What Matters Now in Corporate Travel 2012: Part II

In Part I, I took a look back at predictions from 2011 to see how hot button issues from last year played out. Now, let's turn the conversation to 2012.

Economic Concerns a Wildcard: Last year was a banner year for business travel. Building on a strong uptick in 2010, business travel demand in 2011 rebounded to levels not sustained since demand peaked in late 2007 and early 2008, according to the Global Business Travel Association's Business Travel Index. Can we sustain these levels into 2012? For the moment, the consensus sounds like “Yes… we hope so.” As the European debt crisis continues to threaten a major economy, the US is still scraping its way out of the recession. Asian economies (mainly China and India) are still growing quickly, but even that pace has slowed.

That said, the industry is seeing a clear push for international travel and a renewed appetite for premium-class seating and other amenities and services that enable long-haul travelers to be productive on the road. Influenced by business interests in fast-growing economies (Brazil, Russia, India and China, among others), companies are booking the flights and making deals happen.

Airlines – Alliance Contracts: With the demand for international travel on the rise, airlines are strengthening their marketing and financial arrangements with international air partners. Tighter alliances have emerged and major airlines are pushing buyers to negotiate with the entire alliance in order to receive the best deals. Some buyers see the benefits, with alliances offering one point of contact, better schedule alignment and consistent data across partners. Others find it limiting, preferring to work with individual suppliers of their choice. For the best discounts, however, the days of picking and choosing may be behind us.

Increased Airfares and Higher Load Factors: Buyers looking for relief on airfares in 2012 won't find it in abundance—for several reasons. While fuel prices were held in check in 2010 (contributing to record airline profits for the year), 2011 saw increased volatility that will continue into 2012. Fear of fuel price spikes will influence carriers to keep fares higher. Capacity discipline has been a key factor in controlling fares over the past two or three years, and it will continue into 2012.

Business Travel News recently reported that prior to AMR’s bankruptcy filing in November, Morgan Stanley estimated full-year aggregate mainline available seat miles from Alaska Airlines, American Airlines, Delta Air Lines, United Airlines and US Airways would decline 0.6 percent in 2012, after 0.7 percent growth in 2011. The bottom line is that travel managers and travelers should expect full planes next year. Plan to book in advance.

The Olympics Effect – London Hotel Market: While this may not be earth-shattering news, travel buyers who have not dealt with the issue of lodging in London for 2012 will be strapped as travelers enter this key business market and find very little availability. Even before the games begin, prices will be incredibly steep and rooms hard to come by with preparations underway in earnest and new hotels not yet online. BCD Travel told Travel Market Report that it had one word for corporations considering the idea of sending business travelers to London in July and August: Don't. For unavoidable travel around the Olympic season, try alternate cities and alternate hotel brands looking to lure volume away from the majors (but don't be surprised if their rates are really high, too).

Travel Managers to Approve Apps: This is my own prediction based on the amount of industry conversation and education around mobile travel applications—as well as the development of specific travel management apps and the acquisition of Tripit by Concur. Travel managers are becoming more versant in mobile travel technologies and the idea of approving a collection of travel apps within a program will gain traction this year. While there will still be concerns about compliance and there will be a learning curve about what apps run well on specific mobile operating systems, the effort will begin in earnest and emerge into the mainstream.

For whatever travel management challenges that come your way in 2012, good luck! And a great New Year to you!

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