With record load factors in the air and the highest hotel occupancy rates since 2000, just getting there is becoming as big a challenge as affording the increasing cost of travel. The obvious advice is to convince traveling professionals to book early, but when that's not possible, travel managers often resort to pulling increasingly elusive strings.
June load factors on U.S. carriers reached some of their highest-ever levels. AirTran and United Airlines reported record June figures of 88.3 percent and 79.8 percent. The percentage of Delta seats filled in June reached 84.5 percent, the highest load factor for any month in its history. On June 30th, Delta filled 94.4 percent of seats for the carrier's highest-ever daily load factor. All other big U.S. airlines reported June figures of between 81.5 and 88.9 percent.
Nor is there much breathing room in many hotels. According to PricewaterhouseCoopers, the U.S. hotel industry this summer will fill a record number of rooms per night of 3.277 million. "Occupancy will not exceed the 72.1 percent achieved in 2000 (based on Smith Travel Research data), but the forecast of 71.5 percent will be highest in the five years since 2000," PwC announced last month. The tightness comes despite a 7.7 percent increase in supply over the past five years, PwC noted.
These trends are not expected to let up anytime soon and, unfortunately, tend to redirect travel management priorities from the strategic to the tactical.
"We are finding full planes, even when booking three, four and five weeks out," said Dawn Foods business travel director Sam Barber. "Is there availability? Yes, but it can be very limited. Those nonrefundable coach tickets are at a premium. We haven't solved anything, so we are getting around it the best way we can."
"Availability is a key constraint right now," said InterContinental Hotels Group global sales strategy and systems director Jill Cady during a recent webcast sponsored by the Association of Corporate Travel Executives. "As occupancies continue to increase in some of the major markets, getting your travelers into hotels that are in your preferred portfolio, as well as just getting them into cities when they need to be there, is becoming more and more difficult."
And so travel managers scramble.
Safe Harbors Travel Group president Jay Ellenby mentioned using bed and breakfast properties or alternative airports, and said sometimes it makes sense to suggest a different day of travel. "In some markets, they run out of cars," he noted. Dawn Foods' Barber described how "instead of an alternate airport for departures, we can sometimes use an alternate airport for arrivals. We also encourage people to book non-refundables as early as possible, even if they think their flights will change. The change fee plus change in fare is still cheaper than a refundable ticket at last minute."
Not everyone is affected. "We haven’t had any real issues with availability for individual business travelers, but then we generally work from large airline hubs," said Atlanta-based Turner Broadcasting System corporate travel services vice president Robert McGurk.
Chicago-based Tower Travel Management president John Smith commented on complaints from road warriors about limitations in frequent flyer reward inventory. "Most airlines have specialty desks assigned to accounts," said Smith. "It harkens back to calling the sales rep to get things done."
But back in the day, there were more airline sales reps to call. "One of the biggest problems for us has been that as airlines cut back, the relationships we had are gone--and so with fewer reps, it's much harder to clear a seat," said Executive Travel president Ray Pierce. Added Travel & Transport CEO Bill Tech, "They have cut back tremendously."
Relationships are important on lodging, as well. TMCs traditionally contract with rate program providers.
"We negotiate inventory accessible to our agencies when the hotels have reached a sold-out status," said ABC Corporate Services vice president of hotel and supplier relations Tiffany Topcik. "Our hotel desk has just been jammed with a flurry of requests for inventory in all the major cities, and a lot of secondary cities around the world. This is top of mind for travel managers when they need to get their travelers into these destinations." T&T's Tech said the availability of blocked space for sold-out cities in the Radius hotel program was a major reason his TMC joined Radius network. [Tech is currently chairman.]
At the moment, however, the shift in hotel pricing toward dynamic rates is creating uncertainty. Asked recently whether the advent of dynamic pricing would eliminate "travel agency consortia programs," Carlson Hotels Worldwide sales vice president Doug Abbott said, "I don't know if they will disappear, but time will tell." Added InterContinental's Cady, "As far as program entities being part of the relationship between the corporation (as the end purchaser) and the hotel (as the supplier), if they add value along the way, then they continue."