Business Travel News - July 7, 2008 - (Page 10)

BTN RESEARCH Hotel Development Booming In Emerging BRIC Markets BY MICHAEL B. BAKER Most major hotel companies are pouring capital into development in the emerging markets of Brazil, Russia, India and China, although consultants said limited supply and communication barriers in negotiations will continue to be a challenge for travel buyers establishing hotel programs in such countries. Kathy Pruett, senior director of consulting at BCD Travel’s consulting arm Advito, said having local representation within such regions is key. Some hotels might not understand the request for proposals or the procurement process. Although U.S. buyers can work with hotel brands that have a sales presence in North America, working with a local travel management company, hotel broker or consultant can help identify local independent properties that fit a program, she said. Of the BRIC countries, China was the top inter- est of buyers trying to establish global hotel pro- open 40 more in the next seven months and has grams, Pruett said. It also had the most modest 107 hotels in the pipeline, he said, adding that growth in average negotiated room rate of the the company plans on hiring 50,000 people in four countries in 2007 as compared with 2006, China over the next couple of years. according to the HRG Marriott International, 2007 Hotel Survey reHilton Hotels Corp. and leased earlier this year. Hyatt Hotels & Resorts HRG reported signifialso have numerous China cant hotel openings, parprojects to develop in the YEAR-OVER-YEAR CHANGE IN 2007 ticularly in financial capinext few years. AVERAGE NEGOTIATED RATES tal Shanghai and Beijing as Best Western has 30 it readies for the Olympics properties in China, 14 unBangalore -5% this summer. der construction and sevMoscow 11% InterContinental Hotels eral others under developMumbai 37% Group has opened 84 homent, CEO David Kong tels in China since 1983, said. “We’re focusing on Rio de Janeiro 28% according to Mike Fegley, three major economic Sao Paulo 9% vice president of global zones,” he said. “They’re sales from the Americas. selling very heavily with Source: HRG 2007 Hotel Survey Continued on page 12 InterContinental plans to BRIC CITIES AT A GLANCE U.S. Carriers Backing Off Of Contentiously Sought China Air Services ways estimated $50 million annual United Airlines and US Airways fuel expense to operate the route. are planning to delay the start of At today’s fuel costs, it would cost service to China by one year, as about $90 million. Delta Air Lines is seeking to trim its Additionally, US Airways said schedule between Atlanta and “there remains concern that the Shanghai beginning in November. global economy may be slowing and When U.S. and Chinese regulators that travel between the United last year approved carriers to near- States and foreign points, including ly double service between the coun- Asia, could decrease over the comtries by 107 weekly frequencies ing months and into 2009.” through 2009, the largest U.S. airUnited’s application, filed in April, lines vied for the few coveted slots— requested to shift its San Francisinitiating advertising campaigns, lob- co-Guangzhou startup deadline by bying efforts in Washington and a year to June 30, 2009. The U.S. encouraging corporate Department of TransAccess the clients to endorse their this spring 2008 Business Travel Survey portation the applicaapplications. approved see btnonline.com/survey Due to unprecetion, but with the right dented fuel prices and forecasts of to open the route authority to andemand softness, the China slot al- other carrier in the interim. lotments for a few airlines have gone United’s DOT filing also blamed from hot commodity to hot potato, high fuel costs and reduced demand as carriers now are trying to hold off forecasts. When the carrier applied on service. for the route, fuel cost $63 per barUS Airways in June became the rel, but since has surged beyond second domestic airline after United $130 per barrel, making annual fuel to file for a one-year extension, ask- costs for the route exceed $70 miling to delay its daily Philadelphia- lion, United said. It also blamed “the Beijing service launch to March subprime crisis in the U.S. and its 2010. Based on fuel costs at the time impact on the domestic economy” of its application for service, US Air- as it reduced demand forecasts. BY JAY BOEHMER Delta Air Lines was the first domestic carrier to gain a route authority under the new bilateral deal between China and the United States. The carrier on March 30 made good on its plan to launch daily service between Atlanta and Shanghai, but in June petitioned DOT to adjust its schedule “to reflect fluctuations in demand as a result of the deterioration in market conditions and skyrocketing cost of fuel.” Delta plans to maintain the daily schedule this summer, but wants to reduce daily flights in November to five services a week and return to daily service in May 2009. According to scheduled data pulled by OAG for BTN, carriers from both sides of the Pacific grew the total number of nonstop monthly seats between the United States and Mainland China by 11 percent between June 2007 and June 2008. In addition to Delta’s new service, Hainan Airlines this year added 5,772 monthly seats between Seattle and Beijing, while India’s Jet Airways added 10,608 monthly seats from San Francisco to Shanghai through service that continues to Mumbai. However, two Chinese car- riers scaled back capacity in the past year. China Southern trimmed Guangzhou-Los Angeles capacity by 27 percent, while China Eastern trimmed Shanghai-Los Angeles by 17 percent and Shanghai-New York service by 8 percent. “The reality is the cost for an airline to fly a plane that long a distance is so exorbitant that even if they increase prices, they’re not even able to make a profit,” said Mitch Cwanger, air practice leader for American Express Business Travel Global Advisory Services. “When you raise prices to cover these incredible fuel prices, you’re going to price yourself out of the market. That’s what the airlines are forecasting. That’s the reason they’ve decided to push back.” Though American Airlines, Continental Airlines and Northwest Airlines still plan to launch China routes allotted for next spring, several U.S. carriers, including the six legacy carriers, are seeking a two-year blanket dormancy waiver that would allow U.S. carriers to back out of any international service obligations, but maintain rights to routes. ■ jboehmer@btnonline.com ■ 10 Monday, July 7, 2008 www.BTNonline.com Business Travel News http://btnonline.com/survey http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - July 7, 2008

Business Travel News - July 7, 2008
Contents
Inside Track: U.S., U.K. Seek Entry Rule Reciprocity
Profile: Tyco Upgrades Program with Agency Tools
BTN Research: Emerging Market Hotels Boom
Forum: Delta-NWA Deal Creates Global Airline
Aviation: J.D. Power Shows Satisfaction Drop
Travel Mgmt Tech: Travelocity Builds Recruit Tool
Executive Dashboard: Hoteliers Foresee Discounts
Washington Wire: House OKs Watch List Redress

Business Travel News - July 7, 2008