2008 Business Travel Survey: Fuel Costs Drive Seismic Changes

For business travel suppliers, 2007 was a good year that began to unravel before it ended as fuel prices spiraled out of control, the value of the dollar plummeted, the U.S. mortgage crisis hit home, retail sales slumped and corporate travel demand began to show some softening.

While good fortune for the suppliers has meant higher fares and room rates, as well as passing along some global distribution system costs, buyers now are hungry for discounts, if not at least relief from further hikes. This particular blend of events, however, does not look like particularly good news for anyone.

Dire circumstances have created an environment that demands change.

What would have been an amazing year for the airlines was undermined by previously unimaginable costs, dimming their prospects for as far as anyone can see. Even though airlines finally were able to implement some fare hikes, the soaring cost of jet fuel outstripped carriers' pricing power. Carriers are merging, cutting back capacity and, in some cases, going out of business as a result.

Hoteliers still are in the driver's seat on rates, but they can see some softness in business travel, especially meetings. Blackstone closed the biggest U.S. hotel purchase yet with its Hilton deal. Car rental companies also saw big changes on the competitive landscape, with Enterprise, the giant relocation and off-airport player that already had significant corporate business, buying National and Alamo. Meanwhile, car rental competitor Avis bought a significant percentage of chauffeured transportation provider Carey International.

Business Travel News thanks all the travel supplier representatives from eight major business travel service segments who contributed information to this 24th annual Business Travel Survey.

This year, Business Travel News for the first time is presenting Travel Agency Networks and Franchisors as an online-only adjunct to the 2008 Business Travel Survey at btnonline.com.

This year, we have changed the measure of global distribution system company performance to air transactions. While a meaningful benchmark, GDSs no longer are reporting revenue—a result of the move to private equity ownership.

We again thank the Airlines Reporting Corp. for releasing U.S. point-of-sale transaction and sales data from its ARC Compass data warehouse for publication as authorized by 42 travel management company chief executives. We salute those executives for recognizing the value of authorizing ARC to share their data with business travel buyers through this report.

By focusing on the major travel supplier accomplishments of 2007 and how they laid the groundwork for 2008 developments, we offer an opportunity to put industry changes into perspective and context, and to gain insight into where the industry will go from here.