Advito Travel Industry Economic Forecast 2014

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The forecast for business travel, 2014

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Advito Travel Industry Economic Forecast 2014

  1. 1. 2014 ©2013 ©2013 Industry Forecast
  2. 2. Content Outlook and risk factors Air Hotel Meetings Car rental Rail Appendix 1: Spotlights and September 2013 update Appendix 2: Historical data charts 2 ©2013 ©2013
  3. 3. Airlines are Travel demand showing capacity restraint in remains generally weak mature markets 2014 Outlook Oil price should remain stable 3 ©2013 ©2013 Business travel demand will gain momentum in 2014, in line with projected global economic recovery Hotel rate increases will be low outside primary cities
  4. 4. Risk factors u Economic growth to pick up Global growth in 2013 will match 2012, pick up speed in 2014 U.S. economy will see best performance since start of economic crisis Growth to resume in Europe u Oil price stable for now Oil prices above US$100/barrel for most of the last year Supply and demand will keep prices at or below $110/barrel Fuel surcharges more likely to rise than fall u Safety and security concerns low 4 ©2013 ©2013
  5. 5. Global economic outlook (GDP) Economic growth will firm up across all regions in 2014 U.S. China 2012 +2.2% 2013 +1.9% 2014 +2.5% Emerging 2012 +7.8% 2013 +7.7% 2014 +8.0% economies 2012 +4.8% 2013 +5.1% 2014 +5.6% Source: EIU forecast, July 15, 2013 5 ©2013 ©2013 Euro Area 2012 -0.5% 2013 - 0.8% 2014 +0.6% World 2012 +2.1% 2013 +2.1% 2014 +2.7%
  6. 6. Airfares most resilient in mature markets Capacity restraint supports small fare rises in North America and Europe 6 ©2013 ©2013 Capacity growth to lower fares in most 2014 outlook Air While airlines in the U.S. and Europe are keeping a firm grip on capacity, soft demand will likely prevent significant fare hikes emerging markets Consolidatio n may lead to upward pressure on fares
  7. 7. Airline key performance indicators IATA’s latest forecast for traffic and capacity confirms emerging economies’ strong position 2013 Forecast % change Y-o-Y Traffic (RPK) Capacity (ASK) 2.5% Middle East 5.0% 6.6% 13.0% 2.2% 5.0% 6.5% 12.0% Latin America Africa Global 8.5% 8.3% 5.8% 7.6% 6.0% 5.0% North America Europe Asia-Pacific Source: IATA Financial Forecast, September 2013 7 ©2013 ©2013
  8. 8. Airfare predictions for 2014 – North America Fares will be flat or increase slightly in 2014, with regional economy the most likely segment to see a rise Business Economy Intercontinental +1% 0% Regional 0% +2% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) Source: Advito 2014 Industry Forecast 8 ©2013 ©2013
  9. 9. Airfare predictions for 2014 – Europe With demand weak, airlines continue to show restraint on capacity growth, keeping fare increases in the region low Business Economy Intercontinental +1% +2% Regional +1% +1% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR) Source: Advito 2014 Industry Forecast 9 ©2013 ©2013
  10. 10. Airfare predictions for 2014 – Asia Weaker demand and down-trading will depress business fares, but more resilient demand will provide some support to economy class fares Business Economy Intercontinental -2% +3% Regional -2% 0% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) Source: Advito 2014 Industry Forecast 10 ©2013 ©2013
  11. 11. Airfare predictions for 2014 – Latin America Airfares to rise across all segments Business Economy Intercontinental +3% +2% Regional +2% +3% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) Source: Advito 2014 Industry Forecast 11 ©2013 ©2013
  12. 12. Airfare predictions for 2014 – Middle East Intense competition between Gulf airlines will deliver lower airfares across all segments Business Economy Intercontinental -2% -2% Regional -2% -2% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR) Source: Advito 2014 Industry Forecast 12 ©2013 ©2013
  13. 13. Airfare predictions for 2014 – Africa Competition will lead to lower fares on intercontinental routes; rising demand will support increases on regional routes Business Economy Intercontinental +3% +2% Regional +2% +3% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR) Source: Advito 2014 Industry Forecast 13 ©2013 ©2013
  14. 14. Airfare predictions for 2014 – Southwest Pacific Intense competition in Australian market will ensure that airfares remain largely unchanged Business Economy Intercontinental 0% 0% Regional 0% -1% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) Source: Advito 2014 Industry Forecast 14 ©2013 ©2013
  15. 15. ADR increases will be minimal in Europe Latin America to see strongest rise in ADR 15 ©2013 ©2013 Most other regions will see modest 2014 outlook Hotel Hotel companies will look to raise corporate rates by 4-6% for 2014, but are likely to achieve only half this level on average ADR increases Argentina and Brazil to see biggest rises in ADR
  16. 16. Hotel average daily rate (ADR) 2014 forecast by region In 2014, ADR will grow only slightly in Europe, but we expect stronger rises in other regions—especially Latin America Europe North America +2-4% Latin America +6-8% +0-2% Asia +1-3% Middle East +2-4% Africa +3-5% Source: Advito 2014 Industry Forecast 16 ©2013 ©2013 Southwest Pacific +1-3%
  17. 17. Hotel ADR: 2014 forecast by market DK-NO +0-1% FI + +1-3% CA -1% to +1% US +3-5% MX -1% to +1% TR +4-6% ES-IT-PT DE-FR-UK AT +1-2% CH +0-2% BE-SE IE-NL +1% CZ +1% RU -2% to +1% +1-3% +1-3% JP +2-4% CN +0-3% +0-1% -1% to -2% to KO +0-2% IN -1% to +1% AE -1% to +2% SA +3-5% SG +2-3% BR +6-8% ZA +3-5% AU +1-3% AR +7-9% Source: Advito 2014 Industry Forecast 17 ©2013 ©2013 Forecast of average development of hotel rates used by corporate clients in 2014 against 2013 (local currency)
  18. 18. Demand growth is steady Rates to rise faster in first tier cities 18 ©2013 ©2013 2014 outlook Meetings Availability will become an increasing problem, especially as booking lead times continue to shrink Supply remains tight in North America and Europe Hotels to look for higher increases in 2014
  19. 19. Rate rises unlikely to Competition stick Multinational agreements becoming more popular 19 19 ©2013 ©2013 will keep rates in check 2014 outlook 2014 rental Car outlook Intense competition should keep corporate car rental rates in check, with increases staying at or below 4% Stricter capacity control may make it harder to find cars at airport locations
  20. 20. China highspeed rail back on track High-speed fares in Europe may start to fall 2014 outlook 2014 rental Car outlook Corporate rail bookings are increasingly moving online to reduce booking fees 20 ©2013 ©2013 California won’t see high-speed rail before 2020
  21. 21. Appendix Appendix 1: Spotlights and September updates Appendix 2: Historical data charts //Internal note// • Pick slides from the appendix that work for your client 21 ©2013 ©2013
  22. 22. Appendix 1 Spotlights and September 2013 update 22 ©2013 ©2013
  23. 23. Spotlights 23 ©2013 ©2013
  24. 24. American Airlines and US Airways merger Spotlight • Legal challenge from U.S. DOJ based on industry capacity, pricing • Airlines appealing • Deal likely to succeed (with concessions) ©2013 ©2013 80% of U.S. air traffic THE S COOP 24 Four carriers would control
  25. 25. Hybrid model Hybrid airlines Spotlight THE S COOP • Actively pursuing corporate traffic • Starting to fly long haul leisure routes • Pay for legroom, baggage, fast track and lounge 25 ©2013 ©2013 Example hybrid airlines
  26. 26. Unbundling Spotlight THE S COOP Unbundling trend continues 26 ©2013 ©2013 Unbundling Reporting remains major challenge Loyalty program membership helps some travelers avoid these charges—at least for now
  27. 27. Integrating travel and meetings Spotlight THE S COOP Increasing interest in merging transient travel and meetings programs • Improved leverage of spend • Better risk management 27 ©2013 ©2013 Initial focus is often sourcing Under pressure to integrate travel and meetings, some hotels are reluctant to do so
  28. 28. International corporate car rental agreements Spotlight THE S COOP • Multinational corporate contracting on the rise • Competitive international marketplace • But each player has gaps 28 ©2013 ©2013 3 Global players
  29. 29. Air – 2013 update 29 ©2013 ©2013
  30. 30. Airfare predictions for 2013 – North America Small fare decreases now expected across almost all segments Business Intercontinental 30 ©2013 ©2013 -1%◄ -2%◄ Regional Source: Advito 2013 Industry Forecast Update, September 2013 Economy -2%◄ 0%◄ Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) ◄ Indicates revision to previous forecast
  31. 31. Airfare predictions for 2013 – Europe Forecasts have been lowered across all segments except intercontinental economy Business Intercontinental 31 ©2013 ©2013 +1%◄ +2% Regional Source: Advito 2013 Industry Forecast Update, September 2013 Economy +1%◄ -1%◄ Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR) ◄ Indicates revision to previous forecast
  32. 32. Airfare predictions for 2013 – Asia The forecast has been downgraded, and fare rises are only expected in the intercontinental economy segment Business Intercontinental 32 ©2013 ©2013 0%◄ 2%◄ Regional Source: Advito 2013 Industry Forecast Update, September 2013 Economy 0%◄ 0%◄ Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) ◄ Indicates revision to previous forecast
  33. 33. Airfare predictions for 2013 – Latin America The outlook remains largely unchanged; strong demand growth means airfares will rise across all segments Business Intercontinental 33 ©2013 ©2013 +2%◄ +4% Regional Source: Advito 2013 Industry Forecast Update, September 2013 Economy +3% +5% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) ◄ Indicates revision to previous forecast
  34. 34. Airfare predictions for 2013 – Middle East Increasing capacity by Gulf carriers is pushing prices down across the board Business Intercontinental 34 ©2013 ©2013 -5%◄ -1%◄ Regional Source: Advito 2013 Industry Forecast Update, September 2013 Economy -5%◄ -5%◄ Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR) ◄ Indicates revision to previous forecast
  35. 35. Airfare predictions for 2013 – Africa There will be little or no growth in air fares in African markets Business Intercontinental 35 ©2013 ©2013 0% +2% Regional Source: Advito 2013 Industry Forecast Update, September 2013 Economy +2% 0% Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR) ◄ Indicates revision to previous forecast
  36. 36. Airfare predictions for 2013 – Southwest Pacific Excess capacity and intense competition are leading to lower airfares Business Economy Intercontinental -2%◄ 0% Regional +1% -2%◄ Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD) Source: Advito 2013 Industry Forecast Update, September 2013 36 ©2013 ©2013 ◄ Indicates revision to previous forecast
  37. 37. Hotels – 2013 update 37 ©2013 ©2013
  38. 38. Hotel average daily rate (ADR) 2014 forecast by region In 2014, ADR will grow only slightly in Europe, but we expect stronger rises in other regions—especially Latin America Europe +1-4% North America +4-7% Asia +4-6% Middle East Latin America +8-12% +2-4% Africa +4-6% Source: Advito 2013 Industry Forecast Update, September 2013 38 ©2013 ©2013 Southwest Pacific +5-8%
  39. 39. Hotel ADR: 2014 forecast by market DK-NO +0-1% FI + +0-1% US +4-7% MX +2-5% BR +15-18% AR +9-12% Source: Advito 2013 Industry Forecast Update, September 2013 39 ©2013 ©2013 RU +2-3% BE-FR-NL-UK +2-3% AT-CH-IE-SE +2-3% TR +2-4% DE +3-4% CZ +0-2% ES-IT +0-1% PT -1% to +0% CA +3-4% SA +2-4% CN +2-5% JP +5-7% KO +5-7% IN +1-4% AE +2-4% SG +2%◄ ZA +8-10% AU +5-8% ◄ Indicates revision to previous forecast Forecast of average development of hotel rates used by corporate clients in 2014 against 2013 (local currency)
  40. 40. Appendix 2 Historical data charts 40 ©2013 ©2013
  41. 41. Air 41 ©2013 ©2013
  42. 42. Cost per mile North America Source: Advito 42 ©2013 ©2013
  43. 43. Cost per mile Europe Source: Advito 43 ©2013 ©2013
  44. 44. Cost per mile Asia Source: Advito 44 ©2013 ©2013
  45. 45. Cost per mile Latin America Source: Advito 45 ©2013 ©2013
  46. 46. Cost per mile Middle East Source: Advito 46 ©2013 ©2013
  47. 47. Cost per mile Africa Source: Advito 47 ©2013 ©2013
  48. 48. Cost per mile Southwest Pacific Source: Advito 48 ©2013 ©2013
  49. 49. Economy class ratio North America Source: Advito 49 ©2013 ©2013 Based on weighted average for first five months in each year
  50. 50. Economy class ratio Europe Source: Advito 50 ©2013 ©2013 Based on weighted average for first five months in each year
  51. 51. Economy class ratio Asia Source: Advito 51 ©2013 ©2013 Based on weighted average for first five months in each year
  52. 52. Economy class ratio Latin America Source: Advito 52 ©2013 ©2013 Based on weighted average for first five months in each year
  53. 53. Economy class ratio Middle East Source: Advito 53 ©2013 ©2013 Based on weighted average for first five months in each year
  54. 54. Economy class ratio Africa Source: Advito 54 ©2013 ©2013 Based on weighted average for first five months in each year
  55. 55. Economy class ratio Southwest Pacific Source: Advito 55 ©2013 ©2013 Based on weighted average for first five months in each year
  56. 56. Advance booking North America Source: Advito 56 ©2013 ©2013 Based on weighted average for first five months in each year
  57. 57. Advance booking Europe Source: Advito 57 ©2013 ©2013 Based on weighted average for first five months in each year
  58. 58. Advance booking Asia Source: Advito 58 ©2013 ©2013 Based on weighted average for first five months in each year
  59. 59. Advance booking Latin America Source: Advito 59 ©2013 ©2013 Based on weighted average for first five months in each year
  60. 60. Advance booking Middle East Source: Advito 60 ©2013 ©2013 Based on weighted average for first five months in each year
  61. 61. Advance booking Africa Source: Advito 61 ©2013 ©2013 Based on weighted average for first five months in each year
  62. 62. Advance booking Southwest Pacific Source: Advito 62 ©2013 ©2013 Based on weighted average for first five months in each year
  63. 63. Hotel rates 63 ©2013 ©2013
  64. 64. Hotel rate developments Brazil Source: Advito 64 ©2013 ©2013
  65. 65. Hotel rate developments Canada Source: Advito 65 ©2013 ©2013
  66. 66. Hotel rate developments China Source: Advito 66 ©2013 ©2013
  67. 67. Hotel rate developments France Source: Advito 67 ©2013 ©2013
  68. 68. Hotel rate developments Germany Source: Advito 68 ©2013 ©2013
  69. 69. Hotel rate developments India Source: Advito 69 ©2013 ©2013
  70. 70. Hotel rate developments Ireland Source: Advito 70 ©2013 ©2013
  71. 71. Hotel rate developments Italy Source: Advito 71 ©2013 ©2013
  72. 72. Hotel rate developments Japan Source: Advito 72 ©2013 ©2013
  73. 73. Hotel rate developments Korea Source: Advito 73 ©2013 ©2013
  74. 74. Hotel rate developments Mexico Source: Advito 74 ©2013 ©2013
  75. 75. Hotel rate developments Russia Source: Advito 75 ©2013 ©2013
  76. 76. Hotel rate developments Singapore Source: Advito 76 ©2013 ©2013
  77. 77. Hotel rate developments South Africa Source: Advito 77 ©2013 ©2013
  78. 78. Hotel rate developments United Arab Emirates Source: Advito 78 ©2013 ©2013
  79. 79. Hotel rate developments United Kingdom Source: Advito 79 ©2013 ©2013
  80. 80. Hotel rate developments United States Source: Advito 80 ©2013 ©2013
  81. 81. Historic hotel ADR development United States 2013 Top U.S . cities ADR US$ Q1 Q2 Q3 139 3.0% 197 7.2% 131 0.2% 164 6.4% 138 0.6% 144 2.0% 143 6.3% 120 10.5% 156 8.9% 181 7.6% 139 4.7% 273 13.7% 135 3.8% 222 6.8% 143 8.9% 154 5.8% 148 4.8% 117 4.6% 144 8.6% 195 15.0% 137 3.7% 257 3.9% 138 9.0% 217 6.9% 139 6.3% 154 2.0% 141 5.5% 117 5.1% 124 -5.1% 190 11.7% Top U.S . cities 2012 Q4 Q1 ADR US$ Q1 Q2 Q3 Q4 Q1 142 7.5% 239 2.3% 139 6.0% 221 6.1% 141 3.6% 149 5.3% 146 8.6% 117 5.9% 132 -1.8% 189 9.9% 143 3.0% 196 -0.5% 145 10.7% 172 4.8% 147 6.4% 150 4.2% 156 9.1% 118 -2.0% 155 -0.5% 191 5.3% New Orleans 178 9.9% 261 0.1% 167 1.6% 143 -6.7% 127 7.9% 120 0.7% 150 4.4% 236 13.9% 158 3.7% 244 -0.4% 174 7.6% 342 3.5% 194 9.8% 117 -3.0% 135 5.7% 129 3.3% 152 5.7% 245 14.7% 172 5.1% 281 3.5% 135 9.1% 328 0.3% 177 3.7% 103 -1.4% 142 6.7% 127 2.3% 156 3.2% 271 15.3% 187 5.3% 243 3.5% 166 1.4% 380 5.3% 177 -0.2% 128 0.5% 136 6.8% 124 0.6% 146 1.4% 256 9.3% 164 2.4% 257 2.4% 194 8.6% 282 7.9% 171 2.3% 149 4.3% 138 9.2% 123 2.2% 150 0.2% 250 6.1% 159 0.3% 247 1.0% 2012 Atlanta Boston Charlotte Chicago Dallas Denver Houston Indianapolis Las Vegas Los Angeles AD R AD R AD R AD R AD R AD R AD R AD R AD R AD R Source: Advito 81 ©2013 ©2013 New York Philadelphia Phoenix Portland St. Louis San Diego San Francisco Seattle Washington AD R AD R AD R AD R AD R AD R AD R AD R AD R AD R 2013
  82. 82. Historic hotel ADR development Europe 2013 Top European cities ADR local currency Q1 Q2 Q3 Amsterdam 151 3.3% 153 26.1% 120 -2.1% 160 2.2% 1168 3.4% 115 4.1% 124 2.1% 152 0.7% 120 5.1% 170 5.9% 166 4.2% 171 17.8% 118 0.2% 171 4.4% 1314 8.0% 127 8.5% 131 -7.2% 160 13.4% 124 0.6% 186 2.8% 162 1.6% 155 -6.5% 130 10.7% 151 0.4% 1245 2.4% 130 7.7% 112 2.7% 150 4.4% 127 -0.1% 184 0.1% Top European cities 2012 Q4 Q1 ADR local currency Q1 Q2 Q3 Q4 Q1 155 0.5% 150 8.5% 116 3.6% 166 3.2% 1158 -1.5% 120 1.9% 128 0.0% 152 3.4% 119 1.6% 192 8.3% 144 -5.0% 160 4.7% 117 -2.2% 159 -0.9% 1112 -4.7% 116 1.2% 120 -3.5% 156 2.5% 113 -5.5% 184 8.4% Madrid 133 12.8% 178 4.2% 9642 0.9% 135 -0.5% 197 7.1% 2853 5.0% 156 -0.8% 1609 0.1% 138 4.8% 483 14.9% 138 7.1% 178 2.9% 10209 6.8% 164 16.5% 225 3.5% 3331 5.0% 188 -1.0% 1763 1.5% 143 -0.2% 618 22.3% 125 -8.2% 179 0.1% 9519 -1.3% 166 7.1% 223 4.3% 3301 1.0% 195 6.4% 1703 -1.4% 155 7.5% 464 -8.9% 141 1.6% 158 -7.0% 9930 3.7% 161 13.4% 212 6.0% 3095 0.9% 177 1.9% 1665 -1.5% 143 0.8% 468 -11.6% 135 1.5% 190 7.1% 9510 -1.4% 148 10.0% 197 -0.5% 2798 -1.9% 187 20.4% 1555 -3.4% 133 -3.7% 421 -12.9% 2012 Barcelona Berlin Brussels Copenhagen Dublin Düsseldorf Frankfurt Hamburg London AD R AD R AD R AD R AD R AD R AD R AD R AD R AD R Source: Advito 82 ©2013 ©2013 Milan Moscow Munich Paris Prague Rome Stockholm Vienna Warsaw AD R AD R AD R AD R AD R AD R AD R AD R AD R AD R 2013
  83. 83. Historic hotel ADR development Other cities in Asia, North America and Latin America 2013 Canada & LatAm 2012 Q4 Q1 ADR local currency Q1 Q2 Q3 Q4 Q1 4719 -1.4% 4785 -0.5% 5017 7.3% Buenos Aires 1128 1.4% 3970 N/A 2219 4.1% 8462 -1.9% 257395 3.6% 1222 2.8% 314 -2.5% 246 0.1% 22676 6.8% 1100 -2.1% 7644 -22.0% 2461 2.8% 9269 -6.7% 264134 -1.7% 1239 1.1% 307 -2.5% 276 2.5% 24210 10.4% 1085 -4.8% 5726 -11.0% 2476 1.6% 9372 -3.1% 253077 -1.2% 1168 -6.7% 316 -5.0% 284 3.6% 24295 5.9% Mexico City 809 20.1% 556 4.5% 1811 5.9% 151 2.2% 425 19.6% 83795 11.3% 108194 26.8% 401 32.3% 163 6.7% 158 2.9% 746 10.8% 566 0.7% 1920 20.4% 163 -0.6% 442 23.1% 69663 -9.5% 114509 29.5% 440 35.7% 167 3.5% 183 3.4% 745 -0.8% 564 5.0% 1772 6.5% 159 -2.4% 439 18.5% 65932 -12.0% 95409 5.1% 408 23.4% 167 1.4% 183 0.1% 792 9.2% 547 5.3% 1794 -2.2% 154 -3.2% 460 13.0% 63895 -22.0% 108790 -1.1% 426 24.9% 168 1.2% `164 2.0% 828 2.3% 510 -8.2% 1862 2.8% 150 -0.4% 479 12.7% 68786 -21.0% 99740 -7.8% 442 10.2% 167 2.2% 158 0.0% Top Asian cities 2012 ADR local currency Q1 Q2 Q3 Bangkok 4677 -4.2% 4739 -3.2% 1140 5.7% 6447 41.6% 2438 1.2% 9670 -5.3% 256149 5.5% 1252 4.6% 333 8.4% 275 9.3% 22952 9.1% 1210 6.1% 5496 -5.9% 2307 9.5% 8716 -4.5% 273886 11.4% 1286 4.8% 320 3.9% 255 7.3% 23243 8.9% Beijing Delhi Hong Kong Mumbai Seoul Shanghai Singapore Sydney Tokyo AD R YoY AD R AD R AD R AD R AD R AD R AD R AD R AD R Source: Advito 83 ©2013 ©2013 Lima Montreal Rio de Janeiro San Jose Santiago Sao Paulo Toronto Vancouver AD R AD R AD R AD R AD R AD R AD R AD R AD R AD R 2013
  84. 84. Tier distribution In key markets Source: Advito 84 ©2013 ©2013
  85. 85. Thank you 85 ©2013 ©2013

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