Egencia Releases 2010 Corporate Travel Global Benchmarking Study and Travel
Manager Research
ATPs rise as airlines manage capacity and business travel demand begins to
return; Hotel market for corporate travelers remains soft
</pre>
<p><span class="xn-location">TORONTO</span>, <span class="xn-chron">June 2</span> /CNW/ -- Egencia(TM), an Expedia, Inc. company, today unveiled its 2010 Corporate Travel Global Benchmarking Study, evaluating the current business travel landscape and corresponding supply environment for air, hotel and car inventory. Focusing on top domestic and international business destinations in <span class="xn-location">North America</span>, <span class="xn-location">Europe</span> and Asia-Pacific, Egencia analyzed industry trends, supplier research and capacity implications in Q1 2010.</p>
<p/>
<p>The study validates themes uncovered in Egencia's 2010 Forecast and Hotel Negotiability Index, including that the hotel market for corporate travel has experienced significant decreases in Q1. In addition, Egencia also surveyed more than 400 travel buyers in <span class="xn-location">North America</span> and <span class="xn-location">Europe</span> regarding travel program expectations, policies and challenges.</p>
<p/>
<p>"Corporate travel spending is returning, but businesses remain cautious," said <span class="xn-person">Nikki Germany</span>, Managing Director, Egencia <span class="xn-location">Canada</span>. "Business travellers are returning to airports, hotels and car rental counters, but companies are still seeking to tighten control of spend, with the biggest cost savings opportunities to be found with hotels."</p>
<pre>
Average Ticket Prices (ATPs)
North America
</pre>
<p>As a result of the economic downturn and resulting decrease in travel in 2009, airlines have maintained capacity discipline into 2010. With increased demand for business travel in Q1 2010, this has resulted in an increase in average ticket prices. Higher fuel surcharges, reduced competition on many routes and the dramatic slowing of route expansion has also resulted in upward pressure on ticket prices for major business destinations in <span class="xn-location">North America</span>.</p>
<p/>
<p>The chart below illustrates Q1 YoY ATP figures in selected business travel destinations for North American points of sale.</p>
<p/>
<p> </p>
<p> </p>
<pre>
North America
POS ATP Change YoY Montreal 11%
------------- --------------
Atlanta 5% New York 10%
Boston 9% Paris 17%
Calgary 13% Philadelphia 16%
Chicago 15% Phoenix 15%
Dallas 15% San Diego 12%
Denver 5% San Francisco 14%
Hong Kong 13% Seattle 17%
Houston 11% Tokyo -2%
London 25% Toronto 17%
Los Angeles 11% Vancouver 12%
Minneapolis 7% Washington DC 3%
------------- ---
*Reflected in local currency
Europe
</pre>
<p>European airlines are also maintaining their capacity discipline in 2010. Though European businesses are slowly increasing travel demand both domestically and internationally, this tighter control of capacity has resulted in an increase in ATPs for several business destinations, though the picture is not as clear-cut as <span class="xn-location">North America</span>. Conversely, prices are being driven downward by a number of factors including perceived economic vulnerability of Euro-zone. Increased competition from a number of low-cost carriers and decreased passenger load factors have also resulted in downward pricing pressure for corporate travel.</p>
<p/>
<p>The chart below illustrates Q1 YoY ATP figures in top business destinations for European points of sale.</p>
<pre>
</pre>
<p> </p>
<p> </p>
<pre>
European POS ATP Change YoY
------------ --------------
Amsterdam -2% Madrid 1%
Barcelona 5% Manchester 0%
Berlin -4% Marseille 5%
Brussels 11% Milan -11%
Chicago 19% Moscow -1%
Dublin 13% Munich -6%
Frankfurt am Main -9% New York 15%
Glasgow -2% Paris 0%
London -5% San Francisco 13%
Lyon -10% Stockholm 0%
*Reflected in local currency
APAC
</pre>
<p>Asia-Pacific represents a truly heterogeneous air pricing landscape, varying on a market-by-market basis. Driving the pricing increases is greater demand for business travel into <span class="xn-location">China</span> and <span class="xn-location">India</span> and the strength of the dollar, which has resulted in higher fuel costs for many APAC carriers. Many markets also showed substantial decreases, especially in <span class="xn-location">Australia</span> where the competition for domestic routes heated up between JetStar and Virgin Atlantic, as well as Tiger Airways. Many Asia-Pacific carriers have maintained or increased capacity in contrast to their European and North American counterparts, resulting in decreased prices.</p>
<p/>
<p>The chart below illustrates Q1 YoY ATP figures in top business destinations for APAC points of sale.</p>
<p/>
<p> </p>
<p> </p>
<pre>
APAC POS ATP Change YoY
--------------
Delhi 32%
Mumbai 16%
Beijing 9%
Hong Kong 7%
Tokyo -7%
Shanghai -8%
Singapore -8%
Melbourne -25%
Sydney -27%
San Francisco 13%
New York 4%
Los Angeles 0%
----------- ---
*Reflected in local currency
Hotel Average Daily Rates (ADRs)
</pre>
<p>In the first quarter of 2010, hotel average daily rates dropped in major business destinations. Contributing to this, the meetings and incentives business has yet to fully recover and the recent influx of supply coming on the market over the last several years has resulted in an overabundance of hotel capacity in many cities. While corporate demand has begun to rebound, higher average ticket prices and lower air capacity brings less business travelers, resulting in decreasing hotel rates. With improved occupancy and a decreasing amount of new hotel supply coming into the market, hotel prices in select European and Asia-Pacific markets were actually flat to up.</p>
<p/>
<p>The charts below illustrate Q1 YoY ADR figures in selected business travel destinations globally.</p>
<pre>
</pre>
<p> </p>
<p> </p>
<pre>
North America ADR Change YoY Europe ADR Change YoY APAC ADR Change YoY
------------- -------------- ------ -------------- ---- --------------
Atlanta -3% Amsterdam -3% Beijing -3%
Boston -4% Barcelona -5% Delhi -4%
Calgary -4% Berlin 5% Hong Kong 17%
Chicago -10% Brussels -6% Melbourne -4%
Frankfurt am
Dallas -5% Main -2% Mumbai -10%
Denver -5% London 4% Shanghai -1%
Houston -8% Madrid -12% Singapore 0%
Los Angeles -3% Milan -8% Sydney 2%
Minneapolis -4% Munich 2% Tokyo 4%
----- ---
Montreal -1% Paris 2%
New York -3% Stockholm -1%
--------- ---
Philadelphia -5%
Phoenix -11%
San Diego -1%
San Francisco -9%
Seattle -5%
Toronto -3%
Vancouver 43%
Washington, DC -12%
-------------- ---
</pre>
<p> </p>
<pre>
*Reflected in local currency for each city
Car Rental
</pre>
<p>For the North American car rental industry, restricted financing and subsequently constrained supply made 2009 an unusual year. Q1 2010 rates per day (RPDs) have fallen 10 per cent YoY, however, they are still above 2008 levels. The robust used car market and unwillingness of healthier car manufacturers to provide cheap inventory is also adding upward pricing pressure. On the other hand rising ATPs squeezing traveller budgets, which along with improved financing conditions and profitability of car rental vendors in Q1, are contributing to downward pricing pressure.</p>
<pre>
Travel Management Trends
</pre>
<p>According to respondents of Egencia's survey of more than 400 travel buyers in <span class="xn-location">North America</span> and <span class="xn-location">Europe</span>, 56 per cent of North American buyers and 45 per cent of European buyers expect their travel volumes to increase during the remainder of 2010, with 20 per cent (<span class="xn-location">North America</span>) and 15 per cent (<span class="xn-location">Europe</span>) planning to change their travel policies during the year. Additionally, 40 per cent of North American travel buyers and 49 per cent of European travel buyers said they will negotiate more this year than they did in 2009.</p>
<p/>
<p>"Challenging economic conditions have taught companies the importance of tightly managed travel programs, even impacting how and when travel managers make program changes," said <span class="xn-location">Germany</span>. "We found that in <span class="xn-location">North America</span>, 36 per cent of travel buyers are evaluating supplier contracts more frequently due to the economic climate."</p>
<p/>
<p>Travel Managers universally identified cost control/reducing spending as the greatest challenge facing travel programs. Specific rankings of travel program challenges are as follows:</p>
<pre>
-- Cost control/reducing expenses (59% Europe, 49% North America)
-- Traveller satisfaction (11% Europe, 23% North America)
-- Traveller compliance/policy enforcement (12% Europe, 13% North
America)
-- Capturing a full view of travel spend (9% Europe, 7% North America)
</pre>
<p>Further insights into Egencia's 2010 Benchmarking study and Travel Manager survey are available upon request.</p>
<pre>
Research Methodology
</pre>
<p>Forecast and projections are based on the statistical analysis of the past and present industry trends, macroeconomic factors, market research and vendors' capacity forecasts for 2010. Smith Travel Research (STR) and OAG filings were leveraged for a market-level analysis of both Lodging and Air capacity. ARC, STR and Expedia Internal Data were used for market-level analysis of pricing.</p>
<pre>
About Egencia, an Expedia, Inc. Company
</pre>
<p>Egencia is the fifth largest travel management company in the world. As part of Expedia, Inc., (NASDAQ: EXPE), the world's largest travel marketplace, Egencia helps businesses get ahead by offering the only truly integrated corporate travel service. Egencia's industry expertise helps drive results that matter, delivering meaningful advancements that have a real impact. By combining a powerful offline and online service, Egencia delivers a complete corporate travel offering supported by global market expertise and a best-in-class technology platform.</p>
<pre>
For more information, go to www.egencia.com
</pre>
<p>This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. These forward-looking statements are based on management's expectations as of the date of this press release and assumptions which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results and the outcome of events may differ materially from those expressed or implied in the forward-looking statements for a variety of reasons, including declines or disruptions in the travel industry caused by, among others, prolonged adverse economic conditions, health risks, increased adverse weather, natural disasters such as earthquakes or volcanic eruptions, war and/or terrorism and bankruptcies.</p>
<p/>
<p>Egencia and the Egencia logo are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries. Other logos or product and company names mentioned herein may be the property of their respective owners.</p>
<pre>
© 2010 Egencia, LLC. All rights reserved. CST #: 2083922-50/
For further information: Noor Marzook of Edelman, +1-416-979-1120, ext. 239, [email protected], for Egencia Web Site: http://www.egencia.com/
Share this article