eCLIPSE Advisors, the travel procurement technology division of Rosenbluth International, has released its assessment and findings associated with 2003 business travel fares. Domestic US airfares are expected to increase by at least 4%, while international airfares are predicted to decline by at least 5%. Hotel and car rental rates will either decline or remain constant.
Chief Operating Officer Michael Boult commented: “eCLIPSE`s corporate clients look to our unique combination of detailed statistical insight and consultant expertise in air, hotel and car procurement to support the development of a cost-efficient travel program. This same combination has enabled us to provide a telling glimpse at the trends in business travel costs for the coming year.”
North America Airline Year over Year:
Published Fares (0% to +2% Increase) Airlines will face barriers to raising fares in the public domain given continuing sluggish economic growth.
Actual Fares Paid - Domestic Flights (+4% to +8% Increase) Carriers will try to raise actual fares paid through combination of capacity reductions, greater restrictions on tickets, eliminating under/non-performing corporate contracts, limitations on domestic consolidator/opaque inventory distributors. Spot bargain buys will continue to be available on carrier web sites and through short-term promotions. Expect confident low cost carriers to target marginal routes operated by vulnerable network carriers. Anticipate lower fares in these instances.
Actual Fares Paid - International Flights (-5% to -8% Decrease) International services will see increased yield pressures as corporations re-examine their travel policies with a view to encouraging Coach Travel instead of Business class. With no immediate up tick in the Japanese economy in sight, it is likely that services to and from Tokyo and Osaka will be impacted, as will services to/from South America. US Carriers will view yield opportunities, on certain transatlantic sectors, rather than pricing opportunities as too enticing to ignore and will lead the pack of heavy discounters again this year. While most of the announced fleet reductions have so far been about narrow body, short haul equipment elimination, we anticipate retirement and early lease return announcements from operators of classic wide body models, such as the A-300, 767, 747 and DC-10. The early phasing out of this capacity may help the majors stem some of the pain. All eyes will be focused on potential outbreaks of violence and warfare with the unfortunate but certain negative impact on demand and fuel costs.
North America Hotel Year Over Year:
Published Corporate Rates (+2% to +4% Increase) Hotels will seek to keep pace with inflation in their published rates.
Actual Rates Paid (-5% to -10% Decrease) A buyers market continues with softness across the sector particularly in Upscale and Full Service Brands. Moderate and Economy Brands will fair better as down trading stimulates greater demand in this segment. We expect continued sluggishness in the Bay Area, Boston, New York and Washington, D.C. Certain markets may benefit from the “closer to home” psychology in business meetings. Likely markets include Orlando, New Orleans and Miami as venues for meetings that may have been scheduled overseas.
North America Car Rental Year over Year:
Published Corporate Rates (2% to 5% Increase) Rental providers will boost rates regardless of present and likely protracted economic sluggishness.
Actual Rates Paid (0% Increase) Increasingly buyers will seek alternatives in market that has not faced purchasing scrutiny in years past. Travel buyers will take more time to understand the myriad of “hidden” surcharges that boost the $41 a day mid size rental to $66 of average actual expense. Lower cost providers will be the beneficiaries of this increased scrutiny, with Enterprise set to build upon this opportunity.
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