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Business travel continues to soar
February 18, 2011
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Corporate travel, as observed throughout the industry, has seen an overall increase in demand, says Carlson Wagonlit Travel (CWT)

According to its North American 2011 forecast for airlines, hotels, ground transportation, and meetings and events, as economic conditions continue to improve, suppliers in most segments of business travel have been able to successfully raise prices for corporate travellers, many for the first time in several years.

Air pricing

CWT forecasts North American domestic economy airline pricing will increase 3 per cent to 5 per cent, while domestic first and business class pricing will decrease 2 per cent to 7 per cent. Meanwhile, international economy and business classes are each expected to increase 3 per cent to 5 per cent, while international first class should increase by 4 per cent to 6 per cent. Factors impacting overall air pricing in 2011 include higher demand for travel, increases in crude oil prices, capacity reductions of 2 per cent domestically and 1 per cent internationally compared to 2010, and limited availability of highly discounted fares. These predictions are based on several macro-economic assumptions: crude oil prices will increase in the single digits over last year; seat capacity will not grow by more than 2.5 per cent this year; unemployment will remain in the high single digits throughout 2011, and more.
 		  

Hotel pricing

CWT forecasts average daily hotel rate increases of 4.7 per cent to 5.4 per cent in Canada this year. The highest increases will occur in the provinces of Manitoba and Saskatchewan, at 6.7 per cent to 10.1 per cent, which is well above the anticipated national average. Conversely, rate increases should fall below the national average in Central Canada (2.5 per cent to 2.8 per cent), offering some relative relief for organizations with significant travel volumes in this part of the country. When it comes to class of service, upscale 4 and 5 Crown properties are expected to raise prices more than the national average, at 5.1 per cent to 6.7 per cent. Vancouver, Toronto, and Montreal are expected to continue to be among the highest occupancy hotel markets, creating potential pricing and availability challenges for corporations.
 
Ground transportation pricing

CWT forecasts rental car prices will decrease 1.5 per cent to 2 per cent based on long-term corporate rates priced to earn and keep corporate business, even as tight inventory levels substantially drive up rental car rates for leisure travelers and companies without negotiated rates. Limousine and black car rental prices are expected to decrease 3 per cent to 5 per cent. Conversely, rail travel prices in North America are expected to increase 4 per cent to 7 per cent, as suppliers like Amtrak enjoyed record-breaking ridership increases in 2010.

Meetings and events spending

CWT forecasts corporate spending on meetings and events will range from 1.9 per cent to 2.3 per cent of an organization’s top-line revenues. Spending per attendee, per day will increase 7 per cent to 11 per cent based on returning demand combined with the limited number of suppliers of meeting services like hotels, food and beverage, etc.

CWT North America’s annual travel forecast is intended to provide guidance to travel buyers as they budget for and negotiate their managed travel programs each year. This information should be considered a supplement to an organization’s own annual forecasting and budgeting exercises, as every company’s experience will vary based on its unique travel patterns, specific supplier relationships, and more.

Carlson Wagonlit Travel (CWT) is a global leader specializing in business travel management. Present in more than 150 countries, CWT serves companies of all sizes, as well as government institutions and non-governmental organizations. CWT helps its clients derive the greatest value from their travel programs in terms of savings, service, security and sustainability, and is also committed to providing best-in-class service and assistance to travellers.


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