November 24, 2009

As your travel management partner, Caldwell Travel is pleased to provide the following 2010 Travel Industry Forecast.  The forecast offers vital information for setting travel budgets as the new year approaches.

The Setting

The setting for our 2010 predictions is a sluggish economic recovery. The key downside risks are a major impact of H1N1, which might impact business travel more than other parts of the economy, and a major rise in oil prices (e.g., due to speculation or geopolitical affairs). Any significant changes in the components above can shift the elements impacting travel and require an adjustment in the forecast.

2010 Airline Outlook

General pricing

Average ticket prices will rise moderately in 2010. Although economic conditions will remain weak, a small revival in passenger numbers and continuing capacity reduction by airlines will bring supply and demand into closer alignment. This will lead to some price increases and, perhaps more importantly, to the earlier closing of lower fare buckets as airlines attempt to manage yield upwards.
   
Our suggestions to clients:

• Understand how your company's changing goals and geographical priorities have affected your travel program and use of specific suppliers.

• Since your travel spend has probably reduced, concentrate your remaining buying power with fewer carriers.

2010 Hotel Outlook

In spite of stabilizing economic conditions, it will be firmly a buyer's market for 2010 corporate hotel programs. An additional benefit is that hotels will set low thresholds (perhaps as few as 50 room nights) as the minimum for negotiating a deal.
 
Meetings rates are not expected to rise in 2010, even though they were reduced heavily in 2009.
 
Our suggestions to clients

• Don't accept hotels' suggestions that you should switch fully to a floating best available rate (BAR) because this surrenders your control.

• Improve your buying power by consolidating with fewer properties in each city.

• Take advantage of an unequivocal buyer's market to lock in some excellent meeting rates.

2010 Ground Transportation Outlook

 
Car Rental
Falling corporate demand and aggressive competition (especially in the US) were counter-balanced with restricted supply from vehicle manufacturers in 2009. This resulted in relatively stable pricing, and even rate increases in some European markets.
 
The counter-balancing dynamics are likely to persist into next year, so expect flat pricing, with variations of a couple of percentage points either way according to local conditions.
 
Rental companies may attempt to increase their ancillary revenues by, for example, pushing satellite navigation harder or increasing airport surcharges. They may also push up penalty charges, such as for "no shows."
 
Our suggestions to clients

• Consolidate your preferred supplier list.

• Companies which have come close to maintaining their rental volumes in 2009 are in a strong position to negotiate lower prices for next year.

Further Travel Management Considerations

The time has come for trip models

A trip model is the creation of policy and booking templates for a company's most frequent journeys, specifying not only the preferred means of travel, but where to stay, what ground transfers to use and possibly additional details such as where to eat.
 
Although trip modeling will remain more talk than action among many companies, others will introduce it as they realize a small investment in time can lead to impressive gains in policy control.
 

Corporate travel management is going mobile

An estimated 70 percent of corporate travelers now carry Internet-enabled mobile devices, but to date the creation of mobile applications to serve corporate travel has been extremely limited.
 
Next year will finally see major growth in this area, starting with concierge-type services and help for travelers whose itineraries are disrupted. However, the corporate travel picture will be confused by a proliferation of different applications for different parts of the trip process. It will be several years before anything resembling a complete end-to-end application emerges, if at all.
 

How the recession has affected relationships with corporate payment card providers

There will be an increased use of corporate cards and of lodge cards. A recent shift to individual liability on plastic T&E cards will continue, in spite of opposition from employees and damage to data comprehensiveness, because it has proved effective in reducing debt and managing risk.

Meeting cards will become even more popular in the US and efforts will be redoubled to increase their adoption in Europe.

For questions or comments regarding this TravAlert, please contact Kelly Lally at 615-327-2720 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it