Companies to Pay More for Plane Tickets and Hotel Rooms Next Year

Companies in North America (NA) and Asia Pacific (APAC) are expecting airfare and lodging rates to climb next year and should brace for these increases by upping their travel budgets, according to an Oct. 26 press release form the Global Business Travel Association (GBTA). 

Negotiations with airline and hotel suppliers for 2012 were tougher this year, with buyers citing stricter volume commitments and expecting less generous discounts, according to a recent survey of NA- and APAC-based travel buyers by the GBTA Foundation, the education and research arm of the GBTA. 

Highlights from the GBTA Annual Industry Pulse Report include:

• With the exception of domestic car rentals, buyers expect average airfares and hotel rates in North America to rise between 3 percent and 5 percent in 2012.  Buyers expect average rates/fares to rise between 4 percent and 6 percent in Asia Pacific.

• Buyers expect domestic airfares to increase the most in 2012:

- North America – 5 percent projected increase to average fare of $487
- APAC – 5.3 percent projected increase to average fare of $412

• Buyers also expect fares to rise in other airfare categories:

- International economy – N.A: 4.4 percent to $1,193; APAC: 5.1 percent to $1,146
- International business class – N.A.: 3.9 percent to $4,929; APAC: 4.6 percent to $3,535

• Projected increases for domestic hotels (N.A: 4.1 percent to $165; APAC: 4.9 percent to $181) and international hotels (N.A: 3.3 percent to $262; APAC: 4.4 percent to $618) are not far behind.

• In both regions, higher travel rates (N.A: 69 percent; APAC: 52 percent) and airline fees (N.A: 58 percent; APAC: 53 percent) were most often cited as the primary factors driving increases in travel budgets.

• More than half of buyers in North America (53 percent) said terms for 2012 were stricter relative to volume and market share thresholds from airlines.  Somewhat fewer than half of respondents (45 percent) felt this way in APAC.  

• A substantial majority of buyers said the discounts yielded in negotiations are expected to be the same or worse in 2012 from airlines (N.A.: 74 percent; APAC: 77 percent) and hotels (N.A.: 88 percent; APAC: 76 percent).

• International travel is a major force behind the increase in travel spending because international trips typically cost more.  Buyers projected international spend would comprise a healthy portion of total travel spend in 2012 — 32 percent and 54 percent respectively for NA and APAC.

The 2012 Industry Pulse: Business Travel Buyers’ Sentiment – North America and Asia reports surveyed 307 and 409 corporate travel buyers in their regions respectively in September 2011. The report is free of charge to all GBTA Members (gbta.org/foundation/resourcelibrary). Non-members may purchase the reports through the GBTA Foundation at [email protected].

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