According to the annual “Global Business Travel Forecast and Trends” report, released October 22 by American Express Business Travel, airfares likely will decrease and hotel rates will hold relatively steady—but whatever happens in the air or on the ground, meeting managers can expect more scrutiny as corporations continue to crack down on meetings spend.
The annual forecast was originally scheduled for release on September 23 but was delayed to allow analysts to consider the impact of the potential 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, American Express Business Travel, 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 or be traded down in terms of the production work and types of hotels [being booked].” The study also reports that companies will be planning shorter events and holding them nearer to the home office, than in the past.
In addition, 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 developing and implementing one. Similarly, companies will be looking at ways to leverage their transient hotel bookings together with their meetings hotel bookings for further cost savings.
“We’re forecasting greater scrutiny on all expenses, and meetings are no exception,” Sedky said.
Air and Hotel Forecasts
“We’re starting to see some indications of hotels being receptive to negotiations and concessions for meetings, particularly in cities where demand is lower than it has been in the past,” 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 route have not yet been cut, such as San Diego, may become more popular as meetings destinations, AMEX officials predicted. However, said Frank Schnur, vice president, Global Advisory Services, North America, “We expect gateway cities [such as New York; Boston; Philadelphia; San Francisco; Washington, D.C.; and Chicago] will be able to hold their rates more than smaller cities.”
When it comes to airfares, the good news is that, overall, 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.” He emphasized that corporate meetings spend scrutiny, and travel and entertainment spend management in general, will take into account not just the airfare, but all those ancillary air-related fees that can add up to 15 percent of the total air cost—not to mention parking, meals, and other expenses that can add up to $400 per trip on average, and can double expenses for some trips, he said.