Op-Ed: Turbulent '09 Nevertheless Will Offer Savings Opportunities

For corporate travel managers, 2009 promises to be a turbulent year. It's hard not to view the latest economic news and headlines with a sense of concern for your company and corporate travel program. While this year promises challenges, some opportunities are emerging.

To capture opportunity for your company, look beneath the broad, regional travel forecasts, and examine trends in your key markets. In the fourth quarter of 2008, Egencia selected 20 top business markets around the world, examining past and current industry trends, researching travel supplier markets, macroeconomic factors and capacity projections.

In this market-level analysis of business travel trends, two themes appear:

Some relief should occur in direct expenses as shrinking demand and other factors keep average airline ticket prices, daily hotel and auto rental rates flat to slightly lower in key corporate travel markets.

Preferred supply partners will deliver additional value and better deals to companies that bring demand and deliver on their commitments.



Negotiability

Recognizing that local-level forecasts are the most actionable, Egencia introduced a new tool for travel managers, the Negotiability Index. For 2009, Egencia's Negotiability Index suggests buyers' strongest bargaining opportunities lie in Chicago, Philadelphia and Phoenix. Opportunities are more moderate in Atlanta, Los Angeles, Minneapolis/St. Paul, New York and San Diego, while the weakest are in Boston, Dallas, Denver, Houston, San Francisco, Seattle and Washington, D.C. As for international travel destinations, bargaining will be weakest in Hong Kong and Toronto, a bit better in London and strongest in Paris and Tokyo.



Air

We expect average air ticket prices paid by business travelers in 2009 to be flat to slightly down due to a number of factors. With current economic conditions, expect softening demand to outstrip decreased capacity. In addition, key business markets will experience less capacity compression than average because airlines want to hold share among business travelers. Policy and spend controls will continue to tighten at companies, impacting the mix of products purchased in 2009.

For the top 15 domestic markets reviewed, this will mean average ticket prices for corporate travelers neutral to down in all markets with the largest potential drops anticipated in Denver, Seattle, Atlanta, New York, Dallas and Minneapolis.

Five key international markets (Hong Kong, London, Paris, Tokyo, Toronto) also are expected to be affected similarly.



Hotel

Hotels in key business markets are expecting softer demand in many markets as companies reduce spending and airlines decrease capacity, among other factors. In the 15 key U.S. markets studied, the most significant declines in average hotel rates are anticipated in Chicago, New York, Phoenix and San Diego. The five international markets studied can expect only slight dips in average daily rates for business travelers, with more pressure in Toronto.



Car

For car rentals, 2009 pricing promises to be impacted by industry consolidation and lower growth in rental fleets. This would normally drive upward pressure on prices, but should be mitigated by decreases in demand and some reductions in air capacity. With this in mind, we expect rental prices to remain neutral to slightly up.



2009 Strategies for Travel Managers

In 2009, corporate travel managers can benefit from several strategies for monitoring and controlling travel costs. Monitoring spend closely, on a weekly basis, versus quarterly, brings trouble spots or areas of potential savings to light while there is still time to act. It also helps monitor preferred supply contracts at any given time.

The second strategy is travel policy enforcement. Compliance is the key to driving powerful strategies like advance booking and pre-trip approval as well as meeting supplier preferencing.

Educate travelers on how they can make a difference. Closely monitoring spend and communicating results gains traveler buy-in.

This year will certainly remain challenging. However, there are meaningful opportunities to be found and strong results to be achieved with the right insights and strategies.