially those globalizing operations; and longer trip distances as organizations "are increasingly chasing business in regions whose economies continue to grow substantially, such as Brazil, Russia, India, China and the Middle East. Travel to these countries involves higher fares, more hotel nights and, usually, accommodation in higher-standard hotels because there are few midrange options available."
The AirPlus respondents were based in Australia, Austria, Brazil, China, France, Germany, Italy, Mexico, Netherlands, Singapore, South Africa, Spain, Switzerland, the United Kingdom and the United States. Half of them were secretaries and assistants who play travel management roles.
Nearly 70 percent of respondents from the United States expect higher travel costs in 2009, more than any other represented country. "In spite of the economic crisis and the imperative to reduce budgets, only 6 percent believe their costs will fall," according to AirPlus.
Fewer AirPlus respondents expect higher 2009 hotel spending (54 percent) than those expecting higher air spending (61 percent). "Several markets around the world--especially in the United States--were beginning to show signs of rate softening" as of November, according to AirPlus.
In a separate set of published results pulled from the same Morgan Stanley November study but based on "over 400 corporate travel managers" in the United States and Europe, the firm found that 81 percent of respondents expected their organizations' 2009 room night volumes to be flat or down, with nearly one-third expecting at least a 7 percent decline. The average reduction was 3 percent.
At the same time, more travel managers (37 percent) said 2009 negotiated rates are higher than those (19 percent) saying they are lower. With the remainder responding that negotiated rates for next year are flat, the average change is a 0.3 percent increase, according to Morgan Stanley.
Geographically, Morgan Stanley said 2009 rates would be "up most in Asia and the Middle East and down most in U.S. secondary markets." The firm noted that travel managers expected "aggressive price negotiations" in the United States, with corporate rates "flat to down."
"We view flat rates as a slight positive for the industry, as much of [Wall Street] was expecting decreasing rates due to decreasing demand, pressure on travel budgets and increasing airfares," Morgan Stanley wrote.
Nearly half of all respondents said they "can change their policies within one quarter of a rebound in the global economy. This would most likely involve an increase in the number of trips taken," Morgan Stanley suggested.
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