Egencia Releases 2011 Corporate Travel Forecast and Annual Hotel
Negotiability Index
Canadian Corporate Air Prices Rise Slightly, Car Rental Rates Buck Trend,
Egencia 2011 Corporate Travel Forecast Shows
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<p>BELLEVUE, Wash., <span class="xn-chron">Sept. 15</span> /CNW/ -- Egencia®, an Expedia, Inc. company, today unveiled its 2011 Corporate Travel Forecast and Hotel Negotiability Index, noting airline ticket prices to Canadian corporate travel destinations such as <span class="xn-location">Toronto</span>, <span class="xn-location">Montreal</span>, <span class="xn-location">Calgary</span> and <span class="xn-location">Vancouver</span> will generally follow the North American trend and remain flat to slightly up over the coming year. However, Egencia indicates corporate travelers should expect lower Canadian car rental rates year-over-year in 2011, a trend that runs contrary to the North American average.</p>
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(Photo: http://photos.prnewswire.com/prnh/20100915/CG65113)
(Photo: http://www.newscom.com/cgi-bin/prnh/20100915/CG65113)
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<p>"Corporations are traveling again this year, though still below 2008 levels," said Rob Greyber, President of Egencia. "Egencia clients - large and small - remain focused on cost containment and cost avoidance but through tools such as policy compliance, rather than the broad cuts we saw last year. We expect the modest spending rebound to continue, but careful, policy-driven governance will still be a theme in 2011."</p>
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<p>After a year of significant flexibility, Egencia's Hotel Negotiability Index suggests that corporations will face a more challenging negotiating environment in 2011. Additionally, new to this year's forecast is an Advance Purchase Advisory that identifies ideal advance booking windows and potential savings for flight purchase for specific business travel destinations in nearly 40 markets around the world.</p>
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<p>To arrive at these findings, the study evaluates global industry trends, macroeconomic factors, in-depth research of supplier markets and capacity across air, hotel and car rental channels in both domestic and international destinations, along with booking window analysis tailored for business travelers.</p>
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Canadian Air Travel
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<p>In Canada's major corporate travel destinations - <span class="xn-location">Vancouver</span>, <span class="xn-location">Calgary</span>, <span class="xn-location">Toronto</span> and <span class="xn-location">Montreal</span> - business travelers will likely see a slight rise in the average ticket price in 2011, Egencia's forecast indicates. Corporate travelers to <span class="xn-location">Toronto</span> and <span class="xn-location">Montreal</span> will see a 1 percent rise in the cost of airline tickets next year, while <span class="xn-location">Calgary</span> business travelers should see prices remain unchanged.</p>
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<p>Additionally, Egencia's new Advance Purchase Advisory shows that those with business trips heading to <span class="xn-location">Calgary</span>, <span class="xn-location">Toronto</span> and <span class="xn-location">Montreal</span> can obtain key savings on air ticket purchases by booking three to four weeks in advance. Canadian corporate travelers could see savings between 29 percent and 48 percent on travel to major Canadian urban locations, according to Egencia's Advance Purchase Advisory, by booking travel significantly ahead of their departure date.</p>
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<p>"Canadian business travelers can expect to see significant savings by planning their trips out at least a month in advance," said <span class="xn-person">Nikki Germany</span>, Egencia's Managing Director for <span class="xn-location">Canada</span>. "In a time when companies are cautious about spending on travel, they should make note of the possible savings by scheduling important trips well ahead of the travel date."</p>
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Canadian Hotels and Car Rentals
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<p>As businesses gain some degree of confidence in renewed corporate travel, key Canadian cities are showing a split in the Average Daily Rates (ADR) expected at hotels. With little new supply and occupancy increasing in most North American markets, corporate travelers in <span class="xn-location">Toronto</span> and <span class="xn-location">Montreal</span> will see hotel room prices rise in 2011, Egencia's Forecast demonstrates. Corporate travelers in <span class="xn-location">Toronto</span> should expect to see hotel prices rise by 2 percent, while <span class="xn-location">Montreal</span> business travelers will increase by 5 percent.</p>
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<p>However, corporate travelers heading to <span class="xn-location">Vancouver</span> and <span class="xn-location">Calgary</span> should not expect the same trend. After the excitement and attention drawn to <span class="xn-location">Vancouver</span> by the 2010 Winter Olympics, corporate travelers are expected to see the steepest decline (-5%) of any major North American city when it comes to ADR. That comes after <span class="xn-location">Vancouver</span> business travelers witnessed an ADR rise of 12 percent in the first seven months of 2010. <span class="xn-location">Calgary</span> hotels will also buck the expected increase and see a decline of 1 percent. Egencia's Hotel Negotiability Index also indicates corporate travelers heading to <span class="xn-location">Calgary</span> will experience a higher than average degree of negotiability in the coming year.</p>
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<p>"<span class="xn-location">Calgary</span> will have more demand, but the city's supply is also expected to grow in 2011, resulting in an average daily rate that declines slightly with greater customer negotiability," said <span class="xn-location">Germany</span>.</p>
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<p>And while the U.S. witnesses a slight increase in rental car prices due to consolidation and tight inventory management, Canadian rental car costs are anticipated to be slightly lower in 2011. <span class="xn-location">Germany</span> says the lower pricing comes after a period of increasing rental rates in <span class="xn-location">Canada</span>.</p>
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North America Outlook
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<p>The current rebound in corporate travel demand will continue into 2011, pushing corporate travel prices upward. Adding to upward pressure is consolidation in the airline industry amongst United and Continental and new transatlantic alliances. On the other hand, added capacity for key corporate destinations, the growth of ancillary revenues, better utilization of special corporate fares, and lingering recession concerns are likely to contribute moderate downward pressure on Average Ticket Prices (ATP).</p>
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<p>Overall, ADRs are expected to be slightly up across key cities, with a few exceptions like <span class="xn-location">Houston</span> and <span class="xn-location">Phoenix</span> where demand is not projected to increase. With very little new supply coming into the market in the short term, there is improved occupancy in most top business markets worldwide resulting in upward pricing pressure. Moderating this pressure, Meetings and Incentive volumes have not yet fully recovered and corporate demand is still down compared with 2008 levels.</p>
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<p>Charts below illustrate projected year-over-year 2011 vs. 2010 ATP and ADR figures in the local currency in selected business travel destinations around the world for North American points of sale.</p>
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North America
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Destination ATP YoY ADR YoY Destination ATP YoY ADR YoY
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Atlanta 3% 1% Montreal 1% 5%
Boston 0% 5% New York -1% 2%
Calgary 0% -1% Philadelphia -1% 4%
Chicago 1% 3% Phoenix 6% -3%
Dallas 2% 1% San Diego 4% 0%
Denver 5% 0% San Francisco 2% 4%
Houston 7% -3% Seattle -2% 8%
Los Angeles 2% 4% Toronto 1% 2%
Minneapolis/ Washington,
St. Paul 0% 6% DC 0% 6%
Vancouver 2% -5%
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International
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Destination ATP YoY ADR YoY
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Hong Kong -5% 3%
London -3% 1%
Paris -4% 2%
Tokyo -2% 0%
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<p>For the North American car rental industry, U.S. rates per day (RPDs) have been decreasing through the first half of 2010 by 5 percent compared to a year prior. In the coming year, Egencia anticipates industry consolidation and tighter inventory management will push RPDs up 3 percent year-over-year in the <span class="xn-location">United States</span>. In <span class="xn-location">Canada</span>, rates will stay slightly down year-over-year into 2011.</p>
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Advance Purchase Advisory
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<p>Egencia's exclusive Advance Purchase Advisory informs travel managers and corporate travelers of the best booking timeframe and possible savings for advance air ticket purchases. The advisory shows that, for the majority of destinations, business travelers should book three to four weeks (21-30 days) in advance to realize maximum savings. Booking in advance to <span class="xn-location">Atlanta</span>, for example, can save as much as 22 percent compared to last-minute bookings. Additional destinations where the three-week window nets significant savings are <span class="xn-location">London</span> (48%), <span class="xn-location">Denver</span> (26%), <span class="xn-location">Phoenix</span> (33%) and <span class="xn-location">Philadelphia</span> (31%).</p>
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Supply Outlook: Hotel Negotiability
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<p>Egencia's Hotel Negotiability Index, an indicator of the overall supply landscape in top North American cities, suggests that 2011 will be a challenging year for corporate negotiations with preferred supply partners. The cities with the greatest challenge for rate negotiations are <span class="xn-location">Atlanta</span>, <span class="xn-location">Boston</span> and <span class="xn-location">Seattle</span>, while <span class="xn-location">Calgary</span> and <span class="xn-location">Houston</span> should maintain high negotiability.</p>
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<p>"The hotel negotiation opportunity for travel and business decision makers is comparatively weak in 2011," said Noah Tratt, Vice President, Supplier Relations, Egencia Americas. "We're advising clients to look for value by working closely with their preferred supply partners to drive traveler compliance, negotiate favorable Terms and Conditions and consider inclusion of valuable amenities."</p>
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Travel Management Trends
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<p>Egencia surveyed more than 500 travel buyers in <span class="xn-location">North America</span> and <span class="xn-location">Europe</span> regarding cost control measures, travel spend and expectations for 2011. According to survey respondents, 42 percent of North American buyers and 23 percent of European buyers have slightly or significantly increased travel over the last six months, compared with a slight increase of only 10 percent a year ago in October/<span class="xn-chron">November 2009</span>.</p>
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<p>The top strategies for maintaining or controlling travel costs in <span class="xn-location">North America</span> and <span class="xn-location">Europe</span> include:</p>
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-- Advanced booking of airline tickets (56% North America, 53% Europe)
-- Enforcing policy more rigorously (47% North America, 40% Europe)
-- Actively tracking unused tickets (43% North America, 9% Europe)
-- Requiring pre-trip approval (42% North America, 49% Europe)
-- Encouraging the use of web conferencing (33% North America, 38%
Europe)
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<p>"Last year, the numbers painted a picture of considerable travel reduction, with 59 percent of survey respondents in 2009 acknowledging slight or significant reductions in travel, compared with only 30 percent of respondents this year," said Tratt. "And there are further signs of optimism for investing in travel. Thirty-four percent of respondents expect travel budgets to increase in 2011, whereas only 13 percent had this expectation heading into 2010."</p>
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Europe Outlook
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<p>Pricing for corporate travel ATPs in top European business travel destinations is expected to stay flat to slightly down, year-over-year, with the exceptions of <span class="xn-location">Paris</span> and <span class="xn-location">Moscow</span>, which may see a small rebound. An increase in low cost carriers, capacity additions and demand for lower-class cabins will contribute to downward pressure. In addition, hotels in these business hubs will see weak to moderate negotiability.</p>
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<p>For the European car rental industry, Egencia predicts car suppliers will maintain their fleets at current levels into 2011. Coupled with increased demand, this could mean increased RPDs of roughly 5 percent year-over-year.</p>
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<p>The chart below illustrates projected year-over-year 2011 vs. 2010 ATP and ADR figures in U.S. dollars in selected business travel destinations for European points of sale.</p>
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Destination ATP YoY ADR
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Amsterdam -1% 3%
Barcelona -1% 5%
Berlin -5% 4%
Brussels 0% 3%
Dublin 2% 1%
Frankfurt -1% 2%
Glasgow 8% 7%
London 0% 1%
Lyon 0% 0%
Madrid -2% 1%
Manchester -1% 1%
Marseille 0% 0%
Milan -1% 3%
Moscow 2% -7
Munich 0% 2%
Paris 2% 2%
Stockholm -2% 3%
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Asia-Pacific Outlook
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<p>The outlook for corporate travel ATPs is mixed for Asia-Pacific destinations, with prices staying flat or slightly down across several cities like <span class="xn-location">Hong Kong</span> and <span class="xn-location">Melbourne</span>. <span class="xn-location">Tokyo</span>, <span class="xn-location">Singapore</span> and <span class="xn-location">Shanghai</span> will likely see ATPs increase slightly. Egencia also anticipates a rise in ADRs for this region, most dramatically in <span class="xn-location">Shanghai</span>, Sydney, <span class="xn-location">Delhi</span> and <span class="xn-location">Beijing</span>.</p>
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<p>The chart below illustrates projected year-over-year 2011 vs. 2010 ATP and ADR figures in U.S. dollars in selected business travel destinations for Asia-Pacific points of sale.</p>
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Destination ATP YoY ADR
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Beijing 3% 4%
Delhi -5% 4%
Hong Kong -1% 3%
Melbourne -11% 3%
Mumbai 2% -2%
Shanghai 9% 5%
Singapore 8% 1%
Sydney 2% 4%
Tokyo 7% 0%
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<p>Negotiability Indexes for APAC and <span class="xn-location">Europe</span> are available. Further insights into Egencia's 2011 Corporate Travel Forecast and Negotiability Index are available upon request, as well as region-specific Advanced Purchase Advisory figures.</p>
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Research Methodology
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<p>Projections are based on the statistical analysis of the past and current industry trends, macroeconomic factors, research of supplier capacity and occupancy data, current and projected. Advanced Purchase Advisory savings are estimated based on average savings realized over the last two years. The actual savings will vary due to seasonality, actual travel time and other factors affecting overall supply and demand in each particular market.</p>
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Disclaimer
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<p>This data refers to business destinations and business travel pricing. These projections are based on Egencia analysis of data from OAG, ARC, STR and Expedia, Inc. The forecast represents an opinion based on current market factors and is not a representation or warranty as to the accuracy of the forecasts or projections made herein. Actual changes in ticket prices and hotel rates could vary significantly from forecasted numbers, impacted by unforeseen future economic and political factors.</p>
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About Egencia, an Expedia, Inc. Company
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<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>
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For more information, go to www.egencia.com
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<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, war and/or terrorism and bankruptcies.</p>
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<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>
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© 2010 Egencia, LLC. All rights reserved. CST #: 2083922-50/
For further information: Canada, Robert Thompson of G4G Media Inc., +1-416-995-2024, [email protected], or USA, Lauren Berg of Edelman, +1-312-233-1390, [email protected], both for Egencia Web Site: http://www.egencia.com
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