Egencia's 2011 Global
Travel Outlook, released on Wednesday, forecasts flat domestic air ticket
prices, lower prices for flights overseas and slightly higher hotel rates next
year. U.S. corporations, meanwhile, are beginning to loosen travel budgets,
with about one-third expecting to increase business travel spending next year.
In a survey of more than
300 Egencia clients, 34 percent said they would increase their travel budget in
2011. Only 4 percent said they planned travel budget reductions, and 43 percent
said their travel budgets would be steady. The remaining 18 percent were not
yet sure which direction their budgets would go.
European travel buyers are
less bullish, however, with only 13 percent of 200 Egencia European clients
surveyed saying they expect to increase their travel budget next year. More
than half said they would keep their spending levels flat, and 7 percent expect
travel budget cuts.
With U.S. corporate travel
on the rebound and continued airline consolidation, Egencia forecasts that
average prices for tickets bought in North America will range from flat to
slightly up in 2011 compared with 2010, based on data from OAG, ARC and
Expedia. It forecasts the highest fare increases for flights to Houston,
Phoenix and Denver—up 7 percent, 6 percent and 5 percent, respectively—and fares
to New York, Philadelphia and Seattle will fall slightly.
For American business
travelers flying abroad, however, airfares mostly will be lower than 2009
levels. "Prices were up pretty dramatically last year, and we have a
feeling that will be difficult to contain," said Noah Tratt, Egencia's
vice president of supplier relations for the Americas.
Air tickets purchased in
Europe also should be flat to slightly down in 2011, according to the report.
In Europe, airlines face pressure from increased low-cost carrier competition
and capacity additions that could outpace demand.
On the lodging front,
Egencia forecasts average daily rates will increase overall in North America,
Europe and Asia/Pacific, with the exception of a few markets. Most of the
increases are 5 percent or lower, with the exception of Minneapolis, Seattle
and Washington, D.C., in the United States as well as Glasgow, Scotland.
"We expect fairly
level ADRs, no dramatic price increases," Tratt said. "More demand
means higher prices, but large group meetings and incentives have not recovered
yet."
A few North American
markets will see rate decreases, including Houston, Phoenix, Calgary and
Vancouver, according to the report. Moscow, which in the past several years has
been the most expensive city globally for hotels, will see a 7 percent rate
decrease, providing a "strong opportunity" for travel buyers, Tratt
said.
Even without dramatic rate
increases, the report indicates a weak hotel negotiating market for buyers in
most major North American markets, with Houston the only market in the United
States marked as a strong negotiating opportunity. Europe is more of a mix,
with buyers facing tough negotiations in Amsterdam, Paris, Frankfurt and Madrid
but more moderate negotiations in London, Brussels, Berlin, Dublin and
Stockholm. Buyers also will face tough negotiations in nearly all the key
Asia/Pacific cities, with the exception of Mumbai and Melbourne.
Egencia also forecasts a
slight increase in car rental rates, about 3 percent, in 2011 for the United
States, though this would be a rebound from a 5 percent decrease during the
first half of this year. Car rental rates in Canada will be down slightly, and
European rates could increase by about 5 percent, according to the report.