Emerging markets present business travelers with unique challenges

Monday, November 26, 2012

Emerging markets present business travelers with unique challenges

Many organizations realize that the need to capitalize on emerging markets such as those in the Asia-Pacific region is crucial to growth and lasting success. While several of the major players in the business travel sector have been quick to provide services in Asia, Australia and New Zealand, the need for smart investments, particularly in the accommodations space, has never been greater for corporate travel managers. Serviced apartments and corporate housing will likely continue to provide executives with a cost-effective alternative to chain hotels, but increased competition in these regions could place the rest of the sector under tremendous financial pressures, according to The Sydney Morning Herald.

Supply and demand
The economic growth of the Asia-Pacific region observed by many financial and business experts is no doubt good news for many companies. With greater demand for trade, especially in light of the sluggish economic recovery reported around the world, emerging markets represent an unparalleled opportunity for forward-thinking organizations seeking to expand their operations.

However, the expected increase in business travel throughout the region is also likely to have a detrimental effect on costs associated with executive travel, particularly accommodations, car rentals and business-class flights. This, in turn, highlights the need for corporate travel managers to choose wisely when it comes to selecting service providers.

The news source reports that major Australian cities such as Perth and Brisbane have experienced severe shortages of business-class suites in chain hotels due to heightened demand from international travelers. As such, the popularity of corporate apartments could also rise as savvy executives seek to beat the rush and secure accommodations that fit their budgets and meet their expectations.

"There is a definite need for more properties in both cities," said Lyn Harris, national business manager for Voyager Travel, as quoted by the news source. "Reasonable corporate rates are becoming increasingly difficult to negotiate. The hotel industry is advising us that travel to Perth, in particular, now needs to be booked 14 to 21 days prior to travel to enable companies to secure their negotiated corporate rates."

Mixed blessings
Corporate growth in any global market is good news, if handled correctly. In Australia's case, the heightened demand for accommodations and other services associated with business travel is likely to boost the country's domestic economic conditions. Aggressive pricing policies have already been observed by experts in the Australian aviation industry, and while this may spur the creation of jobs and create a level playing field for consumers, it could lead to higher international rates - something of particular concern to executives.

The Australian Financial Review reports that, according to data from Carlson Wagonlit Travel (CWT), international airfare to Australia and New Zealand could increase by between 1.9 and 3 percent by the end of the year, with rises of up to 4 percent possible by the second quarter of 2013. The cost of car hire in the region is expected to rise significantly during this period, with analysts at CWT estimating an increase of around 7 percent.

David Padman, general manager of Travelscene Corporate, advised executives and travel management companies (TMCs) to try and remain flexible in order to secure suitable accommodations when traveling to Australia next year. He added that heightened pressures observed in the business travel market has meant that many companies now expect both their executives and TMCs to be more resourceful when securing accommodations and related services.

As demand for executive-class suites intensifies, serviced apartments and corporate housing are likely to become increasingly popular choices for discerning travelers.