2011 global travel forecast uk 1

8/4/2019 2011 Global Travel Forecast UK 1

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2011 Global Corporate Travel

Forecast and Hotel Negotiability IndexCompanies continue to cautiously reinvest in corporate travel with an ongoing

focus on cost control and efciency; the current moderate rebound in corporate

travel is likely to continue into 2011. Egencia predicts that many suppliers

will implement price increases in 2011, coinciding with the increase in travel

demand based on improving market conditions.

Based on Egencias 2011 Global Corporate Travel Forecast and Hotel Negotiability Index, average ticket

prices (ATPs) for corporate travellers to top business travel destinations are expected to:

Stay at to slightly down in top European travel destinations;

Stay largely at to slightly up in key North American destinations;

In Asia-Pacic , the ATP forecast for APAC points-of-sale is mixed, with prices increasing slightly in

half the markets (including Sydney, Beijing and Mumbai) and at or slightly down in others.

Severely impacted by the economic climate of

the last several years, the hotel environment is

showing signs of strength relative to increased

corporate demand, resulting in moderately

improved hotel occupancy for nearly every top

business market worldwide. In key destinations

for 2011, Egencia forecasts average daily rate

increases in North America, Europe, and Asia-

Pacic.

In this guide, Egencia examines both the supply

environment at a market-level for nearly 40

destinations in North America, Europe, and Asia-

Pacic, as well as the results of research from

over 500 global travel buyers. In addition, we will

share recommendations and best practices on

how to manage your travel programs, anticipate

travel industry changes, and optimize business

results amidst the unique 2011 global supply

landscape. Well also share the results of our

unique Advance Purchase Advisory study, which

identies potential savings if organisations and

travellers leverage Advance Purchase windows.

The results are often quite dramatic.

Air Fares Overview

European ATP

Though European businesses are slowly

increasing travel demand both domestically and

internationally, air prices for corporate travelwill remain at to slightly down for ying to

top business destinations with a few notable

exceptions.

Largest increase is forecasted for

Glasgow (8%).

For travel originating in the EU and ending

in the United States, many destinations

may see decreases including Los Angeles

(down 12%), New York (down 3%), and San

Francisco (down 1%).

Prices are being driven downward by a number

of factors including an increase in the number of

low cost carriers, capacity additions that could

outpace projected demand, and companies

putting guidelines into place for travellers to book

lower-class, lower-price cabins.

2010 Egencia, LLC. All rights reserved. Expedia, Egencia, and the Egencia logo and Get Ahead are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries.Other logos or product and company names mentioned herein may be the property of their respective owners.

2011 Global Corporate Travel Forecast and Hotel Negotiability Index

For more information, call 0207 065 5439 | www.Egencia.co.uk 1

In This Guide

1. Air Fares Overview -

European ATP

Pg. 1


North American ATP

Pg. 2


Asia-Pacic ATP

Pg. 3

4. Global Hotel Landscape Pg. 5

5. Supply Outlook: Hotel

Negotiability

Pg. 6

6. Lodging Trends Pg. 7

7. Car Rental Price Guidance(RFD)

Pg. 9

8. Travel Management Trends Pg. 10

9. Research Methodology Pg. 10


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Many major European destinations are

forecasted to be at to slightly down

including London (at), Munich (at), and

Berlin (down 5%).

Increased savings for intra-European travel

may be realised using Egencias Advance

Purchase Advisory (see chart this page).

Projected maximum savings in European

destinations include Stockholm (40%),

London (32%), and Paris (32%).

Sources: Egencia analysis, based on data from OAG,STR, ARC and Expedia, Inc.

North American ATP

The current rebound in corporate travel demand

is likely to continue into 2011. For 2011 vs. 2010,year over year, airfares for corporate travel will

largely stay at to slightly up for ights to top

business destinations. Upward pricing pressures

include the continued consolidation among

airlines, particularly the merger of United Airlines

and Continental.

The largest increases are forecast in North

American destinations such as Houston (up

7%), Phoenix (up 6%), and Denver (up 5%).

Airfares for many North Americandestinations will remain at or slightly down,

including Washington DC (at), Boston (at),

and New York (down 1%).

However, maximum savings may be realised

using Egencias Advance Purchase Advisory

(see chart, page 3) a unique guidance tool

that shows last-minute business travellers

how much they can save if they book their

tickets at least 21-30 days in advance.*

Projected maximum savings in North

American destinations include Toronto (46%)

Montreal (45%), and Atlanta (22%).


*Egencia Advance Purchase Advisory savings areestimated based on average savings realised from 1Jan.2009 to 31 Jul. 2010. The actual savings will vary due toseasonality, actual travel time, and other factors affectingoverall supply and demand in each particular market.




ATP Forecast - European OriginDestination ATP 2011

Amsterdam -1%

Barcelona -1%

Berlin -5%

Brussels 0%

Dublin 2%

Frankfurt -1%

Glasgow 8%

London 0%

Lyon 0%

Madrid -2%

Manchester -1%

Marseille 0%

Milan -1%

Moscow 2%

Munich 0%

Paris 2%

Stockholm -2%

Chicago 2%

Los Angeles -12%

New York -3%

San Francisco -1%

Long-Haul

Advance Purchase Advisory

Europe

Destination Potential Savings*Amsterdam 32%

Barcelona 23%

Berlin 33%

Brussels 34%

Dublin 33%

Frankfurt 36%

Glasgow 27%

London 32%

Lyon 33%

Madrid 32%

Manchester 25%

Marseille 35%

Milan 24%

Moscow 20%

Munich 37%

Paris 32%

Stockholm 40%

Chicago 14%

Los Angeles 7%

New York 12%

San Francisco 9%

Long-Haul

* Potential savings if tickets are purchasedat least 21-30 days in advance of travel


3/10

Asia-Pacifc ATP

Unlike 2010, where the Asia-Pacic air pricing

landscape uctuated greatly on a market-by-

market basis, 2011 should see more price stability

across the board. ATPs for APAC origin or points-

of-sale are likely to increase slightly in half of

the destinations we analysed and remain at or

slightly down in others. The pronounced economicrecovery in China and India, as well as increased

demand across all major destinations, is helping to

place upward pressure on prices.

Largest increases are forecasted for

Shanghai (up 9%), Singapore (up 8%) and

Tokyo (up 7%).

Many North American destinations are

forecasted to be at to up: San Francisco

(at) and Los Angeles (up 3%).

Some markets are forecasted to show moderate

decreases, due primarily to increased competition in

the local markets as well as the downward pressure

forged by domestic pricing wars in Australia.

Melbourne is forecasted to show a decrease

in ATP, down 11%.

Other major APAC destinations are

forecasted to show a slight decrease in price

Delhi (down 5%) and Hong Kong (down 1%)

However, maximum savings may be realised

using Egencias Advance Purchase Advisory

(see chart, page 4) a unique guidance tool

that shows last-minute business travellers how

much they can save if they book their tickets

at least 21-30 days in advance. Projected

maximum savings in Asia-Pacic destinations

include Sydney (29%), Shanghai (28%), and

Beijing (25%).

Sources: Egencia analysis, based on data from OAG,

STR, ARC and Expedia, Inc.




ATP Forecast - Asia-Pacic Origin

Destination ATP 2011

Beijing 3%

Delhi -5%

Hong Kong -1%

Melbourne -11%

Mumbai 2%

Shanghai 9%

Singapore 8%

Sydney 2%

Tokyo 7%

London 2%

Los Angeles 3%

New York -1%

Paris 1%

San Francisco 0%

Long-Haul

ATP Forecast - North America Origin

Destination ATP 2011

Atlanta 3%

Boston 0%

Calgary 0%

Chicago 1%

Dallas 2%

Denver 5%

Houston 7%

Los Angeles 2%

Minneapolis 0%

Montreal 1%

New York -1%

Philadelphia -1%

Phoenix 6%

San Diego 4%

San Francisco 2%

Seattle -2%

Toronto 1%

Vancouver 2%

Washington DC 0%

London -3%

Paris -4%

Hong Kong -5%

Tokyo -2%

Long-Haul


North America

Destination Potential Savings*Atlanta 22%

Boston 3%

Calgary 46%

Chicago 14%

Dallas 29%

Denver 26%

Houston 24%

Los Angeles 10%

Minneapolis 34%

Montreal 45%

New York 9%

Philadelphia 31%

Phoenix 33%

San Diego 27%

San Francisco 2%

Seattle 18%

Toronto 46%

Vancouver 31%

Washington DC 6%

London 48%

Paris 50%

Hong Kong 32%

Tokyo 25%

Long-Haul



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Considerations for travel buyers:

Educate your travellers on the value o

being exible. By opting to leave slightly

earlier or later or to make one stop versus

a direct ight, travellers can nd additional

savings on air ticket prices.

Book early. In an era of constrained capacity

and rising ticket prices in many markets,

booking in advance remains even more

critical.

In 2010 and into 2011, airl ines are

expected to place tougher restrictions

on lower price categories, meaning thattravellers need to book farther in advance

to secure less expensive ights.

While not every trip is planned early,

encourage your travellers to book as early

as possible to get their choice of route

options and lower ticket prices. By doing

so, travellers can save up to 50 percent

on ticket prices, according to Egencias

Advance Purchase Advisory.

Consider reminding travellers of the

advantages of Advance Purchase during

the booking process, especially in the

preferred self-booking platform. These

can include a dynamic message within the

booking platform, encouraging travellers

to book early and secure less expensive

tickets.

Take advantage o increased competition

where possible. Certain global markets

and routes are experiencing pricing battles

between established and/or low-costcarriers. This can represent an opportunity

for savings, but organisations should be

cognisant of ticket restrictions from many

low-cost carriers while ensuring they are

comparing total prices, which include

ancillary fees, when shopping for tickets.

Keep a close eye on class o service

policy. In general, prices for First & Business

class tickets grew at a similar pace to the

Economy class tickets in 2010, as airlines

took a measured approach to attract their

most valuable clientele. Next year, however,

we predict the price for the top of the cabin

will outpace that of Economy class. In light of

that, we recommend travel managers drive

their class of service policy and specify class

based on the duration of the trip.

Streamline pre-trip approval processes.

Because of constrained capacity and fare

accessibility, its important that organisationsrespond quickly and efciently to passenger

requests. By responding in a timely fashion to

trip approval requests, companies can ensure

that their travellers can book and conrm

lower priced tickets.

Monitor airlines ancillary revenue. Nearly

every airline continues the practice of adding

baggage fees, reservation change fees,

and miscellaneous operating revenue (pet

transportation, standby passenger fees).

Travellers should ensure they research the

total cost of a trip with a particular carrier

when comparison shopping.

Airlines may be more agreeable to

negotiating discounts if bookings are

consolidated, supported by strong policy

tools and backed by reporting and historical

data. Airline partners will want a concrete

demonstration that travel buyers have

implemented strong policy controls to

increase share and target incentive goals,allowing corporations to shift business to

preferred partners.

While buyers should ask for increased

discounts for consolidated share, current

trends have created an environment where





Asia-Pacic

Destination Potential Savings*Beijing 25%

Delhi 10%

Hong Kong 16%

Melbourne 20%

Mumbai 14%

Shanghai 28%

Singapore 15%

Sydney 29%

Tokyo 22%

London 32%

Los Angeles 17%

New York 30%

Paris 30%

San Francisco 19%

Long-Haul



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airlines are less willing to expand existing

discounts without expanded share.

In addition to fares, consider negotiatingairline amenities and perks, such as waived

baggage fees, status matches, cabin

upgrades, and soft-dollar funds.

Companies with international business

may want to seek lane fares and/or at

fares, which allow for a better discount

than standard percentage discounts.

The Continental-United merger continues

to make headlines. However, this

partnership is not likely to take effect until

late 2011. In the interim, it may be best to

secure the benets of the expansion by

negotiating a preferred partnership with

one carrier now.

Summary

If a company can bring incremental revenue

opportunities to a carrier, increased discounts are

possible, though 2011, like 2010, will most likely

be a challenging year. For successful negotiations,

travel managers must have a good understanding

of their travel spend, use strong policy tools, and

have historical data in place to manage their travel

program. While not all classes of service will

receive discounts, travel managers should look

to other areas to nd value, such as waived fees,

upgrades and status matches.

Global Hotel Landscape

In general, average daily rates (ADRs) are

forecast to be up overall in North America, Europeand Asia-Pacic. Corporate demand appears to

be rebounding, along with improved occupancy in

almost every top business market worldwide and

a decreasing amount of new hotel supply available

In addition, the predicted increase in air capacity

will bring more travellers, potentially adding to the

increase in hotel rates.

Many European cities are predicted to

show improvement year over year, 2011 vs.

2010, with Glasgow (up 7%) leading theway, followed by Barcelona (up 5%). The

exception is Moscow, as Egencia predicts its

ADR to fall 7% in 2011 versus 2010.

Egencia forecasts that the largest ADR

increases in the U.S. will be in Seattle (up

8%), Boston (up 5%) and Minneapolis (up

6%).

Asia-Pacic will most likely follow the trends

of North America and Europe, with ADRs

slightly up overall year on year; Shanghai (up

5%), Sydney (up 4%) and Beijing (up 4%).

In essence, the predicted gures are mostly up

by a few percentage points, except for three

destinations. For example, with Houston, air

capacity is forecasted to decline in 2011, so there

will be fewer travellers, not more. Consequently,

ADRs are unlikely to increase. Furthermore, in

New York, the potential of adding 5-6 percent

capacity in 2011 will likely have a moderating

affect on ADRs, resulting in mere 2 percent

increase year on year.





ADR Forecast

Europe ADR 2011

Amsterdam 3%

Barcelona 5%

Berlin 4%

Brussels 3%

Dublin 1%

Frankfurt 2%

Glasgow 7%

London 1%

Lyon 0%

Madrid 1%

Manchester 1%

Marseille 0%

Milan 3%

Moscow -7%Munich 2%

Paris 2%

Stockholm 3%

North America ADR 2011

Atlanta 1%

Boston 5%

Calgary -1%

Chicago 3%

Dallas 1%

Denver 0%

Houston -3%

Los Angeles 4%Minneapolis 6%

Montreal 5%

New York 2%

Philadelphia 4%

Phoenix -3%

San Diego 0%

San Francisco 4%

Seattle 8%

Toronto 2%

Vancouver -5%

Washington DC 6%

APAC ADR 2011Beijing 4%

Delhi 4%

Hong Kong 3%

Melbourne 3%

Mumbai -2%

Shanghai 5%

Singapore 1%

Sydney 4%

Tokyo 0%


6/10




Supply Outlook Hotel Negotiability

Egencias Hotel Negotiability Index, an indicator of the overall supply landscape in top domestic

cities, suggest that 2011 will be a sellers market for hotels. The majority of major European businessdestinations will maintain weak to moderate negotiability, with the exception of Lyon, Marseille, and

Moscow.

The majority of major North American business destinations also will maintain weak to moderate

negotiability, with the exception of Houston and Calgary.

Dallas

Boston

Chicago

Atlanta

Denver

Houston

Los Angeles

Minneapolis

New York

Philadelphia

PhoenixSan Diego

San Francisco

Seattle

Washington DC

Calgary

Toronto

Montreal

Vancouver

North America

Moderate

Strong

Weak

Amsterdam

Barcelona

Berlin

Brussels

FrankfurtLondon

Madrid

MunichParis

Milan

Dublin

Glasgow

Lyon

Manchester

Marseille

MoscowStockholm

Europe

Moderate

Strong

Weak


7/10




The Asia-Pacic region will most likely be the weakest of the three regions, with a large majority of major

APAC destinations maintaining a weak negotiability indication. The exception is Melbourne and Mumbai,

both moderate in the Hotel Negotiability Index.

Lodging Trends

Now is the right time to establish or update a

preferred supplier strategy, which can be achievedthrough the following tactics:

Strict policy management and support

o negotiated rates.By demonstrating

a consistent effort to drive share towards

preferred suppliers, corporate travel buyers

have a stronger place at the bargaining table.

Mandating bookings via an agency of record

will also aid in this discussion.

Monitoring creates visibility and can help

a travel manager stay ahead o out-o-policy practices. Accessible travel program

data can help companies negotiate better

rates and volume discounts, by providing

greater clarity of:

Travellers who routinely overspend

Asia-Pacic

Beijing

Sydney

Melbourne

DelhiHong Kong

Mumbai

Shanghai

Singapore

Tokyo

Underutilisation of specic hotels

Top cities for the travel program

Analyse total hotel spend in each marketand on a regional basis. A common best

practice is to consolidate one hotel for

every 500 room-nights or US $10,000 at a

particular property.

Negotiate based on property level.

Although the overall negotiability is relatively

weak in 2011, it is important to look at

potential differences by property level.

According to the STR Hotel Pipeline

Outlook for the US in July 2010, the

share of upscale and midscale properties

recently opened by hotel chains accounts

for 70 percent of all new rooms.

A similar picture remains among the

properties currently under construction,

Moderate

Strong

Weak


8/10




which is in contrast to the existing market

supply where the share of aforementioned

properties is only 40 percent.

Certainly, conditions will vary from market

to market, but the data indicates that

negotiations will be somewhat easier for 3

to 4 star properties, rather than the upper-

scale, 4+ star range.

Companies should consider department-

specifc restrictions as a way to control

costs. By segmenting traveller groups,

organisations can still provide a solid level of

service and amenities while decreasing costs.

Be strategic. For example, consider tiering-

down within the same hotel chain. Travellers

will still earn rewards and receive the right

amenities -- all while potentially saving

money.

Leverage hotels that oer ree or

discounted amenities. Cost avoidance is a

key strategy for 2011. Encouraging travellers

to book at and leverage hotels with free

amenities such as Internet service, shuttle

service, breakfast, and hosted eveningevents can result in big cost savings.

Property-specifc agreements typically

lead to better savings. While chain-

wide agreements provide the advantage

of a regional discount to companies with

geographically dispersed travel patterns,

property-level agreements at individual chain

properties offer greater discounts. Chain-

wide agreements are also very difcult

to negotiate for organisations without

signicant travel spend.

Consider independent hotels. Without the

need to subsidise costly loyalty programs,

these properties may offer better rates and

amenities.

Negotiate or better terms and

conditions. Favourable cancellation terms or

decreased early check-out fees can add up

to signicant savings.

Negotiate last-room availability clauses.

This means that properties must offer

negotiated rates even if only one room type is

available, resulting in lower ADRs throughout

the year.

Regularly upgrade room category pricing

The ADR ceiling or cap in large metropolitan

markets can be tight due to city wide sell-

outs, which are more common in these

business hubs.

Work with your travel management

company to take advantage o powerul

discounts and perks. In many cases, travel

management companies can consolidate

the buying power of a broad range of clients

and offer benets that companies may not

be able to achieve on their own. For example,

many hotels on Egencia feature business

traveller friendly preferred rates, which are

highly competitive and frequently include free

amenities such as same-day cancellation,

Wi-Fi, etc.

Summary

Now is the time to work with your hotel partners.

Companies that can show incremental demand

may be able to negotiate favourable agreements.

However, many hotel rates are already at

rock-bottom prices so it will be challenging to

negotiate further discounts. There still remains

an opportunity to negotiate for amenities that are

meaningful to your travellers as well as favourable

conditions such as early check-out.

34%

30%17%

6%

12%

22%

28%

31%

11%

8%

SignificantlyIncreased

SlightlyIncreased

Has NotChanged

SlightlyReduced

Europe

North America

Todays Business

Travel LandscapeQuestion: Over the last sixmonths, has your company

changed its amount ofbusiness travel?

Source: Survey of over 200 EgenciaEuropean clients, conducted August2010 | Survey of over 300 EgenciaNorth America clients, conductedAugust 2010


9/10




Car Rental Price Guidance (RPD)

Due to restored nancing conditions, Egencia

expects a slight increase in car rental prices. Also,US car manufacturers are forecasted to be in a

better economic position in 2011, meaning that

rock bottom prices for inventory may be a thing of

the past.

Europe

Egencia predicts that car suppliers will maintain

their eets at current levels into 2011 which,

coupled with the increased demand, could mean

increased RPDs by about 5% year over year.

United States

In the U.S., rates decreased through the rst

half of 2010 by 5% compared to the year prior.

In 2011, however, Egencia anticipates industry

consolidation and tighter inventory management

will push the RPDs up 3 percent year over year.

Increases in surcharges at on-airport rental

locations, particularly in CHI, PHL and LAS, are

also being seen.

Canada

Egencia anticipates rates will stay slightly down

year over year, well into 2011.

Considerations or the travel buyer

Even with the improved economic environment,

car companies will demand value from accounts

in exchange for discounts. If companies cannot

meet their revenue commitment, discounts will be

reduced. But if a company can bring additional

business to the table, the buyer is in a very good

position to negotiate.

Keep a close eye on future prices. With the

recent Hertz acquisition of Advantage and a

potential bidding war for Dollar/Thrifty, this

could mean decreased competition in the

US car rental market, which usually results in

higher prices.

Prepare data that allows a company to

negotiate additional cost savings. Insurance,

drop-off fees, and surcharges are all areas

that deserve additional focus. Buyers should

also compare fees across vendors and use

the data in negotiations. Larger companies

may be able to negotiate a refueling cap for

when travellers do not refuel off-site.

Leverage multiple data sources. Typically,

expense systems only provide the amount

spent and the location, but will not provide

all the details needed for negotiations with

vendors.

Summary

Driving policy enforcement and mandating car

rental bookings will allow corporate accounts

to realise savings through compliance and by

negotiating better preferred vendor agreements.

Todays Business

Travel LandscapeQuestion: Are youplanning to increase

or decrease your travelbudget in 2011?

Source: Survey of over 200 EgenciaEuropean clients, conducted August2010 | Survey of over 300 EgenciaNorth America clients, conducted

August 2010

Increase

Reduce

Remainthe Same

Dont Know

52%

7%

13% 28%

18% 34%

4%

43%

Europe

North America


10/10

2010 Egencia, LLC. All rights reserved. Expedia, Egencia, and the Egencia logo and Get Ahead are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries.



Travel Management Trends

Egencia surveyed more than 500 travel buyers

in North America and Europe regarding costcontrol measures, travel spend and expectations

for 2011. According to survey respondents, 42

percent of North American buyers and 23 percent

of European buyers have slightly or signicantly

increased travel over the last six months,

compared with a slight increase of only 3 percent

a year ago in October/November 2009.

The top strategies for maintaining or controlling

travel costs in North America and Europe include:

Advanced booking of airline tickets (56

percent North America, 53 percent Europe)

Enforcing policy more rigorously (47 percent

North America, 40 percent Europe)

Actively tracking unused tickets (43 percent

North America, 9 percent Europe)

Requiring pre-trip approval (42 percent North

America, 49 percent Europe)

Encouraging the use of web conferencing

(33 percent North America, 38 percentEurope)

Source: Survey of nearly 500 Egencia clients, conductedAugust 2010 | Survey of over 100 Egencia clients,conducted October 2009

Research Methodology

Data and insight based on the statistical

analysis of the past and present industry trends,macroeconomic factors, market research

and vendors capacity forecasts for 2011. Smith

Travel Research (STR) and OAG lings were

leveraged for a market-level analysis of both

Lodging and Air capacity. ARC, STR and Egencia

Internal Data were used for market-level analysis

of pricing.

Todays Business

Travel LandscapeQuestion: Have youdramatically changed

how/when you evaluateor renegotiate your travelprogram over last year?

Source: Survey of over 200 EgenciaEuropean clients, conducted August2010 | Survey of over 300 EgenciaNorth America clients, conductedAugust 2010

Yes, were makingchanges more frequently

Yes, were makingchanges less frequently

No, but well makechanges next year

No, and we dont haveany plans to do so

I dont know

14%

33%

13%

12%

28%

15%26%

24% 27%

8%

Europe

North America

2011 global travel forecast uk 1

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