Buyers will continue to focus on cost savings while balancing traveler experience in 2011

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Hotel spend increased in 2010 as average daily rates rose slightly in most regions. In 2011, companies will face the challenge of managing higher hotel prices combined with rising demand. Many travel buyers are negotiating hard with preferred hotels to maintain, if not reduce rates, switching to alternative properties if necessary. Improving traveler compliance, optimizing online adoption, driving air and ground transportation savings, and optimizing hotel spend are travel buyers…

Hotel spend increased in 2010 as average daily rates rose slightly in most regions. In 2011, companies will face the challenge of managing higher hotel prices combined with rising demand. Many travel buyers are negotiating hard with preferred hotels to maintain, if not reduce rates, switching to alternative properties if necessary.

Improving traveler compliance, optimizing online adoption, driving air and ground transportation savings, and optimizing hotel spend are travel buyers’ top priorities overall for 2011, according to an annual client survey conducted by Carlson Wagonlit Travel (CWT), a global leader specializing in business travel management. Balancing these cost-saving measures, more than 30 percent of travel buyers identified enhancing the traveler experience and/or addressing safety and security needs as additional key areas of focus this year. The results are available in a CWT report that also highlights major developments in the business travel market and corresponding advice for travel programs.

Travel Management Priorities 2011: Insights into the Rebound, CWT’s third annual survey gauging travel buyers’ top priorities for the year ahead, presents findings from a survey of nearly 200 managed travel professionals worldwide, conducted during the fall of 2010. The following graph reflects the resulting top priorities for travel buyers in 2011, in order of highest precedence:

Important ranking (Priority)

Improving traveler compliance
Optimizing online adoption
Driving air and group transportation savings
Optimizing hotel spend
Enhancing the traveler experience
Optimizing the travel policy
Developing key performance indicators
Addressing safety and security needs
Further consolidating the travel program
Tackling meetings and events
Making the program more environmentally friendly

Source: CWT Travel Management Institute

Based on a survey of 187 travel managers worldwide, September – November 2010

The CWT report also highlights key market developments impacting travel programs in the coming year. Specifically, increased costs across the main areas of managed travel will present challenges for buyers, including:

air fares are expected to moderately increase overall, as a result of higher base fares and surcharges, increased and additional ancillary fees, and new “eco-taxes” in some countries.
hotel rates will increase overall, but the specific amount will vary considerably by region and city, as well as by category of service.
in the ground transportation area, the cost of rail travel is likely to increase, though price increases will be limited where rail providers directly compete with airlines for business. Meanwhile, car rental prices will be contained in some markets, based on the long-term nature of negotiated corporate contracts, which are designed to win and maintain corporate business.
an upswing in meetings and events (M&E) activity means suppliers are less likely to offer deep discounts to M&E organizers. To achieve savings, more companies will need to implement strategic meetings management programs.

“The many travel disruptions caused by natural, political, and other external forces last year brought new and unprecedented meaning to the term ‘road warrior,’” Cathy Voss, executive vice president, Global Program Solutions, commented. “We are all increasingly aware of the potential stresses of being a business traveler; in 2011, companies will introduce technology to enhance the traveler experience and will look at additional ways to ensure safety and security.” At the same time, Voss acknowledged that travel buyers will experience continued pressure to limit cost increases for their organizations. While this may seem like a daunting task given the widespread cost increases CWT identified in its report, Voss shared that well-run travel programs can mitigate these increases in a number of ways. Consequently, effective travel management will be as important as ever in 2011.

Price increases are expected to be seen across most travel programs, creating tougher negotiations overall. Further, CWT anticipates ongoing challenges for travel buyers as recent developments in the distribution landscape leave the future efficiency of access to airline content, and therefore the associated costs, uncertain. When discussing deals with preferred suppliers, travel buyers are advised, as always, to look beyond price and consider aspects such as ancillary fees being charged by many airlines, hoteliers, and ground transportation providers, last-room hotel availability, and suppliers’ sustainability practices.

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Theodore Koumelis

Co-Founder & Managing Editor - TravelDailyNews Media Network | + Articles

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.