Corporate travel buyers are bracing for rising prices this year, according to the Global Business Travel Association's (GBTA) Foundation’s 2013 Industry Pulse: Business Travel Buyers’ Sentiment report.
GBTA reports business travel budgets are expected to remain tight, with international travel seeing the largest price jumps as companies ramp up demand to build their business globally.
Key findings from the GBTA's research include:
· Buyers expect prices to increase from 4.6 percent for domestic economy airfare (to $492/trip) to 8.3 percent for international economy airfare (to $1,318/trip).
· Hotel rates will see marked increases, from 3.7 percent for domestic hotels ($161) to 8 percent for international ($297).
· Buyers expect just a 2.9 percent increase of their budgets, which will struggle to keep pace with projected rate hikes, making smart travel management programs all the more important, GBTA says.
Companies in North America are more optimistic about business travel in 2013 but also bracing for higher travel costs only partially offset by modest budget increases, GBTA says.
Hotels, airlines and meetings venues will capitalize on growing demand to wield more power in negotiations with corporations that spend on business travel, GBTA says.
“Travel prices will be rising across the board, with international price growth especially robust as companies look abroad for opportunities,” said Joseph Bates, GBTA vice president of research.
“Travel buyers are being pushed to balance higher costs, the need to get travelers on the road, and corporate budget constraints. Strategic travel management programs will play a key role for companies dealing with a tougher negotiating environment and focused on getting the most out of their travel spending," Bates said.
International travel prices will experience the largest price jumps, signaling healthy demand and a recovery in global business travel, GBTA reports. International travel spending should comprise 30 percent of total business travel budgets according to those surveyed.
A majority of travel managers said higher rates (65%) and airline fees (60%) will be the top factors driving higher spending in 2013. Two in five travel buyers (42%) believe that higher spending will be driven by more trips and 33 percent expect to spend more because they are putting more travelers on the road.
Travel buyers are gearing up for a challenging negotiating landscape with hotels, airlines and meeting venues, GBTA says. In fact, nearly half of buyers (48%) think that negotiated discounts with hotels will be worse in 2013; 29 percent say the same about airline discounts and 28% about meeting venues.
Travel buyers are slightly more optimistic about the state of the economy: 37 percent feel it’s doing better, 48 percent believe it’s the same and only 15 percent say it’s worse. Half (50%) feel the economy will improve over the coming year and 47 percent believe the business travel industry will be in better shape as well.
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