It's forecast time in the travel industry, the time of year the big players reveal their visions for the coming 12 months. For business travel, some of the future is already here; many travel managers have already negotiated deals for the coming year, setting the trends in advance.
And the news is generally good – unless you were hoping to get back to the age of unlimited $35 room-service omelettes and $20 martinis in the hotel bar.
One thing everyone agrees on: The recession was scary enough to influence decisions into next year. According to the National Business Travel Association of Canada, the number of companies implementing strict travel policies is up 14 per cent from last year. That means more economy flights, hotel downgrades and advance bookings, and a continued need for managed travellers to prove their trips are worth the expense.
“Our travel managers and our clients have told us that this is the new normal,” says Nikki Germany, the new director of Egencia Canada, Expedia's business travel arm. “They've taken a really hard look at their travel policies – in some cases at aspects of their travel spending they haven't looked at in quite a while.”
This could spell more trouble for premium hotel brands, with their premium perks and prices.
Suzanne Cook of the U.S. Travel Association sees the same thing for companies headquartered south of the border. “There's a heightened attention to demonstrating [return on investment],” she says. "Individual travellers are going to have to prove that; I think that's a fairly permanent shift.”
The good news for smaller and mid-sized companies is an extended hand from organized travel management. Air Canada is introducing its small to medium-sized enterprise program, allowing businesses with annual travel budgets of as little as $500,000 to negotiate the sort of bulk-rate deals for their fliers that have, up to now, been the exclusive purview of large corporations.
At the same time, however, airlines are still reeling from the drop in business travel in 2009 – which was around 20 to 30 per cent, according to Susbir Singh, president of FCm, Flight Centre's business division. The airlines are likely to respond with strong marketing for first- and business-class in an attempt to get executive bums back in those pricier seats.
The cost of economy seats will also rise after more than a year of reductions, Singh says, since airlines simply can't absorb more losses. Egencia forecasts a 5 to 10 per cent increase in average ticket prices globally, with prices from Vancouver up 2 per cent, Calgary 3 per cent, Montreal 4 per cent and Toronto 5 per cent.
If you're looking for low prices, look to accommodations to find them. There are a few reasons for this, according to Egencia's research, including fewer fliers overall, increased hotel supply thanks to the opening of long-planned hotel projects, and previously negotiated lower rates for 2010 corporate contracts. All this means few rate increases at any star level. Hotel prices in Beijing are estimated to drop the most at 8 per cent, with New York pegged at 4 per cent and Toronto and Vancouver prices predicted to stay at 2009 levels. The NBTA foresees Canadian occupancy rates remaining flat through the year, meaning that these lower rates could be with us into 2011.
Car rental costs have been rising for some time, and Hertz's acquisition of Advantage put more pressure on prices by reducing competition. But Egencia forecasts that rental rates will finally go down in 2010, by about 5 per cent, as easier credit makes it cheaper for agencies to finance vehicle purchases.
Though these predictions are based on substantial research, NBTA Canada president Tanya Racz says the picture could certainly still change.
“Everyone's waiting and seeing what happens in the first quarter of 2010,” she says. “I think people are being optimistically cautious.”
Special to The Globe and Mail
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