Inside Track - 2006-07-17

Airlines Could Have Profitable Year
Major U.S.-based carriers this week will begin releasing second-quarter earnings, and Calyon Securities analyst Ray Neidl is optimistic about carrier performance and even noted the possibility for the industry's first profitable year since 2000. "For the second quarter of 2006, we expect the U.S. airline industry will return to profitability, with industry net income projected at approximately $1.2 billion," Neidl said in a research note. "This positive trend should continue through the third quarter and even possibly into the slow fourth quarter. We are projecting the industry to earn about $747 million for the year." As fuel costs remain the X-factor for airlines with oil prices hovering above $70 a barrel, strong demand for air travel and tightened capacity will help offset the airline industry's most nagging expense. The good news for airlines, however, translates into more costs for buyers, as "there is room for additional price increases."

InterContinental To Sell Seven Hotels
InterContinental Hotels Group last week agreed to sell a portfolio of seven European hotels to the Morgan Stanley Real Estate Funds at a cash price totaling E634 million. IHG, which placed the properties on the market in January, will redeem 30-year management contracts on the hotels, ensuring representation of the brand's name. The transaction is expected to close in the third quarter. "This deal is a significant step for IHG as we near the conclusion of our asset disposal program," said Andrew Cosslett, CEO of IHG. "Looking ahead, IHG is fully focused on its growth target of adding 50,000 to 60,000 rooms to our portfolio on a net and organic basis by the end of 2008." Since separating from the Six Continents Plc umbrella in 2003, IHG has sold off 175 hotels with a net worth of more than £2.8 billion, as part of its strategy to reduce asset ownership and focus on managing and franchising. The seven hotels, totaling 2,537 rooms and located in Amsterdam, Budapest, Cannes, Rome, Frankfurt, Madrid and Vienna, will retain the InterContinental flag.

HRG To Launch Expense Solution
Travel management company HRG is announcing an expense management tool to the North American market that will be delivered either as a stand-alone solution or as a piece to an end-to-end solution combined with travel booking, delivered through the HRG portal. The technology will help manage expense through an outsourced online solution. HRG is touting that the tool "will significantly reduce transaction costs and improve management control when logging, calculating and processing expense transactions." The announcement of the solution's launch is scheduled for Tuesday at the National Business Travel Association 2006 Conference and Expo in Chicago.

BCD To Release Client Benchmark Study
BCD Travel on Monday will release its 2006 Client Benchmark Survey to attendees of the National Business Travel Association convention in Chicago this week. The survey, which polled 181 BCD clients in May, provides insight on air, hotel and car and offers recommendations for dealing with the increased cost of travel culled from BCD's newly created consulting unit. As for why travel budgets are increasing, BCD's research reveals that 53 percent of the travel management company's buyers have more trips planned for 2006, 42 percent see average trip costs increasing, 32 percent point to a high number of travelers and 9 percent attribute the rise to an increase in the overall cost of trips.

ASTA To ReDefine Corporate Advisory Role
The American Society of Travel Agents Corporate Advisory Council is meeting this month to define its role in the new under a new ASTA governance plan to provide members with equal representation, effective January 2007.