12 December 2022, etc.venues Monument, London
Business Travel Show Europe, presented by The BTN
21 November, London Hilton Metropole
A prediction on what's going to happen in 2009. Mike Platt peers into the next 12 months
I want to be one of the first to predict what will happen in the business travel market in 2009. Why do I want to do that? Well first it is because I am pretty rare in being averagely optimistic and second because I think that in 2009 people will begin to get their thinking in order for the benefit of years to come. Like always I have two biases which are that I write about the global market and not one particular region and also my focus is entirely on business travel. This means that some parts of the world may not locally identify with my views, and also my thoughts are not all encompassing when talking about broader travel providers such as airlines and hotels which need to take into account leisure and the cargo business. I will also make it damn difficult for you to decide in the future whether I am talking rubbish or not! In saying that I believe my Comments have shown a strong track record in the past and I am personally confident in what I predict for the coming year.
To me the key factor on what is going to happen will rest with the very people who know least about the corporate travel market. They are the financial institutions and the messages they send out to the market. You only have to look at the way they believe in what they want to, like low cost transatlantic carriers and some technology solutions, to see what a weak grasp they have on reality. I have therefore ignored this influence and simply focussed on reports I respect, research that I have undertaken, previous experience and gut feel. So here goes.
In global terms I think the following will happen:
Obviously there will be a downturn in travel but it will not be as great as some predict.
Passenger levels will drop by an average of 10% maximum. Some regions, like the USA, will be higher and some, like Europe, lower.
This will be counteracted by airlines which will reduce capacity and costs (3%), increase fares (5% minimum) and continue to add extra costs such as for fuel and baggage (3%). Most of the remaining lower fare impact of ‘Open Skies' will disappear.
Low cost airlines will feel the financial pinch more as they have already cut their costs and cherry picked their best routes, leaving not much left to slice. More of them will go to the wall.
There will not be as many ‘cheap pickings' for corporations as expected and they will have to deliver the volumes to get the deals. Those that do will get the best and be much sought after.
The toughest markets will be those that have enjoyed the most growth in the good times, like the Middle East, China, Russia, India and parts of South America. The USA could be OK if it holds its nerve. The UK will begin to wonder if keeping the pound against the Euro was such a good thing.
Perhaps governments may help their airlines like they are helping their car manufacturers. Some speculate that this might be happening in a small way now.
The premium hotel chains will find life in 2009 pretty tough and will need to be more inventive in how they encourage their market. Travellers will still be out there but only those hotels that come up with the best strategic sales plan will snare them. Low cost chains will enjoy current levels but can expect little growth, particularly from the higher market travellers who will continue to use 4/5 star or not travel at all.
Car hire companies should see little growth but equally little margin erosion.
A big challenge will be in the area of infrastructure. There is much needed to be refreshed but little funds to do so. Airline fleets are becoming old and airports, rail links and road networks have been neglected in many parts of the world, particularly in the UK.
The questions about passenger rights, security, compensation and privacy will grow. For example there is a worry in the UK that the new ‘see through' scanners at some airports could mean a risk that one's genitalia could appear on Facebook in the future. I kid you not, somebody expressed that fear!
So that is a summary of some of the things I believe will happen. Now if I was asked what I would want to happen I would add:
Not much to ask really!
A very happy and successful New Year to all my readers - if there are any!