Challenging economy not deterring corporate travel sector
Friday, March 1, 2013
As the Obama Administration faces the increasingly likely prospect that budget cuts known as "the sequester" will be unavoidable, recent data suggests that demand for corporate travel services remains strong. Business Travel News reports that the volume of global corporate hotel reservations increased by 8 percent year-on-year, indicating that despite lingering economic uncertainty, business travel continues to be a priority.
Data from Pegasus Solutions revealed that in addition to increasing hotel occupancy, rates executives paid for corporate suites also rose by 2.1 percent, according to the news source.. In North America, reservations and rates increased by 5.4 and 2.4 percent. However, occupancy and prices rose substantially in other regions, particularly Asia, which contributed to 11.2 percent growth in hotel reservations.
"Companies were anxious to get to business in January," said David Millili, chief executive officer of Pegasus Solutions, as quoted by the news source. He added that "global corporate bookings are expected to continue strong growth over 2012 into May, though at more moderate margins for most months. These bookings show rates will deliver marginal growth through March, potentially softening in April and May against prior year."
In light of rising hotel rates, many executives are choosing to stay in alternative accommodations, such as serviced apartments and corporate housing. While these options provide business travelers and companies with more flexibility, there is far less choice available when it comes to airfare. Fuel surcharges, airline consolidation and rising fares are putting additional financial pressure on corporate travelers, many of whom have little choice but to pay the increased rates.
USA Today reports that, following a previous rate increase led by Delta last week, major carriers are once again trying to raise their prices on corporate airfare. While this is unlikely to be welcome news to frequent fliers, it shows airlines are confident that despite the looming federal budget cuts, customers will continue to pay higher fees.
"If legacy airlines are worried the sequester will stunt business travel demand, they aren't showing it," Rick Seaney, chief executive officer of airfare comparison website FareCompare.com, told the news source.
With airfare and hotel rates rising across the globe, discerning executives and budget-conscious travel management professionals may want to explore alternatives to typical corporate suites at chain hotels. Serviced apartments and furnished extended stay housing offer business travelers the service and quality they expect at an increasingly competitive price point.