By Susan Avery
In 2016, travel procurement professionals are seeing airfares hold steady despite low oil prices, hotel room rates climb due to increased demand, and more competition for their business from auto rental and other transportation services companies.
For travel buyers in North America, business airfares will remain unchanged, with economy rates rising in regions where there’s more demand, according to the Advito 2016 Industry Forecast for Business Travel.
“More than ever, air market conditions vary by route,” says Bob Brindley, Principle at Advito. “So, it’s especially important for companies to understand precisely where they’re spending the most and whether cheaper alternatives exist.”
The American Express Global Business Travel Forecast 2016 shows increased competition and growth among budget air carriers helping to suppress price increases for short-haul flights in North America, while fares on long-haul flights are expected to remain relatively flat, particularly on routes to Asia and Latin America.
Wanted: Hotel Rooms on West Coast
Meanwhile, Advito expects hotel room rates in North America to rise 4% to 6%, as demand continues to grow and lack of supply puts pressure on prices. Buyers are more likely to see hikes in the U.S. than in Canada or Mexico. The forecast cautions buyers on hotels enforcing ancillary fees on such services as Internet access and early check-in.
Demand for hotel rooms in the U.S. is nearing levels not seen since 1995, say the Global Business Travel Association and Carlson Wagonlit Travel in their 2016 Global Travel Price Outlook. Cities where rooms are rising the most include San Francisco, San Jose and Los Angeles. In Canada, Toronto, Vancouver and Montreal, rates will increase moderately.
Meanwhile supply doesn’t seem to be keeping up in some markets. “While a healthy pipeline of new construction is on the horizon, the impact from added inventory is not likely to appear until after 2016,” finds the America Express Business Travel Forecast 2016. “In secondary markets, excess inventory will dampen price increases while competition for customers is pushing hotel brands to focus on property renovations.”
As for ground transportation, the American Express Business Travel Forecast 2016 reports that rates will remain relatively flat due to overcapacity, strong competition and continued focus on ancillary fees.
While consolidation in the car rental industry has led to oversupply and lower rates, the GBTA CWT 2016 Global Travel Price Outlook advises travel buyers not to overlook the possibility of higher prices in the coming year. However, the report also suggests that the category which although makes up 4% to 6% of a company’s annual travel budget (these figures are higher for those that use rail travel) is relatively unmanaged, ground transportation presents the biggest opportunity for travel buyers to consolidate the spend and reduce costs.
Please click on image to enlarge for viewing.
Susan Avery is Editor-in-Chief at My Purchasing Center. She writes articles, blogs and white papers and manages and creates other content for the online procurement and supply management publication. She produces and moderates roundtable discussions, podcasts, webcasts and video interviews. Susan has 30 years experience covering procurement and supply management for Purchasing magazine and Purchasing.com.
George E. Krauter
When one defines third-party MRO (3PMRO) success, one assumes that fundamental operations are being executed and that expectations are being met (i.e., ROI goals are surpassed} Read More
The US Labor Department reported in March of this year that there were 6.6 million job openings, a record high. Although most of us applaud these numbers Read More
Millennials working in the supply chain management field don’t fit the mold that the older generation assumes for them. APQC’s recent study Read More
Staples Advantage is the one supplier that offers all the business solutions you need, all with the expertise of a specialty vendor. Read More
It started in 1972 with an idea, a new concept in distribution. Today, Digi-Key Corporation is one of the fastest-growing electronic component distributors in the World. The stimulus for this growth is Digi-Key's customer-centered business philosophy… Read More
Procurement and supply management leaders have a seat at the table, and management’s expectations are high. But what do CEOs really want, and is purchasing delivering on these expectations? This webcast looks at how procurement and supply management … Read More
At world-class companies, purchasing’s influence touches just about every area of spending. But, how exactly do procurement teams get to the point where other departments approach them for help with sourcing such indirect categories as human resource… Read More