BTN Europe presents an overview of business travel and MICE predictions for this year
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The cost or business travel will rise by 4-6% across all regions, Advito, the consultancy arm of BCD Travel, predicted.
In its Industry Forecast 2012 it said price rises could be under 4% in areas of high capacity but said that in “boom markets”, the increase, especially for hotels and meetings, could be “considerably higher.”
Advito said it expected demand for business travel to grow in 2012, by low single digits in the North American and European markets but by medium to high single figures in other parts of the world.
But the consultants warned that growth was connected to increases in country’s GDPs.
It added: “If the figures to be released by the IMF on September 20 are substantially lower than they were in June, then price predictions may well have to be revised in the next update to the 2012 Industry Forecast in late 2011.”
Advito said before the economic situation deteriorated in the summer, the price of oil, which rose to $120 a barrel in April was the “major risk threatening business travel growth.” The price of oil has since dropped slightly.
On air travel, Advito predicted growing demand would push fares up by 3-5% worldwide.
Regionally it said fares for both premium and economy could rise in North America and Europe by 5% and by 4% in other areas like the Middle East, Asia Pacific and Latin America.
Advito warned travellers and corporates to expect more experiments by airlines in both unbundling and “what they will charge for it.”
It said that some carriers will try and make use of Direct Connect “regardless of whether global distribution systems succeed in widespread introduction of technology for booking ancillary fees.”
The Forecast added: “Although airlines are likely to agree new but shorter-term deals with global distribution systems, it looks increasingly likely that distribution costs will be passed on in part to TMCs and their corporate clients.”
But European buyers could fare even worse than those in other areas with both Lufthansa and BA both moving towards charging fees for payment by card.
Advito said other carriers were likely to follow but the bright note was that airlines were ready to negotiate with corporate clients.
On hotels, the recovery in rates was likely to lead to a more bullish approach to corporate negotiations and Advito warned of quotes of “significantly higher rates.”
It added: “However they are likely to make some adjustments in response to firm negotiating by travel managers with well-managed, compliant travel programmes.
“Finalised rate increases are likely to be in the region of 2-6%, depending on the location.
The cost of meetings was also likely to rise in both 2012 and 2013, Advito said, with demand strong for both years. The increases were likely to be strongest in gateway cities.
Advito that car hire rates in the US, the largest market in the world, had been static for two years.
“Something will have to give, so expect rates to rise by 4-6% in 2012.
“Companies which have not reviewed their rental programmes for a few years should do so as soon as possible before rates start to go up,” the consultants said.
Advito said Europe should also expected rail fares to rise by 5% in 2012 as happened in 2011.
“Deregulation of the cross-border market will see some new services introduced from 2013 with two Deutsche Bahn (the German network) routes to London, but pricing is unlikely to be affected,” Advito predicted.