Travel suppliers in 2012 largely relied on yet another year
of slow but steady corporate travel growth to boost revenues, but some
underlying metrics and subsequent developments show just how fragile the
business travel rebound remains—years after the deepest depths of economic
recession.
[Please click here to
view the digital edition of the 2013 Business Travel Survey, featuring all
charted data, downloadable as a pdf.]
On the whole, 2012 was a positive year for many travel
suppliers. Of the 28 travel management companies that agreed to share 2011 and
2012 sales figures from bookings through ARC, all but five showed a
year-over-year increase, and 22 handled more ARC air transactions in 2012 than
in the year before. Looking strictly at ARC data, aggregate bookings from those
28 TMCs generated 2012 sales that were more than $650 million above 2011.
Most airlines and hotel chains last year benefitted from
such growth, helped along by slow growth or actual reductions in capacity.
However, a competitive market that helped hold down corporate rates hampered
car rental firms. That led to a recent vow by one CEO, Avis Budget Group's
Ronald Nelson, to "have some spine" during corporate negotiations.
This year, particularly since March, certain travel supplier
executives and industry forecasters wove a few strands of pessimism into 2013's
business travel demand fabric. While by no means unanimous, some raised caution
for the balance of 2013, citing the continuing overall economic uncertainty in
the United States and (even more so) Europe, some soft March-quarter financial
results for travel suppliers and the impact of across-the-board U.S. federal
government spending cuts that took effect March 1, popularly known as the
sequester.
BCD Travel consulting unit Advito, for example, in April
lowered some of its projected 2013 airfare and hotel rate increases. After
global corporate travel sales at American Express during the first three months
of 2013 fell year over year for a fifth consecutive quarter, CFO Dan Henry
noted that "across the board we've seen lower spending in T&E
categories." Though Delta Air Lines in May reported that year-to-date
corporate revenue increased 4 percent versus the prior-year period, president
Ed Bastian cautioned that "corporate demand across the industry appears to
be flat."
Other forecasts are brighter for suppliers. The Global
Business Travel Association cited an "improving economic outlook" in
raising its forecasted 2013 year-over-year U.S. business travel spending total.
Pegasus Solutions in a recent report noted "more decisive corporate travel
spending in 2013" than in 2012 and "companies' increased willingness
to raise their travel spend."
In further detail, including sector-specific reports and
charts, the 2013 Business Travel Survey explores these and other trends
impacting buyers, travel management companies, airlines, hotel companies, car rental firms and corporate payment system providers.
As always, BTN
appreciates the executive leaders and owners of the 28 TMCs who authorized ARC
to release data. BTN also thanks ARC
for furnishing that data in order to help create consistency in tracking and
comparing TMC data.
This report
originally appeared in the May 27, 2013, edition of Business Travel News.