Business Travel News - October 26, 2009 - (Page 3)

NEWS Advito Sees Airfares Lead Slight Rise In 2010 Travel Prices BY SETH HARRIS Business travel prices in 2010 will begin to curl upward, primarily led by airfares, as suppliers work to regain pricing power lost in the last year from the economic downturn and subsequent plummet in travel demand, according to corporate travel consultancy Advito’s 2010 preliminary industry forecast, which it released to BTN this month. Globally, airfares are expected to increase anywhere from 1 percent to 6 percent compared with 2009 ticket prices, according to the forecast. North American economy class fares are expected to rise 6 percent on regional trips and 3 percent on intercontinental routes, with business class fares up 3 percent regionally and 5 percent on international flights. Upward airfare pressure is being driven by slowly improving demand and carrier capacity cuts, Advito vice president of business solutions Bob Brindley told BTN. “It will allow the airlines to start turning off some of the low-fare inventory that they held open for an inordinately longer period of time in 2009,” Brindley said. “It wasn’t so much the published fares changing that drove average fare decreases during 2009, it was that because of reduced demand carriers were leaving their low-fare inventory open for longer periods and selling more of their business at those lower fares to fill up their airplanes.” CONTENTS categories,” Brindley said. “Because of the capacity reductions and slowly improving demand, the pendulum will swing back to the airlines, and they’ll be able to start closing some of those low-fare buckets sooner.” Meanwhile, buyers will continue to see some pricing relief in major hotel markets. Advito forecasts average daily U.S. rates to decrease 0.9 percent year over year. ADR also is expected to de“Because of crease moderately outside of capacity reducthe United States. Advito tions and improvforecasts year-over-year ADR ing demand, the to drop 0.6 percent in France, pendulum will 1.2 percent in the United swing back to Kingdom, 3 percent in China the airlines. ” and 3.4 percent in India. Higher-tier properties ADVITO’S BOB BRINDLEY gained a larger share of room VP,business solutions nights from Advito’s clients because of low occupancy The longer window for available levels and deep discounts. In 2009, price discounts also enabled corpo- upper upscale and luxury properrate advance-purchase trends to re- ties accounted for more than half of main relatively steady. In 2010, buy- Advito clients’ room nights. Midscale ers should expect elongated low-fare properties have a little more than booking windows to shorten, he said. one-third. “Since the availability of lower“The price premium between upfare business was greater, more of scale, upper upscale and luxury is the bookings were falling into those actually less now than it was 18 months ago,” Brindley said. “The discounting moved all of the tiers a little bit closer together and reduced the premium clients were willing to pay when they were moving from one tier to another.” Advito forecasts U.S. car rental rates to rise by 4 percent compared with 2009 as car rental companies continue to reduce fleets and pass more fleet costs to renters. The forecast is based on Advito’s client rate projections for 2010, relatively steady oil prices of $60 to $70 per barrel and other economic indicators, including this month’s International Monetary Fund World Economic Outlook, which projects 2010 world gross domestic product growth of 3.1 percent and U.S. GDP growth of 1.5 percent year over year. ■ sharris@btnonline.com ■ ON THE RECORD “There is no evidence of any significant change in business travel demand, i.e. full-fare demand.” SOUTHWEST AIRLINES CHAIRMAN AND CEO GARY KELLY, PAGE 4 Inside Track: NBTA forecasts price declines . . . . . . . . . . . 4 Washington Wire: UAL, US Airways face safety fines. . 6 16 Profiles In Travel Mgmt.: Nokia changes behavior . . . . 8 EUROPEAN FOCUS Forum: Will Tate: Category management rocks. . . . . 12 Sabre’s Tom Klein EuroBTN: One-on-one with Sabre’s Tom Klein . . . . . . . 16 sees growth ahead. Car & Ground: Buyers adjust refueling policy. . . . . . . 18 Destinations: Beijing Convention Center to open . . . . 20 FIND DAILY NEWS UPDATES AND MORE AT WWW.BTNONLINE.COM Surcharge Irks Swedish Buyers BY AMON COHEN October 26, 2009 Issue 684 Vol. 26, No. 16 BTN (USPS 0728-870, ISSN 8750-3670) is published semi-monthly, except monthly in January, February, May, July and December, by Nielsen Business Media Inc.,770 Broadway,New York,NY 10003,tel.646-654-5000,and is distributed free of charge to qualified corporate travel buyers and travel agents specializing in business travel in the United States and Canada. The cost of a subscription to non-qualified subscribers is $119 in the U.S.; $135 in Canada; $135 in Mexico and Central America; $200 in South America and Europe; and $200 in Asia,Africa and Australia; payable in advance in U.S. dollars. Registered for GST as Nielsen Business Media Inc. USA GST No. 264513185. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Publications Mail Agreement No.40031729.Return Undeliverable Canadian Addresses to:DHL Global Mail 4960-2 Walker Road,Windsor,ON N9A 6J3. Business Travel News is a trademark owned exclusively by Nielsen Business Media Inc.Copyright © 2009 by Nielsen Business Media Inc.Reproduction of this magazine,in whole or in part,is prohibited unless authorized by the publisher.Editorial and advertising offices:770 Broadway,New York,NY 10003.For address changes (please include mailing label), single copy sales ($10 per issue including shipping and handling, prepayment required), subscription information, and other customer service inquiries,write to Business Travel News,P.O.Box 1187,Skokie,IL 60076,or call 847-647-7987 outside the U.S. POSTMASTER: Send changes of address to BTN, P.O. Box 1187, Skokie, IL 60076. Printed in the USA. Travel managers reacted angrily to the news that Air France-KLM on Dec. 1 will introduce a surcharge of 75 Swedish kroner (US$10.83) on card payments processed via the two airlines’ merchant agreements. Electrolux corporate travel manager Jo-Achim Hamburger, in fact, told BTN he would either stop using Air France and KLM in Sweden or switch to an invoicing arrangement with Electrolux’s travel management company. In a letter sent to travel agents on Oct. 1, Noud Duyzings, Air France-KLM country manager for Sweden, said the surcharge will apply to all transactions issued in Sweden by any at twitter.com/BTNonline IATA travel agency. Unlike the E7.50 surcharge introduced by KLM on lower fare classes in the Netherlands on Aug. 4, this surcharge will apply to all fares and booking classes. The only exceptions are corporate net fares, infant fares and miscellaneous documents. Follow BTN on Twitter Continued on page 10 Business Travel News www.BTNonline.com Monday, October 26, 2009 http://www.BTNonline.com http://www.twitter.com/BTNonline http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - October 26, 2009

Business Travel News - October 26, 2009
Contents
Inside Track: NBTA forecasts price declines
Washington Wire: UAL, US Airways face safety fines
Profiles In Travel Mgmt.: Nokia changes behavior
Forum: Will Tate: Category management rocks
EuroBTN: One-on-one with Sabre’s Tom Klein
Car & Ground: Buyers adjust refueling policy
Destinations: Beijing Convention Center to open

Business Travel News - October 26, 2009