Carlson
Wagonlit Travel has warned travel managers to resist rival travel management
companies who offer low-priced cross-border, or “creative”, tickets that flout
airline conditions of carriage. “Some travel providers use it as a sales tool
with cost-conscious clients, promising significant costs savings and
downplaying risks,” said CWT in its 2017 Energy, Resources and Marine Forecast,
published this week. With oil prices “currently expected to rise only slightly
in 2017, remaining well below long-run averages,” according to
president global program solutions of CWT Energy Resources & Marine Raphael Pasdeloup, most
companies in the sector certainly fall into the category of “cost-conscious.” “A
‘mission-critical’ only travel mandate has been in place with many buyers,” she
said.
The report
defines cross-border ticketing as “a range of ticket practices aimed at
disguising the true origin or destination of a traveler to save on the cost of
an individual travel itinerary. The goal is to circumvent airline pricing
strategies by taking advantage of pricing inconsistencies at different points
of sale, either within the same country or in another country.” CWT said that,
if caught, travelers risk having their tickets cancelled. Additionally, their employer
“jeopardizes corporate discounts, back-end rebates and non-monetary benefits”
and being asked by their TMC to make good an agency debit memo imposed by the
airline to collect what was owed for the full price of the trip.
CWT also
cautioned against the familiar practice of issuing a ticket in the country
where the fare is lowest rather than where the traveler is based. It claimed
potential consequences include “difficulties in revising itineraries, limited
ability to track travelers and ensure their safety [and] reduced financial
transparency.” Instead, CWT recommends clients consider point-of-origin pricing,
“specific, contractual discount terms that can be negotiated to allow ticketing
either from a global point of sale or from specific country points of sale,
regardless of the origin of the travel, or ticket. This option can require
certain spend thresholds but is worth consideration, particularly given the
risks of violation airline and/or IATA policies.”
Elsewhere in
the forecast CWT said ERM sector buyers who communicate regularly and
transparently with airline suppliers are “locking in excellent 2017 corporate
rates ... despite decreased air spend in some cases.” Carriers are continuing
to extend generous discounts on the assumption they will retain preferred
supplier status with ERM clients when the sector revives. In part, discounts
are being preserved by switching deal targets from a volume commitment to a market-share
basis.
The report
also urged buyers to consider different approaches to supplier negotiations.
“Particularly in the Asia Pacific market, ERM customers are implementing
alternate [sic] solutions such as block booking or pre-purchase of seats to
avoid price fluctuation.” Other tips include switching to virtual payments,
integrating management and booking of commercial scheduled and private charter
flights, and continuing to use marine and offshore fares in addition to heavily
restricted lowest logical fares. Although marine fares offer savings of up to
30 percent, they can still be more costly than best-on-day fares, but they are
fully refundable and changeable and have no pre-purchase or point-of-origin
requirements.
The forecast
offers airfare and hotel rate predictions for key ERM destinations worldwide,
including Houston, for which CWT predicts a fare rise of 3.5 per cent in 2017.
Although the Texan oil industry continues to suffer, CWT believes there will be
upward pressure on ex-Houston fares owing to general price inflation and
improved demand in the wider U.S. economy, combined with capacity cuts from the
city.
CWT said
hotel rates will fall only 0.3 percent because “Houston is not solely reliant
on oil and is enjoying improved employment rates, softening the blow from a
weakened energy sector locally.” However, “the combined Marriott/Starwood
entity is estimated to have a nearly 40% market share in Houston, complicating
projections beyond simple supply and demand economics.” CWT warned that
consolidation may boost rates in cities in North America where Marriott and
Starwood are dominant.
One
city whose hotels have been hit especially hard by the oil price slump is
Aberdeen, the center of Scotland’s North Sea energy industry. “Hoteliers have
become significantly more aggressive with paid rate reductions averaging -25%
in mid-2016 vs. 2014,” the report said.
Correction Oct. 19, 2016: In a previous version of this article, Mr. Pasdeloup's statement was incorrectly attributed to senior vice
president and global head of CWT Energy Resources & Marine Monisa Cline. The quote was attributed to Ms. Cline in a press statement from CWT, which was later corrected. BTN has corrected the attribution in turn.