Hotel Market for Corporate Travelers Remains Soft

Egencia, an Expedia, Inc. company, unveiled its 2010 Corporate Travel Global Benchmarking Study, evaluating the current business travel landscape and corresponding supply environment for air, hotel and car inventory. Focusing on top domestic and international business destinations in North America, Europe and Asia-Pacific, Egencia analyzed industry trends, supplier research and capacity implications in Q1 2010.

The study validates themes uncovered in Egencia’s 2010 Forecast and Hotel Negotiability Index, including that the hotel market for corporate travel has experienced significant decreases in Q1. In addition, Egencia also surveyed more than 400 travel buyers in North America and Europe regarding travel program expectations, policies and challenges.

“We’re seeing a different pricing picture compared to this time last year,” said Noah Tratt, Vice President, Supplier Relations, Egencia Americas. “Corporate travelers are returning to the air and road, but companies are still seeking to control spend. Given the increased discipline of airlines in reducing capacity, we believe the biggest cost savings opportunity for corporations is found with hotels.”

In North America, as a result of the economic downturn and resulting decrease in travel in 2009, airlines have maintained capacity discipline into 2010. With increased demand for business travel in Q1 2010, this has resulted in an increase in average ticket prices. Higher fuel surcharges, reduced competition on many routes and the dramatic slowing of route expansion has also resulted in upward pressure on ticket prices for major business destinations in North America.

European airlines are also maintaining their capacity discipline in 2010. Though European businesses are slowly increasing travel demand both domestically and internationally, this tighter control of capacity has resulted in an increase in ATPs for several business destinations, though the picture is not as clear-cut as North America. Conversely, prices are being driven downward by a number of factors including perceived economic vulnerability of Euro-zone. Increased competition from a number of low-cost carriers and decreased passenger load factors have also resulted in downward pricing pressure for corporate travel.

According to respondents of Egencia’s survey of more than 400 travel buyers in North America and Europe, 56 percent of North American buyers and 45 percent of European buyers expect their travel volumes to increase during the remainder of 2010, with 20 percent (North America) and 15 percent (Europe) planning to change their travel policies during the year. Additionally, 40 percent of North American travel buyers and 49 percent of European travel buyers said they will negotiate more this year than they did in 2009.