Business Travel Show Europe Kick Off, 23 February,
Global Travel Risk Summit Europe, April 2023,
3rd Annual Sustainable Business Travel Summit
Another hard year is in prospect for the travel buyer with higher prices from airlines, hotels, car rental companies and meetings venues. This puts the new American Express annual Global Business Travel Forecast for 2008 in line with what other surveys have predicted.But what is different about the Amex findings is the wide discrepancies in fare and rates even for the same region.The broad sweep of Amex's predictions is that travel costs will go up.For example, the average cost of a domestic trip including airfare, car rental and hotel stay has risen 6% (about $63) to $1,110 while an international trip has risen by 7% ($205) to $3,171. Mike Streit, vp and leader of the TMC's advisory services, said buyers could expect "another capacity-restricted, challenging year and a continued push to keep travel and entertainment budgets in check."The problem, as in 2007, is that in many regions, demand is outstripping supply with the result that the supplier's have the upper hand. And it is where this imbalance is most pronounced that prices are likely to rise sharply.The London hotel market is a case in point. (The Forecast does not seem to have covered Moscow where the findings are likely to have been equally startling.) In London where occupancy is touching 90% and analysts have long been talking of a record year, Amex says it expects prices in five-star properties to go up by between 21-24% and in mid-range hotels by 19-22%.These are massive increases and compare with much lowers ones in France and Sweden where hotels are also doing well this year.Amex predicts that in France, hotel rates in both mid and up-market ranges will go up 9-11%whiel in Sweden the increase will be, in both ranges 15-17%.Germany where the market is more variable, the rises will be 7-9% in the mid-range and 10-12% in the top range.Now these price increases are predicted as hotels become, according to Joakim Johansson, Amex's newly appointed vp for advisory services EMEA, "more sophisticated" in how they deal with companies.He said at the ACTE conference in Munich: "Negotiations are expected to be in favour of the hoteliers. In Europe it is a challenging environment for the corporates."Hotels are getting more sophisticated in their pricing techniques and their control of prices."He also noted that last room availability clauses were also continuing to drop. But in the corporates' favour he noted that dynamic pricing â€“ much disliked by buyers "had failed to take off last year" and he did not see it happening in 2008.There was also a second point of cheer for the buyers. More and more were asking hotels what their "green policies" were.This same point was made by Samantha van Leeuwen, PwC's head of UK hotels and venues, at the ITM/MPI forum in London (see news story: Travel less, PwC asks staff). Her company is sending hotel chains questionnaires on green issues and using their replies to grade them according to their environmental commitments. It may not be much in the face of spiralling prices and yield management, but it is a negotiating point. But if the Amex Forecast heralded grim news on hotels, meetings organisers got even less comfort.Here the TMC predicted a rise of around 30% in the cost of meetings. Again this is a massive increase.It is not all down to hotel rates. It is a figure worked out from the estimated rises in hotel rates, air fares and food and beverage charges. On air fares, the situation was less alarming. Globally Amex predicted that domestic/short haul fares would rise 1-4% and on international routes by 5-8%In Europe, the increase would be 2-5% on domestic and 6-10% on international. In individual countries, Amex predicted that in France the domestic fares would rise by 0-2% and international ones 10-12%, Germany by, respectively 3-4% and 6-8%, Sweden by 4-6% and 6-8% and - against the trend - the UK could see a drop in domestic/short haul fares of between 5-10% and a rise in international fares of just 1-2%.With Open Skies on the horizon and Heathrow in theory opening up, this last figure may be the most difficult of all. Amex itself said Open Skies was the wild card in the pack.Faced with these increase, Amex does offer some advice in dealing with them. It is nor new but it commonsensical.Use the lowest fares available, optimise online bookings, define precisely who goes business class and who stays in which grade of hotel and, perhaps most important of all, drive use of preferred suppliers.