Business travel to flatline in 2015

Business travel to flatline in 2015
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Airlines, hoteliers and ground transport companies are expected to feel the pinch from a ‘subdued economic growth’ forecasted for Asia Pacific in 2015.

According to the latest American Express Global Business Travel Forecast, hotel and ground transportation prices are predicted to be flat to slightly higher next year, and domestic airfares are predicted to plateau while international rates to drop.

Contributing to the cautious business outlook is decelerating growth in China combined with a slowdown in the resources sector.

With Australian companies expected to tighten their belts on corporate travel policies, in particular in the mining and financial services sectors, new business class offerings coming online will face stiffer competition with companies expected to review staff entitlements.

Qantas and Virgin are expected to keep fares low – and expected to flatten out as capacity wars continue, and Australia’s long-haul economy will drop by 2% partly due to increased competition from Asian carriers into the region.

“Economic growth in Australia next year is expected to be modest, as is consumer spending and therefore overall business sentiment. Business leaders still recognise the importance of business travel, but also will want to make wise decisions around expenditure in 2015 and be able to demonstrate a clear return-on-investment,” American Express Global Business Travel, Asia, general manager, David Reimer said.

“Next year in this region rates are likely to rise modestly across air, hotel and ground transport. We advise our clients to be aware of rate and fare movements and the impact that this can have upon budgets, and review their travel policies and practices accordingly.”

It’s not all doom and gloom however, as hotel occupancy rates in Australia are reportedly back to pre-2008 levels. 

Major cities in Australia will take home the biggest win with new properties entering the market in 2015, expecting to drive room rates up as much as 5%, leaving “little negotiation space for travel managers who are advised to work with travel management companies to take advantage of their volume-based supplier negotiations,” according to the report. However, in international markets with high capacity cities such as hotel-saturated Shanghai, “there is more room for negotiation”.

“Savings across hotels in some parts of Asia can be challenging due to ongoing high occupancy rates. However businesses that broaden the range of hotel properties within their policy, negotiate with particular chains or even consider tiering down from five-star to four-star offerings, can reduce costs.

“In cities where demand for hotel rooms is particularly high and there isn’t much flexibility with rates, businesses can consider negotiating secondary benefits such as free parking, internet or meals, to realise additional savings,” Reimer said.

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