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If you're a U.S. airline executive or a hotelier, these are
heady times. In the not-too-distant past, primary players in the U.S. airline
industry were belittled as bankrupt, unworkable relics beset by excessive
competition, perpetually soaring fuel costs, questionable management and
unsolvable labor cost issues. They were seen as unable to take the steps
necessary to right themselves. Instead, today's largest U.S. airlines, though
not free of troubles, have posted a years-long streak of collective profit,
fueled by major consolidation, capacity squeezes and the proliferation of
U.S. hotel chains, too, are sitting pretty: Rates are up,
occupancy is up, revenue is up, and supply is not up all that much. The result
is a solid industrywide revenue and profit picture, and a seemingly ironclad
seller's market that defies conventional wisdom about the inevitably cyclical
ebb-and-flow of the segment.
[Please click here to
view the digital edition of the 2014 Business Travel Survey, featuring all
charted data, downloadable as a pdf.]
But the current gilded age of U.S. airlines and hotels isn't
really being spurred by rapacious corporate demand for their services; rather,
it's in large part due to deliberate efforts to curb their availability. Those
airlines during the past few years have slowed the growth of their domestic
capacity, and last year's merger of American Airlines and US Airways—following
prior mergers between Delta Air Lines and Northwest Airlines, between
Continental Airlines and United Airlines, and between Southwest Airlines and
AirTran Airways—helped streamline the players competing for travelers' dollars.
And hotel chains, too, in recent years have slowed new construction, especially
in higher tiers, and don't plan to dramatically reverse that trend in at least
the next year or two.
Those strategies have helped make for profitable suppliers
and crowded planes and properties, but they also at least partially veil the
ability to fully assess the true state of corporate travel demand. To wit,
suppliers in the corporate travel segment arguably most dependent on sheer
demand to remain viable—corporate travel management companies—aren't quite
seeing the unanimously good times of their airline and hotel brethren.
In fact, about one-third of those agencies that authorized
Airlines Reporting Corp. to share with BTN
their air ticket transaction and sales data showed a decline in processed
transactions in 2013 from 2012. Though the total dollar amount of sales on 2013
air transactions for all the agencies included in this year's survey increased
year over year, the actual number of ARC transactions processed declined on the
whole, however slightly.
It goes to show that when assessing the state of the
corporate travel market, supplier performance, while valuable, is a metric that
requires close scrutiny.
In further detail, including sector-specific reports and
charts, the 2014 Business Travel Survey explores these and other trends
impacting buyers, travel management companies, airlines, global distribution system providers, hotel companies, car rental firms and corporate payment system providers.
As always, BTN
appreciates the executive leaders and owners of the 29 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 26,
2014, edition of Business Travel News.