Business spending on the up
According to Carlson Wagonlit Travel and the Global Business Travel Association (GBTA), global spending on business travel will increase by up to 6.9 per cent this year, and 8.6 per cent the following year. Research by the two travel organisations found that in 2013, global business travel spending reached $1.1 trillion (£569 billion), with the growth credited to emerging markets such as China, India and Brazil. Russia, however, was highlighted as the country that will see the highest growth in business travel spend at just over 13 per cent year-on-year. At the opposite end of the spectrum is the US, which is expected to register a decline in growth rate compared to 2013.
In the latest report from Carlson Wagonlit and the GBTA, it is predicted that airfares will rise gradually over the next 12 months by around 2.2 per cent, which, continued the report, is due to ‘rising demand and favourable cost structures’. Latin American airlines will see the most significant price increases, with an average of 3.5 per cent. According to the research, hotel suppliers will benefit from a strong negotiating position in 2015: “This improved outlook could lead to greater pressure on negotiated rates for travel managers and buyers, and globally, prices are expected to rise by as much as 2.6 per cent.” Latin America was once more highlighted as leading the price increases for hotels.
Joseph Bates, vice-president of research for the GBTA, commented: “Risks to the forecast include the escalating Ukrainian crisis, declining European inflation, burgeoning debt in China and oil price shocks, which could all potentially have a negative influence on travel demand and pricing … so travel managers are advised to consider contingencies for these risks in their planning.”
Optimism abounds
Supporting the positive predictions above is research from travel management firm AirPlus International, whose latest study asked 1,500 travel managers for their views on how the current economic situation will affect business travel rates. The company found that the share of firms expecting a positive outlook on business travel has risen by five per cent to 17 per cent of respondents. Regions such as South America and Eastern Europe are the most optimistic, while other regions, such as Asia Pacific and South Africa, seem to have a more negative view of the future. Of the respondents predicting positive moves over the coming year, 83 per cent said there will be more business trips, 45 per cent expect business trips to last longer, and more than a third anticipate the relaxation of travel guidelines in their own organisation.
In a sign that airlines are also relishing the prospect of more business travellers, low-cost airlines are moving to attract business travellers. easyJet’s success in attracting business travellers has prompted rival airline Ryanair to target the same travellers, recently unveiling Ryanair Business Plus, which offers a tailored suite of travel benefits. Ticket flexibility, fast-track at security, priority boarding and premium seats are all on offer to budget business travellers. Kenny Jacobs, chief marketing officer for Ryanair, commented on the move: “Businesses are becoming smarter with their travel and over 25 per cent of our customers already travel on business. We now offer even more business routes, connecting Europe’s major cities with additional flights and improved schedules, ensuring great savings for businesses of all sizes.”