2009 Business Travel Survey: Year Of Change Ushers In Uncertainty

Last year, our assessment in this space was, "Dire circumstances have created an environment that demands change." We had no idea at that time of the extent of the changes that lay ahead.

The year 2008 started out as a good but challenging one for most travel suppliers, until the bottom fell out. It began with industry-wide concern about the impact of soaring fuel prices on business travel and buyers grappling with a long-term hotel seller's market. As the housing and financial services industries began to implode and recession set in, the astronomical fuel prices and the hotel seller's market both came crashing down.

While relief from fuel prices was welcomed by airlines and chauffeured car providers, it came with a terrible tradeoff. For airlines, the capacity that they had cut in view of untenable fuel costs helped offset more than a 20 percent drop in demand, but they also suffered a deep drop in premium class customers as a result not only of corporate cost control, but also of perception. Perception in a time of massive layoffs and publicized concern about misuse of U.S. Troubled Asset Relief Program funds also helped drive steep drops in demand for chauffeured car providers and luxury hotels.

More than just perception and slashed budgets are at work in restricting travel spending and guiding travelers to trade down in service, however, as companies have tightened travel management policies to further limit use of premium travel products. They also have deployed technology, such as pre-trip authorization tools, to help implement those policies. Many companies severely reduced or eliminated internal travel and directed employees instead to make use of remote conferencing technology. Some implemented networks of advanced videoconferencing tools as a means of managing demand for internal travel. Even companies without mandate cultures or technology budgets adopted travel cost controls in the past several months.

While few companies are talking about expanding their travel spending, there has been no indication that companies are expecting to make further cuts at this time. This has left the industry trying to discern whether it is still just a time to hang onto the roller coaster or if we have truly hit bottom and can begin to work at climbing back up.

Business Travel News thanks all the travel supplier representatives from the six major business travel service segments who contributed information to this 25th annual Business Travel Survey, including the 43 travel management company chief executives and the Airlines Reporting Corp., who released U.S. point-of-sale transaction and sales data from ARC's Compass data warehouse for business travel buyers' benefit.

We appreciate their help in examining supplier performance during the previous year to understand how changes then were prologue to current market conditions.