Download - Industry Forecast
©2013 Advito
Industry Forecast2014
Connecticut Westchester BTA MeetingNovember 12, 2013
©2013 Advito2 ©2013 Advito
Content
Outlook and risk factors
Air
Hotel
Meetings
Car rental
Rail
Appendix 1: Spotlights
Appendix 2: Historical data charts
©2013 Advito©2013 Advito
2014 Outlook
3
Airlines are showing capacity
restraint in mature markets
Oil price should remain stable
Hotel rate increases will be
low outside primary cities
Travel demand remains generally
weak
Business travel demand will gain momentum in 2014, in line with
projected global economic recovery
©2013 Advito©2013 Advito
Risk factors
4
Economic growth to pick upGlobal growth in 2013 will match 2012, pick up speed in 2014U.S. economy will see best performance since start of economic crisisGrowth to resume in Europe
Oil price stable for now Oil prices above US$100/barrel for most of the last yearSupply and demand will keep prices at or below $110/barrelFuel surcharges more likely to rise than fall
Safety and security concerns low
©2013 Advito5 ©2013 Advito
U.S.2012 +2.2%
2013 +1.9%
2014 +2.5% Euro Area2012 -0.5%2013 - 0.8%2014 +0.6%
China2012 +7.8%
2013 +7.7%
2014 +8.0% Emerging economies2012 +4.8%
2013 +5.1%
2014 +5.6%
World 2012 +2.1%
2013 +2.1%
2014 +2.7%
Global economic outlook (GDP)Economic growth will firm up across all regions in 2014
Source: EIU forecast, July 15, 2013
©2013 Advito©2013 Advito
Airfares most resilient in mature
markets
Capacity restraint supports small fare
rises in North America
and Europe
Consolidation may lead to
upward pressure on fares
Capacity growth to lower fares in most emerging
markets 2014 outlook Air
6
While airlines in the U.S. and Europe are keeping a firm grip on capacity, soft demand will likely
prevent significant fare hikes
©2013 Advito©2013 Advito
Airline key performance indicators
7
IATA’s latest forecast for traffic and capacity confirms emerging economies’ strong position
2013 Forecast% change Y-o-Y
Traffic (RPK) Capacity (ASK)
North America 2.5% 2.2%Europe 5.0% 5.0%Asia-Pacific 6.6% 6.5%Middle East 13.0% 12.0%Latin America 8.5% 7.6%Africa 8.3% 6.0%Global 5.8% 5.0%
Source: IATA Financial Forecast, September 2013
©2013 Advito©2013 Advito
Airfare predictions for 2014 – North America
8
Fares will be flat or increase slightly in 2014, with regional economy the most likely segment to see a rise
Business Economy
Intercontinental +1% 0%
Regional 0% +2%
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Source: Advito 2014 Industry Forecast
©2013 Advito©2013 Advito
Airfare predictions for 2014 – Europe
9
With demand weak, airlines continue to show restraint on capacity growth, keeping fare increases in the region low
Business Economy
Intercontinental +1% +2%
Regional +1% +1%
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
Source: Advito 2014 Industry Forecast
©2013 Advito©2013 Advito
Airfare predictions for 2014 – Asia
10
Weaker demand and down-trading will depress business fares, but more resilient demand will provide some support to economy class fares
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Business Economy
Intercontinental -2% +3%
Regional -2% 0%
Source: Advito 2014 Industry Forecast
©2013 Advito©2013 Advito
Airfare predictions for 2014 – Latin America
11
Airfares to rise across all segments
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Business Economy
Intercontinental +3% +2%
Regional +2% +3%
Source: Advito 2014 Industry Forecast
©2013 Advito©2013 Advito
Airfare predictions for 2014 – Middle East
12
Intense competition between Gulf airlines will deliver lower airfares across all segments
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
Source: Advito 2014 Industry Forecast
Business Economy
Intercontinental -2% -2%
Regional -2% -2%
©2013 Advito©2013 Advito
Airfare predictions for 2014 – Africa
13
Competition will lead to lower fares on intercontinental routes; rising demand will support increases on regional routes
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
Source: Advito 2014 Industry Forecast
Business Economy
Intercontinental +3% +2%
Regional +2% +3%
©2013 Advito©2013 Advito
Airfare predictions for 2014 – Southwest Pacific
14
Intense competition in Australian market will ensure that airfares remain largely unchanged
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Source: Advito 2014 Industry Forecast
Business Economy
Intercontinental 0% 0%
Regional 0% -1%
©2013 Advito©2013 Advito15
ADR increases will be minimal in
Europe
Latin America to see strongest rise
in ADR
Argentina and Brazil to see
biggest rises in ADR
Most other regions will see modest ADR
increases2014 outlook Hotel
Hotel companies will look to raise corporate rates by 4-6% for 2014, but are likely to achieve only half
this level on average
©2013 Advito16 ©2013 Advito
North America
+2-4%
Europe+0-2%
Asia+1-3%
Latin America+6-8%
Southwest Pacific+1-3%
Hotel average daily rate (ADR) 2014 forecast by regionIn 2014, ADR will grow only slightly in Europe,
but we expect stronger rises in other regions—especially Latin America
Middle East+2-4%
Africa+3-5%
Source: Advito 2014 Industry Forecast
©2013 Advito©2013 Advito
Hotel ADR: 2014 forecast by market
17
RU -2% to +1%
CN +0-3%
KO +0-2%
SG +2-3%
AE -1% to +2%
IN -1% to +1%
MX -1% to +1%
BR +6-8%
TR +4-6%ES-IT-PT +1-3%DE-FR-UK +1-3% AT +1-2% CH +0-2% BE-SE +0-1% IE-NL -1% to +1% CZ -2% to +1%
AR +7-9%
AU +1-3%
JP +2-4%
DK-NO +0-1%FI + +1-
3%
ZA +3-5%
SA +3-5%
US +3-5%
Forecast of average development of hotel rates used by corporate clients in 2014 against 2013 (local currency)
Source: Advito 2014 Industry Forecast
CA -1% to +1%
©2013 Advito©2013 Advito18
Demand growth is steady
Rates to rise faster in first-tier cities
Hotels to look for higher increases
in 2014
Supply remains tight in North America and
Europe2014 outlook MeetingsAvailability will become an
increasing problem, especially as booking lead times continue to
shrink
©2013 Advito©2013 Advito
2014 outlook Car rental
1919
Rate rises unlikely to stick
Multinational agreements
becoming more popular
Stricter capacity control may make it
harder to find cars at airport
locations
Intense competition should keep corporate car rental rates in
check, with increases staying at or below 4%
2014 outlook Car rental
Competition will keep rates in check
©2013 Advito©2013 Advito
2014 outlook Car rental
20
High-speed fares in Europe may start
to fallCalifornia won’t
see high-speed rail before 2020
China high-speed rail back on track
Corporate rail bookings are increasingly moving online to
reduce booking fees
2014 outlook Rail
©2013 Advito©2013 Advito
Appendix 1 Spotlights
21
©2013 Advito22 ©2013 Advito
• Legal challenge from U.S. DOJ based on industry capacity, pricing•Airlines appealing•Deal likely to succeed
(with concessions)
THE SCOOP
Four carriers would control80%of U.S. air traffic
American Airlines and
US Airways mergerSpotlight
©2013 Advito23 ©2013 Advito
Hybrid model
•Actively pursuing corporate traffic• Starting to fly long haul leisure
routes•Pay for legroom, baggage, fast track
and lounge
THE SCOOP
Hybrid airlinesSpotlight
Example hybrid airlines
Full-service model
Low cost model
©2013 Advito24 ©2013 Advito
Unbundling trend continues
Unbundling
THE SCOOP
Reporting remains major challenge
Loyalty program membership helps some travelers avoid these charges—at least for now
UnbundlingSpotlight
©2013 Advito25 ©2013 Advito
Increasing interest in merging transient travel and meetings programs• Improved leverage of spend•Better risk management
Integrating travel and meetings
THE SCOOP
Initial focus is often sourcing
Under pressure to integrate travel and meetings, some hotels are reluctant to do so
Spotlight
©2013 Advito26 ©2013 Advito
•Multinational corporate contracting on the rise•Competitive international
marketplace•But each player has gaps
THE SCOOP
3Global players
International corporate car rental agreementsSpotlight
©2013 Advito©2013 Advito
Appendix 2 Historical Data Charts
27
©2013 Advito©2013 Advito
Air
28
©2013 Advito©2013 Advito
Cost per mile
29
North America
Source: Advito
©2013 Advito©2013 Advito
Cost per mile
30
Europe
Source: Advito
©2013 Advito©2013 Advito
Cost per mile
31
Asia
Source: Advito
©2013 Advito©2013 Advito
Cost per mile
32
Latin America
Source: Advito
©2013 Advito©2013 Advito
Cost per mile
33
Middle East
Source: Advito
©2013 Advito©2013 Advito
Cost per mile
34
Africa
Source: Advito
©2013 Advito©2013 Advito
Cost per mile
35
Southwest Pacific
Source: Advito
©2013 Advito©2013 Advito
Economy class ratio
36
North America
Based on weighted average for first five months in each year
Source: Advito
©2013 Advito©2013 Advito
Economy class ratio
37
Europe
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Economy class ratio
38
Asia
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Economy class ratio
39
Latin America
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Economy class ratio
40
Middle East
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Economy class ratio
41
Africa
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Economy class ratio
42
Southwest Pacific
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
43
North America
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
44
Europe
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
45
Asia
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
46
Latin America
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
47
Middle East
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
48
Africa
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Advance booking
49
Southwest Pacific
Source: Advito Based on weighted average for first five months in each year
©2013 Advito©2013 Advito
Hotel rates
50
©2013 Advito©2013 Advito
Hotel rate developments
51
Brazil
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
52
Canada
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
53
China
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
54
France
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
55
Germany
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
56
India
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
57
Ireland
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
58
Italy
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
59
Japan
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
60
Korea
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
61
Mexico
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
62
Russia
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
63
Singapore
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
64
South Africa
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
65
United Arab Emirates
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
66
United Kingdom
Source: Advito
©2013 Advito©2013 Advito
Hotel rate developments
67
United States
Source: Advito
©2013 Advito©2013 Advito
Historic hotel ADR development
Top U.S . cities 2012 2013
ADR US$ Q1 Q2 Q3 Q4 Q1
Atlanta ADRYoY
1393.0%
1394.7%
1373.7%
1427.5%
1433.0%
Boston ADRYoY
1977.2%
27313.7%
2573.9%
2392.3%
196-0.5%
Charlotte ADRYoY
1310.2%
1353.8%
1389.0%
1396.0%
14510.7%
Chicago ADRYoY
1646.4%
2226.8%
2176.9%
2216.1%
1724.8%
Dallas ADRYoY
1380.6%
1438.9%
1396.3%
1413.6%
1476.4%
Denver ADRYoY
1442.0%
1545.8%
1542.0%
1495.3%
1504.2%
Houston ADRYoY
1436.3%
1484.8%
1415.5%
1468.6%
1569.1%
Indianapolis ADRYoY
12010.5%
1174.6%
1175.1%
1175.9%
118-2.0%
Las Vegas ADRYoY
1568.9%
1448.6%
124-5.1%
132-1.8%
155-0.5%
Los Angeles ADRYoY
1817.6%
19515.0%
19011.7%
1899.9%
1915.3%
68
Top U.S . cities 2012 2013
ADR US$ Q1 Q2 Q3 Q4 Q1
New Orleans ADRYoY
1789.9%
1747.6%
1359.1%
1661.4%
1948.6%
New York ADRYoY
2610.1%
3423.5%
3280.3%
3805.3%
2827.9%
Philadelphia ADRYoY
1671.6%
1949.8%
1773.7%
177-0.2%
1712.3%
Phoenix ADRYoY
143-6.7%
117-3.0%
103-1.4%
1280.5%
1494.3%
Portland ADRYoY
1277.9%
1355.7%
1426.7%
1366.8%
1389.2%
St. Louis ADRYoY
1200.7%
1293.3%
1272.3%
1240.6%
1232.2%
San Diego ADRYoY
1504.4%
1525.7%
1563.2%
1461.4%
1500.2%
San Francisco ADRYoY
23613.9%
24514.7%
27115.3%
2569.3%
2506.1%
Seattle ADRYoY
1583.7%
1725.1%
1875.3%
1642.4%
1590.3%
Washington ADRYoY
244-0.4%
2813.5%
2433.5%
2572.4%
2471.0%
United States
Source: Advito
©2013 Advito©2013 Advito
Top European cities 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Amsterdam ADRYoY
1513.3%
1664.2%
1621.6%
1550.5%
144-5.0%
Barcelona ADRYoY
15326.1%
17117.8%
155-6.5%
1508.5%
1604.7%
Berlin ADRYoY
120-2.1%
1180.2%
13010.7%
1163.6%
117-2.2%
Brussels ADRYoY
1602.2%
1714.4%
1510.4%
1663.2%
159-0.9%
Copenhagen ADRYoY
11683.4%
13148.0%
12452.4%
1158-1.5%
1112-4.7%
Dublin ADRYoY
1154.1%
1278.5%
1307.7%
1201.9%
1161.2%
Düsseldorf ADRYoY
1242.1%
131-7.2%
1122.7%
1280.0%
120-3.5%
Frankfurt ADRYoY
1520.7%
16013.4%
1504.4%
1523.4%
1562.5%
Hamburg ADRYoY
1205.1%
1240.6%
127-0.1%
1191.6%
113-5.5%
London ADRYoY
1705.9%
1862.8%
1840.1%
1928.3%
1848.4%
69
Top European cities 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Madrid ADRYoY
13312.8%
1387.1%
125-8.2%
1411.6%
1351.5%
Milan ADRYoY
1784.2%
1782.9%
1790.1%
158-7.0%
1907.1%
Moscow ADRYoY
96420.9%
102096.8%
9519-1.3%
99303.7%
9510-1.4%
Munich ADRYoY
135-0.5%
16416.5%
1667.1%
16113.4%
14810.0%
Paris ADRYoY
1977.1%
2253.5%
2234.3%
2126.0%
197-0.5%
Prague ADRYoY
28535.0%
33315.0%
33011.0%
30950.9%
2798-1.9%
Rome ADRYoY
156-0.8%
188-1.0%
1956.4%
1771.9%
18720.4%
Stockholm ADRYoY
16090.1%
17631.5%
1703-1.4%
1665-1.5%
1555-3.4%
Vienna ADRYoY
1384.8%
143-0.2%
1557.5%
1430.8%
133-3.7%
Warsaw ADRYoY
48314.9%
61822.3%
464-8.9%
468-11.6%
421-12.9%
Historic hotel ADR developmentEurope
Source: Advito
©2013 Advito©2013 Advito70
Historic hotel ADR developmentOther cities in Asia, North America and Latin America
Top Asian cities 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
BangkokADRYoY
4677-4.2%
4739-3.2%
4719-1.4%
4785-0.5%
50177.3%
Beijing ADRYoY
11405.7%
12106.1%
11281.4%
1100-2.1%
1085-4.8%
Delhi ADRYoY
644741.6%
5496-5.9%
3970N/A
7644-22.0%
5726-11.0%
Hong Kong ADRYoY
24381.2%
23079.5%
22194.1%
24612.8%
24761.6%
Mumbai ADRYoY
9670-5.3%
8716-4.5%
8462-1.9%
9269-6.7%
9372-3.1%
Seoul ADRYoY
2561495.5%
27388611.4%
2573953.6%
264134-1.7%
253077-1.2%
Shanghai ADRYoY
12524.6%
12864.8%
12222.8%
12391.1%
1168-6.7%
Singapore ADRYoY
3338.4%
3203.9%
314-2.5%
307-2.5%
316-5.0%
Sydney ADRYoY
2759.3%
2557.3%
2460.1%
2762.5%
2843.6%
Tokyo ADRYoY
229529.1%
232438.9%
226766.8%
2421010.4%
242955.9%
Canada & LatAm 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Buenos Aires ADRYoY
80920.1%
74610.8%
745-0.8%
7929.2%
8282.3%
Lima ADRYoY
5564.5%
5660.7%
5645.0%
5475.3%
510-8.2%
Mexico City ADRYoY
18115.9%
192020.4%
17726.5%
1794-2.2%
18622.8%
Montreal ADRYoY
1512.2%
163-0.6%
159-2.4%
154-3.2%
150-0.4%
Rio de Janeiro ADRYoY
42519.6%
44223.1%
43918.5%
46013.0%
47912.7%
San Jose ADRYoY
8379511.3%
69663-9.5%
65932-12.0%
63895-22.0%
68786-21.0%
Santiago ADRYoY
10819426.8%
11450929.5%
954095.1%
108790-1.1%
99740-7.8%
Sao Paulo ADRYoY
40132.3%
44035.7%
40823.4%
42624.9%
44210.2%
Toronto ADRYoY
1636.7%
1673.5%
1671.4%
1681.2%
1672.2%
Vancouver ADRYoY
1582.9%
1833.4%
1830.1%
`1642.0%
1580.0%
Source: Advito
©2013 Advito©2013 Advito
Tier distributionIn key markets
71
Source: Advito
©2013 Advito©2013 Advito72
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