Altour's Boult discusses:
- How "resilient" travel demand contributes to rising costs
- Why rumored air consolidation seems unlikely
- Declining effectiveness of travel policies
Rising travel costs, though at a moderating growth rate compared with earlier this year, are on the horizon into 2027, according to the annual forecast published earlier this summer by the Global Business Travel Association and Altour, which this year succeeded longtime forecast partner CWT. Altour SVP and chief commercial officer Michael Boult spoke with BTN executive editor Michael B. Baker during the GBTA Convention in August to give his analysis of the results and why buyers shouldn't expect to see any relief from rising prices in the near future. Edited excerpts follow.
BTN: Were there any surprises in the recent forecast you put out with GBTA?
Michael Boult: I don't know if there are any surprises. Go to the grocery store and tell me if things are a little more expensive. It's the same on the travel side, and it's unfortunately almost a permanent phenomenon now. We've been in the business long enough. Sure, there'll be recessions. There'll be something that reduces the cost of travel, but for the foreseeable future, it's only going to go in one direction. Because why would it change, if travelers are still traveling? And they are still traveling.
BTN: Maybe that's the surprise?
Boult: It's kind of surprising how resilient it's been. But then again, it probably shouldn't be a surprise. The economy's doing fairly well. Unemployment is low, stock market's doing well. Those are typically the things that drive the economic cycle. Apparently, we're still in expansion mode, and when you're in expansion more, travel is always good. [With] inflation ... business travel, for sure, has seen steeper climb of cost than overall travel.
BTN: What's the cause of that? Less competition?
Boult: Yeah. Not so long ago, there were 10 pretty big carriers in this country. And we're down to four, basically. Southwest has thrown in the towel in terms of being a low-cost carrier. The carriers have done a nice job of geographically separating themselves. We've got few markets, like Chicago, that are still competitive—New York, to some extent. But for the most part, they've partitioned the country.
BTN: We've heard speculation about another merger. Do you think there could be more air consolidation?
Boult: It's hard to believe we could see more. You've got a phenomenon in Europe where, basically, you've got Lufthansa, Air France and British Airways, and then everything else is everything else. So, I guess it's conceivable. But, boy, that would be a lot of power. If United bought American … would Delta respond? Would they allow just that one mega carrier? The airline business is a travel business, an economy of scale business, so it makes sense to want to be bigger and bigger and bigger, but is that right for the consumer? Would the government stand in the way of something like that?
BTN: What about on the lodging side?
Boult: Between Marriott and Hilton, you've got 65 brands, so they've obviously become the mega power in the hospitably business, and they continue to grow and add brands and more importantly to their loyalty program. Loyalty is an over-indexed value in travel. The airline doesn't make any money flying you and me hither and dither. They make money with points, and it's well-publicized. Loyalty has this over-indexed value in travel, and it has in lodging, too. If you want access to Honors rates or Bonvoy rates, they're not going to make those rates publicly available to corporations. They want you to book directly or on direct-connect platforms. They want you to use their credit card. So, loyalty will be an even bigger issue than it has been historically.
BTN: What's the solution to that for corporate travel?
Boult: We had a session at our client advisory board, and I told a customer to detail the five best behaviors of your corporate traveler: Book in advance, book the lowest price, book your preferred suppliers, book in your preferred channels, use your preferred credit card. That's your perfect traveler. Let's look at the supplier's perfect traveler, [which is] completely different: Buy higher prices, buy directly with me, use my credit card. But there is this tension. Travel managers face that problem of how to get their travelers to behave in the way they want them to behave. That's a difficult challenge, and it's more challenging every day.
BTN: And the TMC is in the middle of it all.
Boult: Trying to satisfy our customer, which—we're pretty sure who our customer is, the corporation and the traveler—is not easy. It used to be, when we first started doing this, about service. Then, it was about procurement and savings.
I think we're going into the third chapter of the book: It's about balance. You're not going to be able to get the savings you used to get from suppliers. There are fewer of them. But maybe travel was never about bringing everything down. Maybe travel was about helping you as an organization, your top line, traveling for whatever reason. Let's get you to Chicago in the best way you can possibly to do the best job you can possibly do.
BTN: Does that get into the matter of ensuring purposeful travel?
Boult: That's always been the holy grail of our business, hasn't it? So, I think with AI now, we'll have much better chance of throwing all the expenses into the box and analyzing deals and analyzing long-term value of relationships and saying, "Yeah, this is worthwhile. This is something you should invest in for the corporation." We shouldn't maniacally focus on it as a cost, something evil that we hit with a mallet every day. I have high hopes that we can do that in the future.
BTN: What are you seeing with client policies? Are more looking at dynamic policies?
Boult: We did a webinar with GBTA [about] three months ago. It was about policy, and it was truly surprising to see how little it had changed. Worryingly, the trend was the policies were less and less effective. They were longer, but they were less effective, [and fewer] people were complying with the policy.
So, the question's now become: Are you changing the policy for the actual behavior? Because the people are voting by their behaviors what they want from the organization in terms of travel. So, will companies publish this long document that they know is kind of rigid but really not followed by half the organization? Half the organization is just ignoring it or feels like there are no consequences of not following the policy. It seems to me that there's less desire for corporations to crack down or make people adhere to those policies. So, what is it? A guideline? I don't have a lot of optimism around policies.
BTN: Will AI and personalization help with this?
Boult: That is what all the TMCs are working on. We launched a product, Altour IQ. You basically put the travel, credit card and expense data into the box, and you just ask it questions. My CFO just called and wants to cut 10 percent of the travel? How can I do that? It would take weeks for someone to answer that, but the box is going to give you an answer in three minutes. It'll say, "Based on the data, here are the eight areas in which you can, trim and tuck and, and move." So, that's pretty awesome. No one has yet connected back to the traveler level. But it will come, and it'll come pretty quickly, hyper-personalization. But again, what you want, is that in contrast to what the corporation wants? Who is going to win that tension? I don't know. If what I want is not offered to me, and I don't feel the consequences of going and getting it myself, I'm going to go get it myself, and the corporation loses control entirely. So, who is going to win in this push-pull journey?
BTN: Altour has announced a slate of technology partnerships in recent years. How are those progressing?
Boult: [Recently] we announced that Embraer has rewarded us their global contract for their business travel. Our relationship with Blockskye, which was the original relationship, is going really well. We've got lots of big customer implementations with the Blockskye-Kayak partnership. We announced our Altour One small business solution, and that's gone well. We were the first with Juno, and we were the first with EmPath. We always support these new ideas first. You've got people that are vertically integrated, they own their own technology. Our business is about smart partnerships, because we don't believe that we can do it all. We like to bring in these really smart engines into the business.
In terms of the things we build and bring to market, we're going to look more like Navan than we do today, and all of the TMCs are kind of on the same journey. The thing to watch for is the investment to do that is enormous. How many more agencies have the capability, the resources and the money to do that work? Not many. You'll be left as a TMC outside of that new AI-centric universe.