Business TravelTravel Management

2012 Travel Forecast and Recommendations

By March 1, 2012 No Comments

Since the fourth quarter of last year, the Christopherson Business Travel Account Management team has been actively negotiating 2012 air, car, and hotel contracts for those companies that qualify.  Because the negotiation process is more viable this year, it has been necessary for us double-check every angle in order to secure the best contracts for a great return on investment for our clients.  Below are the forecasts and recommendation guidelines for 2012 that we use when obtaining the ultimate contract for you

Airfare

Forecasts:

  • Fare increases of 3-5%.  Significant fuel surcharges, prompted by rising oil prices, will ultimately determine this.
  • Capacity cuts that occurred in Q4 2011 are likely to be sustained into 2012, but over-supply may remain in some regions.
  • Additional factors threatening to push up total ticket prices include consolidated airline entities, distribution/card payment fees, and EU Emissions Trading System.

Recommendations:

  1. Negotiate hard on pockets of over-capacity in the market.
  2. Joint ventures and other airline consolidations will pose an increasing threat to managed air programs.
  3. A reliable way to reduce average ticket price is to find ways to avoid last-minute purchases.
  4. Be wary of significant over-commitment to volume or market-share targets during negotiation.

Car Rental

Forecasts:

  • Demand will continue to rise steadily and providers will keep inventory tightly aligned.
  • Rate increases will be minor (4-6%) thanks to strong competition, but total cost of rental will continue to climb (ancillary charges, taxes, insurance, fuel).

Recommendations:

  1. Negotiate harder on ancillaries and other charges, such as refueling premiums.
  2. Revisit car rental program before suppliers start to push up their rates.
  3. Book further in advance.
  4. Evaluate relative financial costs of private vehicle use vs. car rental.
  5. Set policy on ancillary items (i.e. satellite navigation systems, etc.).

Hotel 

Forecasts:

  • More chains will demand heavy rate increases in opening 2012 negotiations.
  • New capacity will be limited in N. America and Europe but significant in Asia-Pacific.
  • Rates will rise 2- 6% in general, but with another double-digit jump in markets like New York.
  • Demand will continue to rise, though at a lower rate than 2011.

Recommendations:

  • Be wary of dynamic pricing and be sure to negotiate more than 10% off the BAR.
  • Expand # of hotels in RFP process but concentrate on fewer properties in final decision.
  • Negotiate hotel contracts for transient travelers to cover small meetings (up to 50 room nights).
  • Insist on negotiated rate being an LRA rate.
Kevin Lee

Kevin Lee

Kevin is a Business Development Executive from Montgomery, Alabama. He has more than 15 years of experience in the travel industry, with expertise in higher education and government contract travel management. Connect with Kevin on LinkedIn.

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