Corporate Travel Budgets to Remain Flat

21st Nov 2003

PRNewswire ATLANTA Nov. 20 :

Although the economy is slowly rebounding, it appears that U.S.
corporations remain cautious with their 2004 travel budgets. WorldTravel
BTI`s annual client survey conducted in August 2003 shows 62 percent of
127 respondents plan no significant travel budget changes for 2004 and the
remaining 38 percent plan changes of only -10 to +10 percent.

In 2003, the top travel alternatives for those companies indicating a
decrease in travel budget are telephone and video conferencing, foregoing
the trip, Web meetings and driving.

Corporate Travel Policies
In 2003, almost half of the respondents (42%) adjusted their company
travel policies. Security procedure changes led the policy changes,
followed by the emphasis on travel options, enforcement of preferred
vendors and implementing a pre-trip approval process.

In 2004, two out of three respondents (68%) expect no change to their
company travel program, while the remaining third are planning significant
changes, the most popular including mandated and increased use of online
booking tools, required use of preferred vendors and implementing online
expense management tools.


Increasing employee adoption of corporate online reservation tools is a
goal for almost half of the respondents (48%). Companies with annual air
volume between $5.1 million and $10 million had an adoption rate of 45
percent for 2003. Companies with annual air volume between $10.1 million
and $20 million had an adoption rate of 43 percent for 2003 with 2004
adoption goals targeted at 62 percent. Companies with annual air volume
below $5 million had a 43 percent adoption rate with 2004 goals targeted
at 56 percent.
Air and Hotel Programs
Nearly three out of four respondents (70%) reported no change to the
company`s air carrier negotiation strategy for 2003. However, nearly a
third of the respondents (30%) cited some changes including evaluating
low-cost carriers as preferred vendors, seeking a joint contract within
new alliances, mandating preferred carriers, implementing an airline
performance tool and consolidating suppliers.

WorldTravel is seeing a slight shift in the use of low-cost carriers in
their clients` corporate travel program. While the majority of respondents
still support the major network carriers, 30 percent report the use of
low-cost carriers as preferred suppliers. The top four low-cost carriers
are (in order of respondent ranking) Southwest Airlines, JetBlue, America
West and AirTran.

Managing the preferred vendor program within the company continues to be a
challenge in today`s environment of Web-based offerings to business
travelers. Half of the respondents indicate that driving traveler behavior
is a concern in their program. Actions taken to encourage travelers to
participate in the company`s preferred supplier program are pre-trip
approval, non-reimbursement of expenses and mandated use of the corporate
travel agency.

The majority of companies (82%) have a negotiated company hotel program.
Forty-four percent indicate the hotel program includes less than 100
hotels and 22 percent include 101-300 hotels. Only a small number of
companies (12%) manage programs with more than 300 hotels. According to
the survey results, there are three primary approaches to meet hotel
negotiated goals: require hotel bookings through the corporate travel
agency, mandate the hotel program or strongly encourage booking through
the hotel program—but do not mandate.
2004 Predictions
Facing a challenging year in 2003, the corporate travel industry dealt
with numerous incidents that strongly impacted the industry including: the
war in Iraq, SARs outbreak, terrorist threats and a weak economy.
WorldTravel believes that the corporate travel industry will see an
upswing in 2004. An increasingly stable economy indicates an increase in
consumer spending and corporations will no doubt want their “road
warriors” on the move to leverage the upswing. Face-to-face meetings will
reclaim its status as the preferred way of doing business.

“Economic forecasts are showing that the economy will improve in 2004 and
with this positive news companies will be eager to get back on the road,”
said Danny Hood, president, WorldTravel BTI. “While we will see an
increase in passenger traffic, companies will be smart and cautious about
their travel spending.”

WorldTravel is forecasting that global passenger traffic will increase by
four percent with domestic traffic increasing by five percent and United
States international passenger traffic increasing by nine percent. Barring
the advent of another health or diplomatic crisis in 2004, WorldTravel
believes the origination of international flights from the United States
will also increase.
As the airline industry continues to evolve its business model, expect to
see a mild overall increase in airfares. Domestic long haul fares will
increase between two and three percent and international business class
fares will increase by three to five percent. Low-cost carriers, however,
bring competition to the network carriers, prompting what WorldTravel
believes will be a decrease in short haul fares of approximately two
Domestic transient hotel rates will remain flat in 2004 due to excess
capacity of new hotels built prior to the weakening of the economy and the
proliferation of Internet technology including hotel merchant programs.
Overall negotiated rates are flat to slightly up year over year. Provided
that there are no major changes in the political and economic climates,
international hotel rates should see a slight increase of two to three
“As the hotel chains and properties economies improve, we will see a mild
skirmish over the 15-25% merchant model profits that have been claimed by
the online travel agencies over the past two years. The hotel properties
have been glad to give these net rates to the middle-man because they were
grateful for the contribution to overhead during the tight economy.
However, the big five chains would like to reclaim some of these profits
as conditions improve. I would predict the merchant models will flourish,
but the hotel chains and properties will want the online players to meet
in the middle somewhere,” said Hood.
Car Rentals
In 2004, the car rental sector will remain moderately flat with a one to
two percent increase in rates. “Travelers have been driving the
four-to-five hour destinations over the past two years as an alternative
to flying. They were accurate in stating that the total time was the same
when the commute to the airport, the security time and the airport
downtime was factored in. However, the frequent traveler express lines,
the TSA learning curve and the short haul deals have decreased the driving
time decision by at least an hour. Other than Monday morning for 8-9 a.m.
flights, the security lines have improved dramatically,” noted Hood.
“Driving and trains in the Northeast corridor will continue to become a
preferred mode of business travel for regional trips due to cost savings
incurred and company policy changes.”
The WorldTravel BTI Benchmark Survey was conducted using an online survey
in August 2003. The survey received a 36 percent response rate with 127
respondents. Additional information on the WorldTravel BTI 2003 Benchmark
Survey is available on the Consulting page of .
About WorldTravel BTI
WorldTravel BTI, headquartered in Atlanta, GA, is the third largest
corporate travel management firm in the United States. With more than
4,500 employees across the country and 48 affiliate agencies in the United
States, the company supports more than $3.6 billion in annual sales for
Fortune 500 and mid-sized companies. WorldTravel BTI provides cost saving,
innovative travel management solutions tailored to their clients` local
and global travel needs. WorldTravel BTI`s global services include
traditional and online corporate travel services, group travel management,
meetings and incentives, leisure services for corporate travelers, as well
as consulting and corporate fulfillment services.
Founded in 1987 and known for its vision, value and commitment to
excellence, WorldTravel BTI has sustained a 43 percent compounded growth
rate since its inception. BCD N.V., the majority shareholder of
WorldTravel BTI, is a 46 percent stakeholder in Business Travel
International (BTI). BTI is the acknowledged expert in the delivery of
corporate travel solutions operating in almost 100 key commercial
countries. For more information on WorldTravel BTI, visit .


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