Moderate Increases In The Costs Of Corporate Air Travel, Hotel Stays, Car Rentals And Meals - NBTA 2006 Forecast
The National Business Travel Association (NBTA) published its 2006 Business Travel Overview and Cost Forecast, predicting moderate increases in the costs of corporate air travel, hotel stays, car rentals and meals.
The main findings of the forecast are as follows:
Air
NBTA predicts domestic airfares will increase by six percent in 2006. Both capacity and numbers of passengers are on the rise. Fuel costs are high, and are expected to remain high throughout next year; taxes on air travel continue to add to prices paid for air travel. On the other hand, low cost carriers will continue to put downward pressure on fares, an effect illustrated in 2005 when many network carriers introduced flatter fare structures. Three carriers are in Chapter 11, and all airlines are working hard to minimize their costs. With distribution in the airlines' sights as a high cost that might be reduced, new entrants into the Global Distribution System (GDS) marketplace are putting pressure to traditional GDS companies to restructure airline costs.
Hotel
With hotel occupancy rates high and on the rise, NBTA forecasts that hotel rates will increase nine percent next year. Seventy-three percent of travel managers responding to the NBTA survey indicated they expect to spend more on hotels in 2006. The anticipated increase in corporate hotel expenditures reflects multiple factors, including rising room rates and the expectation of more than 40 percent of respondents that their companies will take more trips next year.
Although hotel occupancy rates and room rates are expected to continue rising, there is still room for travel managers to negotiate hotel value for their companies, both in discount rates and soft dollar considerations. In order to drive that value, some travel managers are concentrating their room nights with fewer properties in order to maximize their leverage.
Rental Car
Rental car companies are impacted by high costs for fuel and auto manufacturing, as well as rising usage taxes imposed by airports and/or cities. Those costs are counterbalanced by a high volume of business travelers, which is expected to continue next year. In 2006, NBTA forecasts that car rental rates will increase by five percent.
In addition to the predictions outlined above, the NBTA 2006 Business Travel Overview and Cost Forecast sheds light on current trends in travel management, including online booking and policy mandates.
Seventy percent of respondents to the survey indicated their companies are currently using an online booking tool, and nearly 25 percent plan to implement online booking in the future. Online booking provides travel managers with an additional resource for adding value through reduced transaction fees and integration of policy and process requirements, such as automated pre-trip approval.
Nearly 90 percent of travel managers responding to the survey indicated that their companies' travel programs are mandated to some degree. More than half (51.6 percent) indicated a full or 'hard' mandate, while 37 percent indicated a partial or 'soft' mandate. Travel managers who are empowered with some level of mandated program have an improved ability to travel leverage volumes to control costs and add value for their companies.
The report, based on a survey of 130 NBTA member travel managers, is available to NBTA members at no cost via the association's website -- http://www.nbta.org/Research/Surveys. Non-members can purchase the survey at a cost of $109; please contact educate@nbta.org.
The National Business Travel Association is the source for critical information on the business travel industry. For more than 35 years, NBTA has dedicated itself to the professional development of its members through advocacy, education and training, and networking opportunities. NBTA represents over 2,500 corporate and government travel managers and travel service providers, who collectively manage and direct more than $170 billion of expenditures within the business travel industry. For more on NBTA, visit www.nbta.org.
Air
NBTA predicts domestic airfares will increase by six percent in 2006. Both capacity and numbers of passengers are on the rise. Fuel costs are high, and are expected to remain high throughout next year; taxes on air travel continue to add to prices paid for air travel. On the other hand, low cost carriers will continue to put downward pressure on fares, an effect illustrated in 2005 when many network carriers introduced flatter fare structures. Three carriers are in Chapter 11, and all airlines are working hard to minimize their costs. With distribution in the airlines' sights as a high cost that might be reduced, new entrants into the Global Distribution System (GDS) marketplace are putting pressure to traditional GDS companies to restructure airline costs.
Hotel
With hotel occupancy rates high and on the rise, NBTA forecasts that hotel rates will increase nine percent next year. Seventy-three percent of travel managers responding to the NBTA survey indicated they expect to spend more on hotels in 2006. The anticipated increase in corporate hotel expenditures reflects multiple factors, including rising room rates and the expectation of more than 40 percent of respondents that their companies will take more trips next year.
Although hotel occupancy rates and room rates are expected to continue rising, there is still room for travel managers to negotiate hotel value for their companies, both in discount rates and soft dollar considerations. In order to drive that value, some travel managers are concentrating their room nights with fewer properties in order to maximize their leverage.
Rental Car
Rental car companies are impacted by high costs for fuel and auto manufacturing, as well as rising usage taxes imposed by airports and/or cities. Those costs are counterbalanced by a high volume of business travelers, which is expected to continue next year. In 2006, NBTA forecasts that car rental rates will increase by five percent.
In addition to the predictions outlined above, the NBTA 2006 Business Travel Overview and Cost Forecast sheds light on current trends in travel management, including online booking and policy mandates.
Seventy percent of respondents to the survey indicated their companies are currently using an online booking tool, and nearly 25 percent plan to implement online booking in the future. Online booking provides travel managers with an additional resource for adding value through reduced transaction fees and integration of policy and process requirements, such as automated pre-trip approval.
Nearly 90 percent of travel managers responding to the survey indicated that their companies' travel programs are mandated to some degree. More than half (51.6 percent) indicated a full or 'hard' mandate, while 37 percent indicated a partial or 'soft' mandate. Travel managers who are empowered with some level of mandated program have an improved ability to travel leverage volumes to control costs and add value for their companies.
The report, based on a survey of 130 NBTA member travel managers, is available to NBTA members at no cost via the association's website -- http://www.nbta.org/Research/Surveys. Non-members can purchase the survey at a cost of $109; please contact educate@nbta.org.
The National Business Travel Association is the source for critical information on the business travel industry. For more than 35 years, NBTA has dedicated itself to the professional development of its members through advocacy, education and training, and networking opportunities. NBTA represents over 2,500 corporate and government travel managers and travel service providers, who collectively manage and direct more than $170 billion of expenditures within the business travel industry. For more on NBTA, visit www.nbta.org.
