September 2022, Virtual
September 29 2022, Virtual
Now in its 27th year, the Business Travel Awards
Travel managers should do more airline negotiations with the alliances, aviation expert Darryl Jenkins said.
Speaking at the National Business Travel Association's (NBTA) Business Travel Financial Forum in New York, Mr Jenkins said: “The one thing that travel managers have not done well enough is negotiations with alliances.
“I think you could do a much better job with alliances. I forecast that that there will be much more negotiations with alliances.”
Mr Jenkins, director of the Aviation Institute of Ohio State University, was speaking on economic trends in the aviation industry at the NBTA's first ever forum on finance.
More than 240 delegates attended, of which half were buyers.
He told the assembly that business fares were “enormously high” but as load factors were also high and airlines wanted to “keep their heads in the trough”, they would stay that way.
Phillip Baggaley, managing director of corporate ratings for US consultants Standard and Poors, said the financial position of American airlines had improved over the last couple of years.
But in term of buying shares in them, it was still the equivalent of buying “junk bonds.”
While airlines and analysts talked of consolidation, there were several risk as well as advantages, he said.
Among the risks were problems with labour integration and concessionary contracts, source integration and the likely acquisition of debt.
“US airlines are getting there but they are not out of the wood yet,” he said.
“US hotels in third year of recovery”
US hotels are in their third year of recovery with no end in sight, Amanda Bryant told the NBTA conference.Ms Bryant, vp lodging group Merrill Lynch, said that demand, driven by a growing economy, was still outstripping supply.
But the rise in prices was led by the increase in the average daily room rate which was going up more than the revPAR.
“Hotel companies are really pushing their rates aggressively. They are making up for lost time, Ms Bryant said.
She said with just three major players, Marriott, Starwood and Hilton dominant in the market and being “extremely aggressive on prices”, it was harder for travel managers to negotiate deals.
But she said the supply in growth of new hotel had bottomed in August 2006 but was now rising again “but is not as robust as it was.”
But there had been a decline in the number of hotel rooms in cities like New York, Houston and Los Angeles.
Booby Bowers, senior vp for Smith Travel Research, said the last five years had seen “unprecedented growth” in room supply in the US.
But while there was a decline in occupancy in some cities, average room rates were still rising.
“Every bit of the rise in revPAR is due to the rise in room rates,” Mr Bowers said.
The average daily rates in New York were now $241.
“This room rate growth is very strong and you will continue to see a robust average daily room rate this year,” he said.
Amid the good times for the hotels, the luxury, upper upscale and upscale properties were all doing very well.