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Even as prices and risks rise, corporate travel still a booming business

Date: 04/18/2016

It would take a lot to bring business travel to a grinding halt. Yet even rising fares in the midst of a global oil glut and multiple acts of terrorism this year alone have barely made a ripple.

While that speaks volumes about the resiliency of commerce, corporate travel purchasing managers are likely a nervous and harried bunch right now.

All this while we’ve seen an industry literally transform before our eyes because of the mobile technology revolution – making even the most cellular-challenged buyers savvy negotiators. It’s a nightmare for corporate travel purchasers grappling to reign in compliance while chasing elusive discounts and best prices.

First, let’s consider how plunging oil prices have helped travel buyers. (Queue the chirping crickets.)

Even as prices have continued dropping at the pump, consumers haven’t cashed in on any dividends at the airfare counter.

In January, while spot jet fuel prices in New York harbor had plunged almost 70 percent over the preceding 12 months, base airline fares stayed stuck at 2014 levels, Bloomberg Business reported. All this as news came U.S. airlines reportedly notched record profits in 2015. Meanwhile, the biggest airlines just recently raised fares for the third time in 2016.

According to a Global Business Travel Association (GBTA) report, business travel inflation last year hit “historically low levels due to the combination of a strong dollar and very low oil prices.” However, the GBTA expects “normal” price growth to resume in 2016 and 2017, at 2.6 to 3 percent, respectively.

But the bigger news in travel this year is global terrorism, particularly the bombings in Belgium in mid-March and the continued fallout from the Paris attacks in November 2015. Mounting fears of attacks and the subsequent disruptions and costs are keeping many travel buyers up at night.

According to the British Standards Institute (BSI), businesses now perceive terrorism as the most rapidly growing global threat to business continuity in 2016. Even cyber attacks and data breaches are trailing behind.

It’s become the new normal. Terrorism and its attendant costs are becoming widely acknowledged costs for doing business, GBTA Executive Director Michael McCormick recently told the Washington Post. As Supply and Demand Chain Executive magazine recently noted, BSI calculates global supply chains incurred $56 billion in additional costs in 2015 just from the disruptions caused in part by global terrorism.

Even in the midst of all that, U.S. and European business travelers remain, for the most part, not swayed, a GBTA survey recently found. Business marches on.

In other news …

Here’s a look at some of the current highlights in corporate travel, and a peak at some trends to watch out for.

  • GBTA predicts companies worldwide will spend $1.25 trillion this year on work-related travel. As The Economist recently reported, nearly 65 percent of American firms increased their travel budgets in 2015. GBTA also is predicting a 3 percent uptick in corporate spending on U.S.-originating business trips in 2016 and 2017.
  • Meanwhile, the big airlines may be muscling for more of your travel dollars in 2016 as regional carriers face some hurdles, Forbes reports.
  • CNN has noted that we may begin seeing a new generation of “hybrid carriers” that are somewhere between no-frills and full service. Stay tuned.
  • If you’re a corporate travel buyer, no doubt you’ve experienced the impact of the sharing economy on your budgets and travelers. Uber and Airbnb aren’t going away.
  • Expect perks to continue evaporating. Already, many corporate travelers are finding airlines increasingly stingy and restrictive with those frequent flier miles.
  • SKIFT, the travel industry’s self-described "largest industry intelligence platform," predicts 2016 will see a wave of experimental airfare pricing as “new types of airfares and bundle options” hit the markets.
  • While folks at the airlines seem happier, travelers are just the opposite. As the Palm Beach Post recently reported, complaints nationwide spiked more than 30 percent last year.
  • It’s no secret, but worth repeating here: Business travelers are absolutely addicted to their smartphones. As Travel Daily News recently reported, as much as half of all travelers regularly check their business emails and other work tasks while on personal vacations. A wide majority of people now consider smartphones their most indispensible travel companion, even more than their toothbrush, deodorant and driver's licenses, according to the Expedia/Egencia Mobile Index.
  • Business travelers continue to be dogged by paperwork, and it’s costing companies dearly. GBTA reports, for example, that the average cost to process an expense report for a single night hotel stay is $58.
  • And finally, we end on a bit of a dire warning. As the hotel reservation firm HRS tells Travel Daily News, purchasing chiefs are only spending five to 10 percent of their time on travel issues because more “system critical” tasks occupy their time. HRS advises travel bosses to consider investing a little more time managing relationships with their travel partners.



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