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Travel Management Priorities 2012

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Travel Management Priorities 2012

  1. 1. CWT PerspectivesTravel Management Priorities for 2012 January 2012
  2. 2. ContentsExecutive summary.................................................................................................................................................................. 5Business travel market trends.............................................................................................................................................. 8 . GDP and business travel going East............................................................................................................................................. 9 . A mixed outlook for air capacity..................................................................................................................................................11 . Ever more complex travel spend.................................................................................................................................................14 . All eyes on airline direct connect.................................................................................................................................................17 Occupancy driving hotel negotiations........................................................................................................................................18 Even easier rail travel.......................................................................................................................................................................21 Opportunities ahead in car rental................................................................................................................................................24 More strategic meetings and events management................................................................................................................26 Rising prices in most categories and regions...........................................................................................................................29 Value in social media and mobile applications.......................................................................................................................31 Recommendations for 2012.........................................................................................................................................................33 .Survey results: travel managers priorities for 2012......................................................................................................35 Priorities and planned measures: total sample......................................................................................................................38 . Driving air and ground transportation savings.................................................................................................................................... 38 . Improving traveler compliance................................................................................................................................................................. 40 . Optimizing hotel spend............................................................................................................................................................................... 41 Optimizing online adoption....................................................................................................................................................................... 43 . Optimizing the travel policy....................................................................................................................................................................... 44 . Enhancing the traveler experience.......................................................................................................................................................... 45 Developing key performance indicators............................................................................................................................................... 46 . Further consolidating the travel program.............................................................................................................................................. 47 Addressing safety and security needs.................................................................................................................................................... 49 Tackling meetings and events................................................................................................................................................................... 50 Making the program more environmentally friendly........................................................................................................................ 51 Priorities and planned measures: regional highlights...........................................................................................................52 Asia Pacific........................................................................................................................................................................................................ 52 Europe, Middle East and Africa................................................................................................................................................................. 53 Latin America.................................................................................................................................................................................................. 54 . North America................................................................................................................................................................................................. 56 Global travel managers................................................................................................................................................................................ 57 Travel Management Priorities for 2012 | 3
  3. 3. Executive summary2012: a shifting landscape requiring strong foundationsTravel managers who have faced market turbulence over the last few years should be steeling themselves for another challengingyear that will underline the importance of an effectively managed travel program.Global economic recovery may be slower than previously anticipated, according to the International Monetary Fund, which hasrevised its forecast for GDP growth down to 4% (stable compared to 2011).1 These global figures hide considerable differencesbetween countries, however, with weak progress in advanced economies contrasting with double-digit growth in China andIndia. Although oil prices may be lower than in previous years and air capacity looks set to rise slightly, higher travel costs canbe expected across regions.In air travel, international traffic looks set to grow in all regions, especially to and from Asia Pacific. Nevertheless, airlines willmaintain a tight capacity environment, and cuts will continue on domestic routes in the United States. In all markets, buyers willneed to manage ancillary fees and high fuel surcharges, while new credit booking charges and the inclusion of airlines in theEuropean Union’s Emissions Trading Scheme will add to the cost of flights to and from E.U. airports.Hotel occupancy will continue to pose a challenge in many cities, making last-room availability agreements advisable to securerooms for travelers. London in particular will require special attention during the 2012 Summer Olympic Games. Increases arelikely to continue in average daily rates, ranging from negligible to double figures, depending on the city.Ground transportation should bring some new good news for the travel program, with car rental prices possibly falling in somemarkets as consolidation and competition intensify. At the same time, high-speed rail networks will continue developing aroundthe world, notably in China and some European countries. Buyers will have to watch for higher prices though and progress inintermodal travel remains slow.In the meetings and events market, buyers can expect more scope for regional contracts in Europe but less flexibility oncancellation and contrition fees in North America. Average group size and spend will likely increase in North America butdecrease in Europe, where many organizers will favor national over international destinations. Hybrid events combining physicallypresent and remote attendees will be more common, and companies will increasingly adopt a more strategic, innovative andtechnology-driven approach to M&E management while seeking synergies with the transient travel program.Finally, 2012 promises to bring improvements to the traveler experience as more dedicated travel management apps comeonto the market and social media are used more commonly to share information relevant to business travel.1 World Economic Outlook, International Monetary Fund (September 2011) Travel Management Priorities for 2012 | 5
  4. 4. CWT has highlighted 10 key trends likely to impact the corporate travel market in 2012, as summarized in Figure 1: Figure 1 10 key trends for 2012 More strategic Rising prices in most meetings & events categories and regions management Occupancy driving hotel negotiations NT RA AU Even easier rail travel REST TAXI TAXI Meals/Drinks Extra Luggage TAXI Wifi/Breakfast Payment Charge MARKET SHARE A mixed outlook Ever m more for air travel com complex travel spend Opportunities ahead All eyes on airline in car rental direct connect GDP and travel going East China +13% 2 India +14% 2 Within Asia Pacific, strong increases in business travel spend are expected Value in mobile and social appsTravel managers priorities for 2012For the fourth year running, CWT surveyed clients to find out which areas of the travel program they intend to focus on andwhich key actions they plan to implement in the year to come. To best manage the challenges ahead in 2012, travel managersintend to focus above all on four key foundations of the travel program: driving air and ground transportation savings,improving traveler compliance, optimizing hotel spend, and optimizing online adoption. These areas represent majorsavings opportunities even for the most mature travel programs, given shifting market dynamics and the need for ongoingefforts to optimize performance. This explains why they come high in the rankings every year. (See Figure 2 for a comparisonwith 2011.)At a regional level, some differences in results reflect the supplier offering as well as program maturity. These differencesconcern both the top priorities and travel managers’ planned measures in these areas. For example, travel managers for AsiaPacific place more importance on optimizing hotel spend, no doubt due to the very high occupancy rates in some cities,which makes availability harder to secure and keeps prices high. Travel managers for Europe naturally place more focus onmanaging the trade-offs between air and rail, given the importance of rail travel in the region. In Latin America, the greatmajority of respondents say they will be driving air and transportation savings in a context where competition is being shakenup by TAM, the region’s largest airline, completing its merger with LAN, another major player. In North America, more travelmanagers intend to seek synergies with meetings and events spend. Finally, global travel managers will make improvingtraveler compliance their top priority to support the efforts already made to optimize their travel policies.6
  5. 5. Figure 2Travel managers priorities for 2012 2012 2012 vs. 2011 2011 ranking Priority Respondents ranking ranking 1 Driving air and ground transportation savings 63% 3 2 Improving traveler compliance 68% 1 3 Optimizing hotel spend 60% 4 4 Optimizing online adoption 56% 2 5 Optimizing the travel policy 42% 6 6 Enhancing the traveler experience 39% 5 7 Developing key performance indicators 34% 7 8 Further consolidating the travel program 33% 9 9 Addressing safety and security needs 27% 8 10 Tackling meetings and events 22% 10 11 Making the program more environmentally friendly 12% 11Breakdown by scope of responsibility Europe, Middle EastAsia Pacific & Africa Latin America North America Global Compliance 75% Air & ground 69% Air & ground 83% Compliance 73% Compliance 79% Hotel 66% Hotel 67% Hotel 73% Air & ground 58% Online adoption 60% Online adoption 53% Online adoption 60% Compliance 43% Online adoption 46% Air & ground 54% Travel policy 53% Compliance 63% Online adoption 43% Travel policy 46% Hotel 49% Air & ground 47% Travel policy 45% KPIs 57% Hotel 46% Travel policy 39% Traveler experience 53% Traveler experience 34% Consolidation 37% Traveler experience 42% Consolidation 42% Safety & security 38% KPIs 28% Traveler experience 23% Consolidation 36% KPIs 38% Consolidation 34% Consolidation 26% Travel policy 23% KPIs 39% Traveler experience 44% KPIs 25% M&E 23% M&E 17% Safety & security 27% Safety & security 32% Environment 25% Safety & security 24% Safety & security 17% M&E 30% M&E 24% M&E 13% Environment 13% Environment 3% Environment 12% Environment 8% Sample size: 32 travel managers 123 travel managers 30 travel managers 33 travel managers 72 travel managersNotes: CWT asked travel managers to select their top five travel management priorities for 2012 and rank them in order of importance. The responses were weighted to take into account how often each priority was ranked 1st, 2nd, 3rd, 4th or 5th. The “Respondents” column shows the proportion of travel managers who included the priority in their top five. “Driving air and ground transportation savings” was identified as a priority by fewer travel managers than “Improving traveler compliance” (63% compared to 68%) but ranked higher overall because it figured higher in travel managers’ top five. Regional results include country/regional travel managers. Source: CWT Travel Management Institute Based on a survey of 290 travel managers worldwide (October – November 2011) Travel Management Priorities for 2012 | 7
  6. 6. Business travel market trendsWhat to expect in 2012?In an uncertain economic environment, travel managers need to monitor changes closely to ensure they are getting the bestdeals from suppliers and the right performance from their travel program. With this in mind, CWT has identified 10 key trendslikely to impact the business travel market in 2012: GDP and business travel going East A mixed outlook for air capacity Ever more complex spend All eyes on airline direct connect Occupancy driving hotel negotiations Even easier rail travel Opportunities ahead in car rental More strategic meetings and events management Rising prices in most categories and regions Value in social media and mobile applicationsEach of these trends will be discussed in the following pages, along with some recommendations for travel managers planningtheir program for the year ahead.8
  7. 7. GDP and business travel going East“Western” has long been synonymous with economic power, but this label is gradually weakening as the worlds most advancedcountries face uncertainty at home in contrast with remarkable growth in developing countries, especially in East Asia. Globaleconomic power is gradually shifting to the East, with Asia Pacific expected to account for 43% of the world’s GDP by 2020. Figure 3 Forecast GDP growth Source: World Economic Outlook, International Monetary Fund (September 2011)Implications for the travel programWhat does this mean for business travel? Travel patterns will evolve, and buyers will find a wider offering from airlines andhoteliers along with more competitive prices on the horizon. However, air capacity and hotel occupancy will not ease noticeably: A strong increase in Asia Pacific travel. In fact, global traffic should continue to grow fastest to and from this region. As an indication, air passenger volume has already risen by 13.4% between Asia Pacific and the Middle East, 6.1% between Asia Pacific and North America, and 4.8% between Asia Pacific and Europe from first quarter 2009 to first quarter 2011, compared to a 1.0% drop in volumes between North America and Europe.2 Moreover, traffic between China and the United States grew by 200% over a decade to a record 2.7 million passengers in 2010 (+30.5% year-on-year).3 Within the region, business travel spend is expected to grow by an impressive 14% in India and 13% in China between 2011 and 2012.42 Amadeus Total Demand by airconomy (June 2011)3 CAPA – Centre for Aviation, and U.S. Department of Transportation (September 2011)4 Global Business Travel Spending Outlook 2011‒2015, GBTA Foundation and Vantage Strategy (August 2011) Travel Management Priorities for 2012 | 9
  8. 8. A dynamic aviation market. Growth in air traffic naturally follows economic expansion and there are a number of striking illustrations of strong activity in the region. Currently, Beijing Capital International ranks 2nd among the world’s busiest airports (Figure 4), compared to 14th five years ago, and the city is set to become the world’s largest aviation hub (all airports combined), thanks to a second airport at Daxing, south of Beijing, which began construction in 2011. Figure 4 World’s busiest airports (2011) Rank 1 2 3 4 5 6 7 8 9 10 Airport Atlanta Beijing London Chicago Los Paris Tokyo Dallas Frankfurt Denver Hartsfield Capital Heathrow O’Hare Angeles Charles Fort -Jackson de Gaulle Worth Code ATL PEK LHR ORD LAX CDG HND DFW FRA DEN Passengers (millions) 69.7 58.0 52.7 50.2 46.8 46.4 45.5 43.5 42.7 40.0 % change (vs. 2011) 4.0 4.8 5.9 -0.6 5.8 5.1 -4.6 2.1 6.7 1.1 Source: Airport Council International (based on passenger figures, January ‒ September 2011) Another illustration is the region boasting the world’s fastest growing domestic aviation market: India. According to CAPA – Centre for Aviation,5 India’s domestic air traffic had grown by 17.6% to 55 million passengers in the first 11 months of 2011, completing 15 consecutive months of double-digit growth. Strong performance should continue, with IATA forecasting a compound annual growth rate (CAGR) of more than 16% between 2010 and 2013. While legacy airlines are increasing their service to key destinations in the region, many low-cost carriers are launching new services especially on international routes, which will almost certainly impact prices. (See Page 12.) Finally, Asia Pacific airlines are expanding or renewing their fleets more noticeably: among the top 30 airlines by widebody deliveries planned from September 2011 to September 2012, 14 are from Asia Pacific, compared with five from Europe, four from Latin America and three each from Middle East/Africa and North America.6 Given the continued strong demand, Asia Pacific business hubs register some of the world’s highest hotel occupancy rates, making room availability an ongoing challenge for the travel program. According to STR Global data,7 the year-to-date rolling average in September 2011 reached 84.4% in Singapore, 82.3% in Hong Kong, 82.0% in Sydney and 80.7% in Seoul.5 CAPA ‒ Centre for Aviation (January 3, 2012)6 CAPA ‒ Centre for Aviation, and Ascend (September 15, 2011)7 Global Hotel Review, STR Global (September 2011)10
  9. 9. A mixed outlook for air capacityA tough environment for airlines looks set to continue in 2012, with very slightprofits across the industry and only cautious increases in capacity—a situation thatcould quickly switch to declines if the economic context worsens.International growth vs. domestic decline Overall, global air capacity is expected to remain flat or slightly increase (by 0.6% to 3.1% in a more optimistic scenario, compared to 6.0% in 2011, according to IATA8), anticipating slower growth or even a decline in traffic (between -1.3% and 2.9% compared to 4.2% in 2011). More than ever, established airlines will practice capacity discipline to protect margins, focusing on matching demand on profitable routes while cutting any services proving to be a drain on resources. In many cases, the increases will be on international routes, and the cuts on domestic service. Strong growth is expected on some international routes. IATA revealed in its November 2011 monthly brief that international capacity year-to-date had increased by 8.3% year over year9 and was likely to continue growing in 2012. GBTA forecast a 3.3% increase in the number of trips abroad, which it believes will be reflected in a 7.7% increase in international travel spend.10 Some major international routes will see significant capacity increases as carriers introduce superjumbos. For example, Singapore Airlines has announced a 25% increase on the New York JFK–Frankfurt–Singapore route from January 2012.11 At the same time, low-cost carriers will continue to aggressively expand, particularly on international routes. (See Page 12.) Figure 5 Examples of planned capacity developments (mid December 2011 – mid May 2012) + + + + + + + +10.3% +7.7% +5.9% +4.0% +2.7% +1.7% +0.1% China China Lufthansa All Nippon American Air France British Southern Eastern Airways Airlines Airways Airlines - - - -0.3% -0.6% -3.2% TAM Airlines Qantas Cathay Pacific Source: CAPA Outlook (December 2011)8 Financial Forecast, IATA (December 2011)9 Air Transport Market Analysis, IATA (November 2011)10 Global Business Travel Spending Outlook 2011‒2015, GBTA Foundation and Vantage Strategy (August 2011)11 News release, Singapore Airlines (September 19, 2011) Travel Management Priorities for 2012 | 11
  10. 10. New low-cost services 2012 will see increased competition on many domestic and international routes as new low-cost carriers (LCCs) enter the market and existing players expand their offerings. Many announcements concern Asia Pacific: Jetstar Japan will be Japan’s third new low-cost carrier, offering domestic routes by the end of 2012 and short-haul international flights by 2013. The carrier has said it will consider any destination within four to five hours of Japan and is currently planning routes to China, South Korea and the Philippines. Jetstar Group, one of the main low-cost brands in Asia Pacific, also comprises Jetstar Airways in Australia and New Zealand, Jetstar Asia in Singapore and Jetstar Pacific in Vietnam. Peach Aviation will launch Japanese operations in March 2012, starting with domestic flights between Fukuoka, Kansai International and New Chitose airports. The carrier intends to serve destinations within three to four hours of Japan, including major cities in China, South Korea and Taiwan, as well as resort destinations Guam and Saipan. The first international destination to come on stream should be Seoul in May 2012. Scoot Airlines, Singapore Airline’s long-haul budget carrier, has unveiled Sydney as its first daily destination, due to launch in June 2012. Scoot will be the first low-cost carrier to fly non-stop to ‒Melbourne­­­­­ Sydney, which is also served by Jetstar (Singapore­­­­­ ‒Sydney). By 2015, Scoot intends to expand to destinations in Europe, the Middle East, New Zealand and North Asia. SpiceJet of India is seeking authorization to fly to 10 international destinations in 2012, including Bangkok (Thailand), Dubai (United Arab Emirates), Kuala Lumpur (Malaysia), Muscat (Oman), Riyadh (Saudi Arabia), Singapore, Tashkent (Uzbekistan) and Tehran (Iran). Currently, the carrier flies to Kathmandu (Nepal), Colombo (Sri Lanka) and around 33 domestic airports. Thai Smile, a subsidiary of Thai Airways, is due to start flying domestic routes in Thailand from July 2012 and short-haul international routes within Southeast Asia, India and China from 2013. Thai Airways also plans to launch Thai Tiger Airways in partnership with Tiger Airways, although no firm date has been announced. In other regions, new developments include the following: Iberia Express, Iberia’s new low-cost airline, will launch operations out of Madrid Barajas airport, serving domestic and international routes. The Spanish carrier will initially run four aircraft in summer 2012, rising to 13 by the end of 2012. Norwegian Air Shuttle ASA, Scandinavia’s second-largest airline, plans to start long-haul flights in 2012 using Boeing 787 Dreamliners. The carrier is planning routes from the Scandinavian capitals to Bangkok and New York by late 2012 or early 2013. VivaColombia will be Colombia’s first budget airline when launched in May 2012. The carrier intends to serve more than 20 domestic and international destinations, including the United States, focusing on routes under four hours. Wow Air, an Icelandic low-cost carrier, has announced it will start operations in June 2012. Wow will connect Reykjavik with 12 European destinations, including Alicante, Basel, Berlin, Cologne, Copenhagen, Krakow, London Stansted, Lyon, Paris, Stuttgart, Warsaw and Zurich.12
  11. 11. In contrast to international increases, cuts will continue on many domestic routes. Europe will be impacted, but in particular the United States, which will experience a steep decline in domestic capacity, continuing the trend over the past decade. Figure 6 U.S. domestic and international capacity (Q4 2007 ‒ Q4 2011) Available seat miles (billions) Domestic International 186.1 84.1 -9.4% +6.1% 79.2 79.0 77.3 168.3 168.7 165.6 73.4 162.4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: CAPA ‒ Centre for Aviation, and Innovata (August 2011)One of the main reasons for this two-speed market is that many domestic routes are being trimmed as carriers retire fleetsof smaller jets that have become more expensive to run in terms of fuel cost per passenger. Some routes have shut down,requiring travelers to fly from airports further afield, while others have become less competitive and typically more expensive.According to Airports Council International, 27 small U.S. airports have lost service from major commercial airlines over thepast two years, including St. Cloud (Minnesota) and Oxnard (California). OAG12 notes that capacity to and from Cincinnati hasdropped drastically (-31% in 2011 compared to 2009), while Memphis (Tennessee) has also seen considerable reductions(-15% on overall capacity, with Delta cutting 25% of its flights at the destination). Pittsburgh, which used to be US Airways’main hub, is down to about 165 flights a day by all airlines to 37 airports. Some observers believe that Cleveland service mayalso be impacted in the wake of the merger between United and Continental.12 OAG Facts (November 2011) Travel Management Priorities for 2012 | 13
  12. 12. Meals/Drinks Extra Luggage Wifi/Breakfast Payment ChargeEver more complex travel spendThose little extra fees charged by airlines and other suppliers have growninto a multibillion dollar business that makes it virtually impossible for buyersto efficiently and accurately compare the full cost of travel between suppliers.With the proliferation of credit card booking surcharges in the European Union, volatile fuel surcharges and increases in othertaxes and charges, the situation is not likely to ease anytime soon. Future U.S. regulation on airline ancillary fees in GDSs couldbring radical improvements in transparency, but no firm decision has been reached yet.Given that airline fees alone can add up to 30% to the average ticket price according to CWT observations, it is clearly incorporate clients’ interest to push for greater visibility and negotiate these costs whenever possible with suppliers, whilecommunicating a sensible policy on them to travelers. This advice applies not only to airline spend but also hotel amenity feesand additional costs charged by car rental companies.Ancillary fees, charges and taxesHere are some of the key items expected to impact the travel program in 2012: Airlines will continue to focus on growing ancillary revenues. According to Amadeus and IdeaWorks,13 the global average year-on-year increase was 43.8% in 2011, ranging from 13% by low-cost carriers to 87% by U.S. major airlines. (Seven North American airlines alone account for 34% of the estimated US$32.5 billion in ancillary revenues charged in 2011.) Such growth has enabled airlines to remain profitable in a harsh economic environment and has largely been enabled by leisure travelers, since an estimated 20% of these revenues come from baggage fees and 50% from the sale of frequent flyer miles. Figure 7 Key ancillary revenue components Baggage fees Priority check-in In-flight entertainment (checked, overweight and security & Internet access and carry-on bag fees) screening Sleep sets In-flight food X Seating assignments and drinks Charges for One-time lounge Fare lock-in fees $ lost tickets passes Source: CWT Travel Management Institute13 Amadeus Worldwide Estimate of Ancillary Revenue for 2011, Amadeus/IdeaWorks (October 2011)14
  13. 13. U.S. regulators delay action on ancillary fees in GDSs ...New U.S. regulation now requires airlines to display all “optional" (ancillary) fees more prominently on their websites anddisclose baggage fee information on e-ticket confirmations. Travel agents must also point out on their booking sites thatadditional fees may apply and direct travelers toward the relevant information. These measures are a step in the rightdirection for price transparency, but the burning question for travel managers remains: When will ancillary fees be widelyavailable in GDSs—and in a way that enables an efficient comparison of total trip prices?The technology now exists to include ancillary-fee data in GDSs, but airline uptake has been slow. Further, the U.S.Department of Transportation has deferred action on a proposal to mandate the inclusion of airline ancillary fees inGDSs. New discussions on this hot topic are scheduled for April 2012, but implementation will be delayed until 2013at the earliest.... but there is good news for air passenger rightsAncillary fees are just one of the subjects that have been targeted by the DOT to enhance airline passenger rights. Anumber of new requirements have been introduced over the past year, including: Full-fare advertising, meaning that advertised fares must include all mandatory taxes and fees Details of ancillary fees on a specific web page linked to the carriers home page. Notification of bag fee changes on carriers’ websites for a minimum of three months Fee refunds for bags lost in transit Higher minimum compensation for denied boarding A four-hour limit on tarmac delays for international flights Refreshments for travelers during delays The European Union’s Emissions Trading Scheme (EU ETS) could impact airline fares and fees. Starting in January 2012, this controversial scheme will include all airlines using E.U. airports, meaning they will be allocated a free carbon allowance and required to surrender one unit per ton of carbon dioxide produced. Any surplus allowances may be sold, while airlines going over the quota will need to buy more at an auction. EU ETS is likely to cost the aviation industry billions of dollars, and many airlines have warned that fares or fuel surcharges will rise as a result. For example, in December 2011, Lufthansa raised its fuel surcharge on European and long-haul flights to €10 (approximately US$12.70), up from €3 (US$3.80), citing EU ETS as the reason. Further, in January 2011, Chinese and U.S. carriers contested the legality of the scheme and refused to pay the associated charges. Fuel prices are forecast to drop slightly but the impact on fares and surcharges will vary between airlines, largely due to different fuel hedging strategies. British Airways and Iberia, for example, are likely to increase their fuel surcharges and fares as existing hedging deals come to an end. A growing number of legacy airlines are applying credit card booking surcharges. In 2011, Air France-KLM, British Airways and Lufthansa joined the ranks of carriers imposing credit card booking fees in certain European countries that authorize them. Typically charged by low-cost carriers, these fees vary widely, making a fair price comparison difficult when they are not included in the quoted ticket price. For example, at the end of 2011, Air France-KLM announced it would charge €15 on credit card bookings through travel agents for long-haul flights and €7.50 for short- and medium-haul flights departing from Germany, while Lufthansa announced €5 for domestic, €8 for continental and €18 for intercontinental flights. Air passenger duty will increase by 8% to 10% in the United Kingdom starting in April 2012. Economy flights of up to 2,000 miles (approximately 3,220 km) could therefore rise by £4 (approximately US$9.3) to £16 (US$25). Travel Management Priorities for 2012 | 15
  14. 14. Hotel amenity fees will be included in about two-thirds of negotiated rates in 2012, helping companies to mitigate price increases. Figure 8 Preferred rates including amenities in 2012 Breakfast Parking Internet +2 pts = stable +8 pts 63% Source: CWT Hotel Solutions Group (December 2011) P 31% @ 71% Jet fuel prices may dip in 2012 but remain high In 2012, jet fuel prices may fall slightly, having climbed back to 2008 levels in August 2011, according to Airlines for America (A4A, formerly known as the Air Transport Association). While some airlines have mitigated the impact of high fuel price increases through long-term fuel hedging strategies and increased energy efficiency, jet fuel remains one of aviations largest cost items, having a major impact on profits. A4A14 reports that a US$0.01 increase in the cost of a gallon costs U.S. airlines US$175 million, while a US$1 increase costs them US$415 million. IATA15 estimates that jet fuel will account for 32% of global airlines’ costs in 2012 based on an average price of US$100, compared to 30% of their costs in 2011 at US$110 per barrel. Figure 9 Evolution in airlines’ total costs and fuel expenses (2001‒2012F) Total costs 609 571 583 Fuel expenses 490 525 450 474 409 319 311 323 376 33% 30% 32% 26% 28% 26% 26% 22% 13% 13% 14% 17% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F Source: CWT Travel Management Institute Based on data from IATAs Financial Forecast (December 2011)14 A4A website (accessed in January 2012)15 Financial Forecast, IATA (December 2011)16
  15. 15. All eyes on airline direct connectThe travel management industry will keep a watchful eye on the issue of airline “direct connect,” which does not look likelyto be settled any time soon. At the heart of the matter, corporate buyers and their travel management companies largely seethe proposed system as a step backward for the travel program since it would involve airlines removing content from globaldistribution systems (GDSs).For airlines, the benefits are clear: lower distribution costs from bypassing GDS fees, and the ability to use the system to marketcustomized services, including the full range of ancillaries that currently have patchy coverage on GDSs.For clients, however, pulling content out of GDSs would disrupt not only the current productive booking environment, raisingcosts, but also impact reporting, traveler tracking and the ability to meet duty of care for employees away on business. The keyissues include: Less efficient booking. TMCs would be required to implement new interfaces to access airline content outside GDSs, while still using GDSs for other travel content (other airfares, hotels and ground transportation, as well as policy data). More difficult fare comparisons and potential missed savings. Typically travel counselors would need to start their search with direct connect flights, rather than scrolling through the program-compliant options displayed on the GDS. More complex traveler tracking, safety and reporting. To ensure that non-GDS bookings are included in TMCs’ tracking and reporting systems, data can be entered into passive GDS segments. Doing so involves additional charges, however, and may not be supported by GDSs in the long term. Higher costs. CWT continues to believe that the GDS environment is the most cost-efficient and effective model available for managing corporate travel. Any system that fragments content introduces unnecessary inefficiencies that cannot benefit corporate customers. Travel Management Priorities for 2012 | 17
  16. 16. Occupancy driving hotel negotiations2011 saw hoteliers taking back some of the pricing power they had lostsince the downturn in 2009, and they may well hang on to it in 2012.Already high occupancy rates are likely to rise and further push up ratesin many cities, with increases ranging from negligible to double figures,depending on the region. (See Pages 29-30 for CWT’s price forecastrelating to hotels.)Rising occupancy and room rates RA NT TAU R ESOccupancy and average daily rates (ADRs) have risen in most regionsover the last year. Figure 10 Evolution of the global hotel market (January ‒ November 2011 vs. the same period in 2010) Source: Global Hotel Review, STR Global (November 2011)18
  17. 17. Figure 11 shows the worlds top 20 hotel markets in terms of occupancy in September 2011. Figure 11 World’s 20 highest-occupancy hotel markets (September 2011) Source: Global Hotel Review, STR Global (November 2011)In 2012 occupancy is likely to remain an issue in many top cities, with uneven supply across regions. According to STR Global,16most of the development projects concern Asia Pacific and Latin America: Growth is strongest in Asia Pacific, where 348,653 rooms are in the pipeline at 1,433 new hotels. In 2012, 139,432 new rooms are expected to open at 559 new properties across the region, but especially in Beijing and Bangkok. The economic slowdown has impacted many new hotel developments in Europe, where hoteliers are currently adding 139,006 rooms, mostly in the upscale and upper midscale segments. Much of this new build is concentrated in the United Kingdom, which is preparing for the 2012 Olympic Games, and Russia, which is preparing for the 2014 Winter Olympics and the 2018 FIFA World Cup. New build is slowing in North America, with 76,497 planned new rooms in 2012. Half of this pipeline was postponed from 2011. Significant growth is expected in Latin America. In Central/South America, 196 new hotels are in the pipeline, bringing 28,958 rooms, particularly in the budget category and in Brazil, which will host the 2014 FIFA World Cup in 2014 and the 2016 Summer Olympics. Meanwhile, 131 new hotels are being built in Mexico and the Caribbean, totaling 133,705 rooms.16 Global Hotel Construction Pipeline Reports for November and September 2011, STR Global (2011) Travel Management Priorities for 2012 | 19
  18. 18. Key findings during 2012 negotiationsSo far, hoteliers have taken a tough stance overall, holding back on complimentary amenities and LRA clauses unless clientsspecifically request them: This year, hoteliers are taking a harder line on amenities. In North America, hotel offers are more often including breakfast or Internet, but not both, while in Europe, many hotels are leaving these amenities out of their initial bids, leaving clients to negotiate them in the second round as a way to lower the total cost of stay. Negotiations have been harder on last-room availability clauses at properties in many high-occupancy cities, although CWT clients have still managed to obtain them at 84% of their preferred properties, consistent with results last year. Mid-year renegotiations could be possible in some European locations if economic conditions take a significant turn for the worse. Hoteliers will continue to develop their “green” offerings and also enable buyers to more easily evaluate their environmental friendliness as new industry standards are introduced.In addition, the following developments are worth noting: Travelers will increasingly be able to use their mobile phones or other remote solutions as key cards. For example, a number of chains have been experimenting with OpenWays mobile technology, which unlocks a guest’s door through a dialing tone. Others are testing online lock systems with radio-frequency identification (RFID) technology, which enables specific rooms to be assigned to permanent loyalty cards and turned on or off remotely. Travelers will turn increasingly to social media reviews when selecting a hotel. Travel managers can take advantage of new tools that will soon be available through travel management companies to enable travelers to share their reviews of preferred hotels. Such tools can boost service for travelers while promoting compliance with preferred suppliers.20
  19. 19. Even easier rail travelRail is often the preferred way to travel when trips are three hours or less, and routes in competition with air have seenenormous growth in corporate traffic in recent times. Convenient city center access, a productive working environment and arelatively light carbon footprint all make rail an attractive alternative to air or ground transportation when prices are competitive,as they often are. (New rail connections typically lead to lower airfares on competing routes.) In 2012, the use of rail in thecorporate travel program may be boosted further by developments including new high-speed routes and integrated air-railofferings. New regulation in the European Union also promises to facilitate rail travel in the coming years.Expanding high-speed networksRail networks are developing around the world at different paces, reaching remarkable milestones in some countries: China continues to expand its high-speed network, already the world’s largest and fastest. In 2012, numerous new lines are due to open: Beijing–Guangzhou (the main north-south rail corridor through central China, linking Beijing, Shijiazhuang, Wuhan, Guangzhou and Hong Kong), Hankou–Yichang (linking Wuhan and Yichang), Chongqing–Lichuan, Suining–Chongqing and Shijiazhuang–Jinan. Figure 12 New high-speed lines due to open in China in 2012 CHINA Dark red lines show the high speed rail that should be completed by the end of 2012 Source: Nextbigfuture.com (June 2011) Travel Management Priorities for 2012 | 21
  20. 20. Spain is the first European country to offer more than 2,000 km (1,243 miles) of high-speed lines, while boasting the largest number of projects under construction. Some 1,000 km (621 miles) should be completed by the end of 2012, with routes including Vitoria–Bilbao–San Sebastian, Variante de Pajares (connecting Madrid with Oviedo and Gijon in the Asturias region), Bobadilla–Granada, La Coruna–Vigo, and Olmedo–Zamoro–Orense. In Germany, the Munich–Augsburg line will be fully upgraded to operate at high speed by the end of 2012. This route is Germany’s busiest, and a major corridor for European passengers from Budapest through Vienna to Paris. Turkey has inaugurated its second high-speed line, stretching from Ankara to Konya. The United Kingdom has confirmed plans for a national high-speed network, connecting London to Birmingham by 2026 and Birmingham, Leeds and Manchester by 2033. The first phase of the "HS2" network will also connect to Europe via the Channel tunnel, as well as to Heathrow airport. In a few countries, however, high-speed rail developments have stalled: In the United States, several projects have met with funding difficulties. In particular, conservative governors have rejected federal funds to begin building high-speed lines in a number of states, including Florida, Ohio and Wisconsin. However, construction on the California High-Speed Rail project is due to begin in September 2012, with an initial segment from Merced or San Jose to Bakersfield in the Central Valley to be completed by 2019. In Brazil, a government auction for the right to build a 510-km (317-mile) bullet rail service between Rio de Janeiro and Sao Paulo failed to attract any bidders in July 2011. The auction had already been postponed twice due to a lack of interest. Nevertherless, the country’s president Dilma Rousseff remains keen to see the project completed before the 2016 Summer Olympics in Rio de Janeiro, and officials have announced that the auction will be split in two to speed up the process. In Argentina, the Buenos Aires–Cordoba high-speed link has been on hold since 2009, due to the financial crisis.New international servicesIn the European Union, deregulation since 2010 has opened up transborder competition, enabling carriers to operate limitednational routes outside their home country. Many of the new service announcements still involve partnerships with localcompanies: Thello, a new venture between France’s Veolia and Italy’s Trenitalia, has launched night trains between Paris and Dijon in France and seven destinations in Italy. Thalys, jointly owned by France’s SNCF, Belgium’s SNCB and Germany’s Deutsche Bahn, has expanded its service with three new German destinations, Essen, Duisburg and Dusseldorf, departing from Brussels and Liege in Belgium. SNCF has bought a stake in Rail Holding AG, the parent company of Austria’s Westbahn Management GmbH. The partners intend to compete with Austrian incumbent OBB on its busiest and most profitable route, Vienna–Linz–Salzburg. SNCF has also started service on its Rhine-Rhone high-speed line, intended to facilitate travel between Germany, northern Switzerland and France.22
  21. 21. A partnership between SNCF and Nuovo Trasporto Viaggiatori, an Italian company that plans to be Europe’s first private open access operator of high-speed trains, has pushed back its launch to 2012. According to previous announcements, three high-speed lines should come into service: Salerno–Turin, Venice–Rome and Rome–Bari. Deutsche Bahn intends to launch service between Frankfurt and London in 2013, two years later than initially scheduled due to delays in deliveries of rolling stock.Plans for seamless pan-European rail ticketingCurrently, cross-border rail travel in Europe can be complicated to plan and book with different countries and operators usingdifferent systems. Railteam, an alliance of seven European rail companies set up in 2009, originally intended to offer integratedticketing but has since abandoned those plans. The good news is that the European Commission adopted new regulation in2011 requiring rail operators to standardize data on fares and schedules, and in 2012 the Commission also plans to bringforward complementary regulation on interoperable IT systems and practices. Implementation will not be immediate, but thesemeasures effectively lay the foundations for seamless pan-European rail reservations and ticketing, which could also integrateother modes of transport.Developments in intermodal travelTransfers from airports and stations can add hours onto a trip if roads are congested or connections are poor. In response,airlines are increasingly combining air and rail tickets for easier itineraries and ticketing. Some recent examples include: Lufthansa launching “Rail&Fly” tickets with Deutsche Bahn trains in Germany. China Eastern Airlines coordinating flight times with China’s high-speed rail to minimize transfer times between Shanghai Hongqiao international airport and the center of Hangzhou and Wuxi. Jet Airways entering into its first intermodal codeshare agreement with Thalys high-speed rail to help intercontinental travelers from India, the United States and Canada reach Paris faster. This service links Brussels International to Paris Nord rail station in under two hours.In the longer term, the European Commission has announced ambitious plans for a unified transport network (TEN-T)—arail backbone that should be accessible by the great majority of Europeans within 30 minutes’ travel time. The aim is to easecongestion, upgrade infrastructure and facilitate cross-border transportation for passengers and businesses across the EuropeanUnion. This new network would connect 37 key airports with rail connections into major cities, and 83 main European portswith rail and road links, thanks to 15,000 km (9,375 miles) of railway line upgraded to high speed and 35 cross-border projects.(Currently Europe’s railways use seven different gauge sizes and are connected to only 20 major airports and 35 major ports.)This new backbone network would be completed by 2030 with connections feeding into it by 2050. Initial funding would beprovided at a European level, with Member States expected to contribute additional funds. Travel Management Priorities for 2012 | 23
  22. 22. Opportunities ahead in car rentalIn 2011, car rental companies weathered stormy market conditions without significant increases in corporate rates, drivingrecord revenues mainly by increased cost efficiency and on-airport business. At the beginning of 2012, fierce competitionfor corporate business shows no sign of abating, meaning that corporate buyers can expect fairly flat prices and a favorablenegotiating environment. A number of new services may also bring benefits to the travel program.More consolidation offering opportunities for wider contractsOne of the major events of 2011 was Avis Budget Group acquiring Avis Europe, reuniting the Avis and Budget brands underone global umbrella. The company expects synergies to save more than US$30 million a year and provide a stronger presencein rapidly growing markets worldwide, including India and China, where the available services are mainly chauffered vehicles(vs. self-drive options). In the future, travel managers may find more opportunities to negotiate deals covering a widergeographical scope, and the company’s more efficient cost base may help keep prices down.Also in Europe, U.S.-based Enterprise Holdings is set to acquire Paris-based car-rental company Citer from PSA Peugeot Citroen.In doing so, Enterprise, the parent company of Alamo Car, National Car Rental, Rent-A-Car and WeCar, will expand its presencein France and Spain.While Hertz Global Holdings withdrew its latest offer to buy Dollar Thifty Automotive Group in October 2011, it has continuedto seek anti-trust clearance from the Federal Trade Commission, leaving the door open to a new offer.Fierce competition impacting pricesThree global brands (Avis Europe, Europcar and Hertz) now account for 61% of the European market and four brands(Enterprise Holdings, Hertz, Avis Budget and Dollar Thrifty) similarly dominate the U.S. market. However, this high degree ofconsolidation by no means prevents strong price competition: a move by any of the major rental companies to cut prices tendsto be closely matched by competitors. In addition, many smaller brands enjoy a strong position in specific countries.Such competition will continue to hold corporate prices in check for the foreseeable future. CWT forecasts cautious changes,ranging from rate cuts of 1-2 percentage points to slight increases, depending on the region. (See Pages 29-30.)It is worth noting that Avis will be limiting its new “non-cancellation fees” to special events like major conventions or sportsattractions, as well as specialty vehicles. The company may concentrate on offering discounts for prepaid rentals instead.24
  23. 23. Technology driving new servicesAmong the new services announced: More electric cars are now available for rental. Notably, Hertz has expanded its fleet of electric vehicles to China, making it the first global rental car company to offer electric cars on three continents, while Enterprise Rent-A-Car has expanded its electric fleet to 11 California cities, now operating the state’s largest network of “green” rentals. Herz has introduced 24/7 ExpressRent™ kiosks at airports and city locations in more than 30 markets, with plans to extend to a further 18 markets. Moreover, Hertz Gold members can sign up for “eReturn,” which offers electronic receipts and faster vehicle returns. Hertz has also introduced a Roam Express Rental e-Pass system in Australia, enabling automatic payment at road, bridge and tunnel tolls. Avis Budget Group is planning an “On Location” service powered by I.D. Systems’ proprietary wireless vehicle management system, which will enable corporate clients to rent and check in vehicles using a smartphone and also has the potential to automate vehicle data collection and streamline billing. The service will be launched initially in North America. Travel Management Priorities for 2012 | 25
  24. 24. More strategic meetings and events management Meetings and events trends look both conservative and innovative for 2012: conservative in terms of the scale of confirmed bookings, and innovative in the way that M&E will be designed and managed. Many more companies will adopt a strategic approach to meetings management, while using technology to enhance planning and content. Conservative bookings M&E spend typically reflects the corporate mood, with drastic scaling back during difficult periods and more flamboyancy during a boom. In 2012, therefore, a cautious 1% to 4% increase in group size and a 5.5% to 6.5% increase in spend per attendee isexpected in the United States, assuming economic growth of around 2%. Meanwhile, in Europe, the average group size isexpected to decline by up to 3%, accompanied by a 5% to 6% decrease in spend per attendee. In this region, the averagelength of events is likely to remain stable at just under three days.Another reflection is the type of M&E spend: international destinations generally fare better than domestic destinations duringtimes of growth. In 2012, international M&E bookings should increase in the United States, as they have done over the pastfew years, although remaining below 2008 levels. In Europe, Middle East and Africa, the proportion of international meetingsis expected to decline, representing an estimated 30% in the first half of 2012 compared to 40% in the second half of 2011.In addition to economic factors, political instability in some destinations, notably the Maghreb, may weigh heavily on the choiceof destination. Figure 13 Proportion of meetings and events held internationally (vs. domestic destinations) 40% 26% 22% 25% 28% 30% 29% 40% 30% 8 8 9 9 0 0 1 1 2 2 00 2 00 2 00 2 00 2 01 201 201 201 201 H1 H2 H1 H2 H1 H2 H1 H2 H1 Source: CWT Meetings & Events client data for Europe, Middle East and Africa26
  25. 25. A challenging supply environment in some marketsCompanies are also likely to remain cautious regarding lead times and booking terms. Although early booking is advisablefor a variety of reasons—from ensuring room availability, preferential rates and well-planned content to attracting maximumparticipation—many planners are preferring shorter lead times to minimize the risk of cancelling events and incurring attritionfees. Similarly, they are looking for more flexible terms and conditions, sometimes asking hotels to adopt the companys ownstandard contracts.Although it is difficult to make generalities in the hotel market, which varies considerably between cities, growing demandcombined with limited new supply will make occupancy a greater challenge in some key cities, and notably London duringthe Olympic Games. This situation will be intensified for larger groups. (See Pages 18-20 for more information on the hotelmarket.)More strategic M&E managementCWT noticed remarkable progress in strategic M&E management in 2011 and expects the trend to continue through 2012.Companies are acknowledging four main areas for improvement: savings, data/reporting, global consolidation and policycompliance (Figure 14). Figure 14 Top pressure points in strategic meetings management Need to reduce costs/increase savings 66% Need to improve data analytics 41% Globalization of strategic meetings and events 33% Need to improve event policy compliance 25% Source: Aberdeen Group (May 2011) Based on a survey of 115 companies (April ‒ May 2011)In particular, enterprise-wide consolidation is taking hold, especially in sourcing. Many companies are outsourcing more oftheir M&E management while making great progress in reducing the number of M&E agencies they work with—in some casesfrom 50-70 local players to a handful of partners worldwide. They are also more often consolidating M&E and transient spend,finding sufficient overlap to negotiate better deals with preferred hotels and other suppliers.More companies are also developing a consolidated M&E policy, including the use of preferred suppliers, standardizedcontacts and improved reporting. The results are not only savings but also enhanced service levels and mitigated risks. Forsome organizations, (e.g., in the pharmaceutical or public sectors), regulation on M&E spend and reporting is driving suchimprovements. Travel Management Priorities for 2012 | 27
  26. 26. More innovative, technology-driven M&EAnother key trend for 2012 will be using technology to facilitate M&E planning, control costs and offer an improved experiencefor attendees. The following points are worth noting: Growing adoption of strategic meetings management tools. Online registration tools are designed to save time for both attendees and meetings planners, and in the best cases are integrated with online booking tools to enable seamless travel bookings. According to a CWT survey,17 89% of a sample of companies were already using online registration tools in North America in 2009, compared to 39% in Asia and 24% in Europe, where the slower uptake was due largely to weaknesses in terms of local language capabilities and market presence. Adoption is increasing now that providers are addressing those problems. Increasing use of virtual meetings and “hybrid” events. For various reasons—cost, convenience and concern for the environment—companies are keen to explore alternatives to travel when appropriate. While small meetings by phone and videoconference have been common for years, larger-scale virtual arrangements are growing in importance for events that previously required participants to be present physically. These events range from company-wide training courses to industry thought-leader conferences, and may be designed specifically for online participation or take into account both physical and virtual attendance. More interactive formats, especially through the social web, networking and mobile apps. M&E organizers are finding innovative ways to build content and engage participants before, during and after events. For example, organizers may crowdsource key issues ahead of an event, publicize important messages using Twitter feed, conduct a live poll of participants, broadcast speeches on YouTube, share presentations, photos and other content on Facebook, and keep debate open on a dedicated website. Mobile apps can help participants with anything from finding their way around a venue to keeping tabs on different sessions and speakers, and in particular, near-field communication features are likely to be more common (e.g., QR codes containing information that can be read by mobile phone code readers). More sustainable events. Planners and suppliers continue to consider the impact of meetings and events on the environment and local communities. A growing number of companies include a long list of “green” criteria in their requests for proposals and consider creative ways to make events more eco-friendly without increasing costs. In 2012, a new milestone should be reached with the expected finalization of the M&E industry’s first comprehensive “green” guidelines, developed by the U.S. Environmental Protection Agency, the Green Meeting Industry Council and the Convention Industry Council’s Accepted Practices Exchange (APEX). In 2011, a final draft had already been released for industry review and comment, offering measurable criteria in nine areas of event planning and management: accommodations, audiovisuals and production, communication and marketing, destinations, exhibits, food and beverages, meeting venues, on-site offices, and transportation. Further, the new ISO 20121 standard for international event sustainability management is expected to be ready in time for the 2012 Summer Olympic Games.17 Meetings and Events: Where Savings Meet Success, CWT Travel Management Institute (2010)28
  27. 27. Rising prices in most categories and regionsAccording to projections made by CWT,18 higher prices are likely worldwide, although the situationwill vary considerably between regions. All categories will be impacted, with the possible exceptionof car rental, where prices may be flat or lower in some countries.Figure 15 summarizes CWT’s pricing forecast for each region and travel category, based on a statisticalmodel interpreted by CWT market experts. Figure 15 CWTs global pricing forecast for 2012 North America Asia Pacific +3.5% to + 4.1% +3.1% to +3.8% H1 +2.4% H1 2012 to + 3.1% 2012 -1.9% to +2.1% H2 H2 +2.6% to + 3.4% -0.9% to +0.0% 2012 2012 -1.0% to + 2.5% -1.7% to +3.9% Group Size +1.0% to + 4.0% Cost per attendee +5.5% to + 6.5% per day Europe, Middle East, and Africa +2.1% to +3.7% Latin America H1 + +5.7% to +5.9% 2012 0.2% to +0.9% H2 + H1 + 2012 0.1% to +0.8% 2012 9.0% to +11.8% H2 + -1.9% to +2.9% 2012 10.1% to +12.2% -2.2% to +5.6% +3.6% to +4.2% Group Size -3.0% to +0.0% Cost per All projections reflect anticipated price changes measured against attendee -5.0% per day to -6.0% prices for the same time period in the previous year. Per-country figures and more comments are available in the full pricing forecast on www.carlsonwagonlit.com.18 CWT Perspectives: 2012 Travel Price Forecast, CWT (October 2011) Travel Management Priorities for 2012 | 29
  28. 28. Some of the main highlights are as follows: A verage ticket price (ATP). Overall, travel buyers can expect air ATP increases to be limited to single digits, although they may be more substantial in some countries. In Asia Pacific, modest price increases are likely: 3.1% to 3.8% overall, with some of the lowest figures in Japan (0.1% to 2.7%). In Europe, ticket price inflation may be in a similar range (2.1% to 3.7% overall, with increases expected to be below average in Spain (1.1% to 3.2%) and above average in Germany (2.4% to 4.6%). Latin America will see some of the highest fare increases (6% on average), particularly in Colombia (8.0% to 11.4%). Finally, in North America, higher prices (3.5% to 4.1%) will accompany fuller planes as airlines scale back on growth plans. A verage daily room rates (ADRs). A general forecast can be made for different regions, although the most accurate comparison is made city by city since prices tend to be closely linked to occupancy. In Asia Pacific, for example, some of the highest ADR increases will be seen in Hong Kong (an estimated 9% on average in first half 2012). Overall, in the region, strong growth in supply is likely to limit rate changes (-1.9% to +2.1% on average). In Europe, ADRs will remain particularly steep in high-occupancy cities like London (especially during the 2012 Olympic Games), but on average are forecast to increase by 0.9% at most. Looking at specific countries, prices look almost certain to drop in Finland (by -0.7% to -7.0%), but could go either way in other countries (e.g., in Spain, where prices are forecast to change by -0.8% to +4.6%). In Latin America, substantial rate increases are expected (9.0% to 12.2%), with the highest in Brazil (20% in first half 2012, rising to 35% in second half). In the future, prices should ease as new supply becomes available in preparation for the 2014 World Cup and 2016 Summer Olympic Games. In North America, increases are expected to be higher in the United States than in Canada (e.g., 4.7% in northeastern U.S. vs. 2% on average in Canada). C ar rental prices. Buyers can expect flat or lower prices in many car rental markets worldwide. Forecasts for all regions range from a slight decrease to a small increase: -1.7% to +3.9% in Asia Pacific, -1.9% to +2.9% in Europe, Middle East and Africa, -2.2% to +5.6% in Latin America and -1.0% to +2.5% in North America. R ail ticket prices. Here CWT’s forecast is limited to Europe, where prices are expected to increase by 3.6% to 4.2% overall. In the United Kingdom, the average increase may be higher than the forecasted 2.5% to 3.3% due to recently announced increases of 6% for regulated fares and 5.9% for season tickets from January 2012. Further, available fares may double on some U.K. routes, according to market observers. It is also worth noting the recent decision in France to increase reduced- rate VAT to 7% (up from 5.5%), which will contribute to the forecast fare increases of 4.0% to 6.0%. M eetings and events. In Europe, Middle East and Africa, the average cost per attendee is expected to decrease by 5% to 6% as events organizers choose fewer international destinations in favor of domestic ones and the average group size stays the same or drops by up to 3%. In North America, ME spend is expected to continue making a steady recovery throughout the region, including for internal meetings, incentive trips and international meetings. Increases are also expected in the average cost per attendee (6.5% vs. 5.5% in 2011) and group size (+1% to +4%).30
  29. 29. Value in social media and mobile applications New technology, mobile apps and social media are improving the travel experience in practical ways as more business travelers stay connected through their wireless devices and new apps come onto the market. More widely used mobile apps to facilitate business travel The use of smartphones, tablets and other Internet-connected devices has risen dramatically over the past few years: a recent survey by PhoCusWright and Rearden Commerce,19 showed that 84% of business used smartphones for business purposes while traveling. Naturally travelers want to make the most of the available services and in particular the abundance of apps created specifically for travelers (as an indication, more than 40,000 travel apps are available in the Apple App Store alone). These apps are changing corporate travelers’ expectations and making it even more tempting for them to book out of policy. To promote traveler compliance while enhancing the traveler experience, companies are increasingly deploying dedicated travel management apps, especially for itinerary management and destination information. Travel managers can also promote traveler compliance while enhancing the traveler experience by recommending a selection of suitable apps. (See Page 45.)According to a CWT survey,20 business travelers particularly value itinerary informatoin, flight status updates and electronicboarding passes among the available mobile services, which may be delivered by SMS or app. Figure 16 Travelers’ ranking of mobile services by importance Travelers’ ranking of mobile services by importance Average ranking Itinerary information 1 4 1 9 19 31 35 2.2 Flight status updates 1 3 7 1 33 33 22 2.4 Electronic boarding passes 3 3 5 11 21 21 36 2.5 Safety and security alerts 6 20 35 22 10 5 2 4.6 Maps 5 22 26 32 9 4 2 4.7 Travel management 21 25 21 18 8 4 3 5.1 company contacts Tourist information 61 27 7 21 11 6.5 0 20 40 60 80 100 Respondents (%) Least important Most important 7 6 5 4 3 2 1 Source: CWT Travel Management Institute. Based on a survey of travelers (2,016 responses)19 Rearden Commerce website (November 2011)20 Business Traveler Services: Finding the Right Fit, CWT Travel Management Institute (2011) Travel Management Priorities for 2012 | 31
  30. 30. For travel managers, the focus in 2012 will be on offering mobile services that not only facilitate logistics for travelers but alsoimprove their experience at every step of the way, from making compliant bookings and accessing an up-to-date itinerary, toreceiving security alerts and being able to easily share feedback.Business travelers and social networkingIn 2012, the mobile web will also continue driving the use of social media—according to Nielsen,21 60% of apps used bysmartphone owners are related to social networking. With an estimated 800 million Facebook users and 10 million Twitterfollowers,22 social media will inevitably continue to penetrate the business travel world. CWT research23 dating from the beginningof 2011 shows that at least 17% of travelers in a sample of companies were already using social media for business travel—andmore than a third in most cases (Figure 17). The reasons cited were to look for/share information, network, receive feedback,get market intelligence and communicate with suppliers. Figure 17 Travelers’ use of social media for business travel in a sample of companies Travelers (%) 100 80 60 40 53 51 48 20 43 42 41 37 36 30 30 27 22 21 17 0 ds ds ls s l nt on i ng i ng gy ic a t ic ge r vi ce t ai i ng se Type of ati oo oo ul t nk olo g is era Re t ur fen me du c er g er g on s Ba n he m Lo be v Se c e on company de C te ch dc ufa dd v ir um um d n n en an ns ns Bio an an Ma ea nd dia Co Co e od ac tur Fo ros p ya Me c ul er g ri Ae En Ag Source: CWT Travel Management Institute Based on a survey of travelers worldwide (1,791 responses from companies with regional or global travel programs)21 Social Media Report Q3 2011, Nielsen (2011)22 Facebook (November 2011) and Twitter (September 2011)23 Business Traveler Services: Finding the Right Fit, CWT Travel Management Institute (2011)32

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