According to the annual “Global Business Travel Forecast and Trends” report by American Express Business Travel, airfares are likely to decrease and hotel rates will hold relatively steady — but whatever happens in the air or on the ground, meeting managers can expect more scrutiny.
The annual forecast, originally scheduled for release September 23, was delayed for a month to allow analysts to consider the impact of the global economic slowdown.
“Our work with clients has been to view travel as an investment category,” said Hervé Sedky, vice president and general manager, Global Advisory Services, AEBT, in a press teleconference. “They're balancing the cost of the trip with the business that will come from that trip.” Travel that is not generating revenue will either be cut or replaced with technology such as webcasting or teleconferencing, he said. Small meetings, direct-report staff meetings, smaller sales meetings, training meetings, and meetings that are essential for talent retention, which make up 70 percent to 80 percent of the total meeting spend, are not forecast to change in 2009, said Sedky. “The larger meetings, which account for 20 percent to 30 percent of spend, will be fewer in number and are, most likely, going to be scaled down.” The study also reports that companies will be planning shorter events and holding them nearer to the home office.
While AEBT found that more than 70 percent of companies surveyed did not have a meeting-specific cost-management program, it is expecting companies to focus more energy on implementing one. Similarly, companies will be looking at ways to leverage their transient hotel bookings together with their meetings hotel bookings.
Air and Hotel Forecasts
“We're starting to see indications of hotels being receptive to negotiations and concessions for meetings,” Sedky said. Even first-tier cities will see slowdowns in rate increases to the single-digit levels, while second- and third-tier cities may become even better bargains as the economy slows and air capacity is cut. Some cities where hotel rates are dropping but air routes have not yet been cut, such as San Diego, may become more popular meetings destinations, AMEX officials predicted. However, gateway cities such as New York; San Francisco; and Chicago will be able to hold their rates more than smaller cities.
When it comes to airfares, the good news is that the study found airfares likely to decrease in 2009. The bad news, Sedky said, is that “this doesn't necessarily correlate to a decrease in prices paid, as airlines continue their pursuit of expanding the suite of fees charged for services, such as in-flight meals and baggage.”
Nearly two-thirds of respondents to an online Special Events poll say that lousy economic news is cutting into their corporate holiday party business. More than half — 56 percent — say their corporate holiday party business will be off by more than 10 percent this year compared with 2007.
|Mid-range Properties||Upper Range Properties|
|New York||5% to 9%||4% to 9%|
|Boston||3% to 7%||2% to 6%|
|Philadelphia||2% to 6%||1% to 5%|
|San Francisco||2.5% to 7%||2% to 6.5%|
|Washington||5% to 9%||3% to 5%|
|Chicago||4% to 8%||3% to 7%|
|Source: “Global Business Travel Forecast and Trends” report, American Express Business Travel, October 2008|