Business travel spending in North America is on track to decline year over year after a flat first quarter, according to research published this week by Internova Travel Group.
The Internova Index, based on millions of travel bookings made by North America residents as well as a survey of 3,000 U.S. travelers, reported for the first quarter a 1 percent year-over-year increase in air and hotel spending for international travel and a 1 percent decrease on such spending for domestic travel. An overall increase in air spending was offset by a decline in hotel spending, according to the report.
Forward business travel bookings are trending lower this year, according to the report. Spending for air bookings from the second through fourth quarters is down 2 percent year over year, and spending for hotel bookings is down 9 percent, combining for an overall decline of 5 percent in forward booking spend, Internova said.
Airfares were up slightly year over year in the first quarter—2 percent for domestic fares and 1 percent for international fares—and hotel rates were up in most regions. The report indicated that the growth in air spending and decline in hotel spending amid "broadly consistent" average daily rates "suggest that business travelers are shortening trips but not cancelling them."
Companies appear to be tightening their belts for airfares, too, with 10 percent first-quarter growth year over year for economy-class spending compared with a 3 percent growth in business- and first-class spending. The stronger growth in economy spending indicates that road warriors have been continuing to travel, while the more sluggish growth in spending on premium cabins indicates "senior management are either trading down to save money or flying less to reduce discretionary spend," according to the report.
Spending on premium economy seats saw the strongest growth in the first quarter, up 25 percent year over year, though it is "significantly smaller" in total volume than economy or premium-class spending, Internova said.
For domestic hotel rates, the Northeastern U.S. had the highest growth in the first quarter, up 6 percent year over year to $223, followed by the Southwest, up 4 percent to $199. ADR was up 1 percent year over year to $201 in the South and flat at $161 in the Midwest, while the Western U.S. saw a 2 percent decline to $218 in the first quarter.
Internationally, ADRs were up in most regions in the first quarter, most strongly in Latin America, up 24 percent year over year to $236. Oceania's ADR increased 8 percent to $207 for the quarter, and Asia ADR was up 5 percent to $268. Both North American and African ADRs were up 2 percent, to $200 and $212, respectively. Europe was the only global region to see ADR decline in the first quarter, down 8 percent to $221, according to the report.