Despite predictions of a flat year for business travel and some voices of doom, there are tentative signs that 2012 might be better than expected. Stanley Slaughter reports on how the sector has fared in the first three months of the year
When we gnarled soothsayers sat down in January to write our predictions for 2012, there was more pessimism than optimism to draw on. There were, for example, some grim figures from the GTMC in the UK which suggested, in terms of air travel at least, there was a dip in sales in the last months of the old year. The most, many of us concluded, that could be hoped for was that 2012 would be no worse than 2011.
This stance may have been unduly pessimistic. Early figures – and the stress must be on early – from the GTMC suggests a remarkable rise in transactions in the first quarter of 2012. Mix this with some mildly upbeat reports from the Temple of Doom (aka IATA) - albeit with warnings about the potential effect of rising oil prices and the “fragile” global economy - and a tentative conclusion may be that things might just be on the up.
First the good news from the GTMC: the early returns from their members for their quarterly count of transactions shows a 19% increase in the number of transactions in Q1 compared to the same three months in 2011. Anne Godfrey, the GTMC’s chief executive, described the increase as “phenomenal.”
She added: “I would say that despite the fears that 2012 was going to be bad and after the slow Q4 of 2011, Q1 is looking good. We have only so far had 15 responses so it is a bit early to say whether it will hold up but it looks like people are travelling again.”
The early responses so far indicate that hotels are “very strong” but there is also double digit growth in rail and car hire transactions. Air is still in recovery mode, after the poor December, bit is still 8% up on Q1 2011. Godfrey said she was not surprised by the apparent upturn. “The first nine months of 2011 were very, very good for GTMC members. It was only the last quarter that set alarm bells going. But that was only a blip.”
Ironically the apparent upsurge and the general feeling among agents that things are getting better have left them with an unexpected problem – where to recruit qualified staff to handle the extra business. When things got tough over the past two or three years, many TMCs, like other countries throughout the world, made staff redundant.
Their new “lean and mean” look helped get them through the toughest of times but now when more staff are needed, many agencies are finding there is a serious shortage of qualified staff on the market.
The news coming from IATA in the last two weeks or so has been guardedly encouraging. Its premium traffic figures, released on March 20, showed that traffic in January was 2.9% higher than it was in the same month last year. The Association said there had been a “stable upward trend” in premium traffic since May 2011 and this seemed to be continuing. Economy traffic fare better with a 6.1% rise in January compared with January 2011. Throughout that year, economy traffic rose 5.1%. Both sets of figures suggest that air travel is more than holding its own and is actually on the increase.
IATA confirmed these hopes earlier this week (April 3) when it released figures for total passenger traffic. February 2012 figures were 8.6% up on those for the same month last year. This included some substantial increases, with traffic up 20% + in Africa and the Middle East, 16% up in Latin America and 5% up in North America. Europe also enjoyed a 7.6% rise in its international passenger traffic.
The latest figures, released yesterday (April 4) in IATA’s financial monitor, put a slight brake on the upward curve. Passenger volumes continued to be “considerably higher than a year ago” while yields which had slowed in the second half of 2011 were now increasing again.
But the bad news was that airline capacity “continues to trend higher, unabated.” Increased capacity unless it is checked tends to lead to fare wars and cuts. Matching capacity with demand is something the continuously dynamic industry rarely seems to get right.
But before any conclusion is reached that spring is just around the corner, it is worth taking stock of the position of those who actually spend the money, the travel managers. Here is what many of us expected at the beginning of the year: little or no change on 2011.
Paul Tilstone, chief global development officer and European managing director for the GBTA, cautioned: “I would say that things seem pretty stable as they stand. I saw a recent survey by the Dutch which showed 59% of buyers saying they expected flat expenditure in 2012 and this appears to resonate with most buyers I have spoken to.
“It appears to be a time when we are in the eye of the storm and things are relatively calm and stable. A good time to refocus on the strategy in hand whether that of managing demand and supply or of tightening policy compliance or opening up to a world of traveller-led services.”
It may just be too soon yet to celebrate.