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Corporate Travel Budgets to Remain Flat in 2004 According to WorldTravel BTI Survey

Hotel Booking Although the economy is slowly rebounding, it appears that U.S. corporations remain cautious with their 2004 travel budgets. WorldTravel BTI's annual client survey conducted in August 2003 shows 62 percent of 127 respondents plan no significant travel budget changes for 2004 and the remaining 38 percent plan changes of only -10 to +10 percent.

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Travel Agency In 2003, the top travel alternatives for those companies indicating a decrease in travel budget are telephone and video conferencing, foregoing the trip, Web meetings and driving.

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Cheap Hotel Corporate Travel Policies
In 2003, almost half of the respondents (42%) adjusted their company travel policies. Security procedure changes led the policy changes, followed by the emphasis on travel options, enforcement of preferred vendors and implementing a pre-trip approval process.

"Groople and Avis Budget Group continue to lead innovation in the industry with the launch of our group rental car product. The rapid growth in booking travel online and the size of the group travel segment is driving demand for group based travel tools, " said Mike Stacy, chief executive officer of Groople. "We have demonstrated our leadership in group hotels, breaking tool for cars, which will make their travel planning and booking much easier."

Flight Booking In 2004, two out of three respondents (68%) expect no change to their company travel program, while the remaining third are planning significant changes, the most popular including mandated and increased use of online booking tools, required use of preferred vendors and implementing online expense management tools.

Tim Wright, Fexco AllTravels head of business development and distribution, Once again, travel agents, consolidators and online travel services are strengthening their armoury in the battle to remain competitive. With PlacesToStay, they can offer more hotel content and therefore choice for their trade and consumer customers, which should help to increase bookings. well give you full booking access to a growing range of worldwide hotels offering competitive rates, and well collect and pay attractive commission. Its all about adding value.

Travel Agent Increasing employee adoption of corporate online reservation tools is a goal for almost half of the respondents (48%). Companies with annual air volume between $5.1 million and $10 million had an adoption rate of 45 percent for 2003. Companies with annual air volume between $10.1 million and $20 million had an adoption rate of 43 percent for 2003 with 2004 adoption goals targeted at 62 percent. Companies with annual air volume below $5 million had a 43 percent adoption rate with 2004 goals targeted at 56 percent.

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Hotel Chicago Air and Hotel Programs
Nearly three out of four respondents (70%) reported no change to the company's air carrier negotiation strategy for 2003. However, nearly a third of the respondents (30%) cited some changes including evaluating low-cost carriers as preferred vendors, seeking a joint contract within new alliances, mandating preferred carriers, implementing an airline performance tool and consolidating suppliers.

Online Booking WorldTravel is seeing a slight shift in the use of low-cost carriers in their clients' corporate travel program. While the majority of respondents still support the major network carriers, 30 percent report the use of low-cost carriers as preferred suppliers. The top four low-cost carriers are (in order of respondent ranking) Southwest Airlines, JetBlue, America West and AirTran.

Travel Health Insurance Managing the preferred vendor program within the company continues to be a challenge in today's environment of Web-based offerings to business travelers. Half of the respondents indicate that driving traveler behavior is a concern in their program. Actions taken to encourage travelers to participate in the company's preferred supplier program are pre-trip approval, non-reimbursement of expenses and mandated use of the corporate travel agency.

Hotel Reservation The majority of companies (82%) have a negotiated company hotel program. Forty-four percent indicate the hotel program includes less than 100 hotels and 22 percent include 101-300 hotels. Only a small number of companies (12%) manage programs with more than 300 hotels. According to the survey results, there are three primary approaches to meet hotel negotiated goals: require hotel bookings through the corporate travel agency, mandate the hotel program or strongly encourage booking through the hotel program ─ but do not mandate.

London Hotel Booking 2004 Predictions
Facing a challenging year in 2003, the corporate travel industry dealt with numerous incidents that strongly impacted the industry including: the war in Iraq, SARs outbreak, terrorist threats and a weak economy. WorldTravel believes that the corporate travel industry will see an upswing in 2004. An increasingly stable economy indicates an increase in consumer spending and corporations will no doubt want their "road warriors" on the move to leverage the upswing. Face-to-face meetings will reclaim its status as the preferred way of doing business.

Discount Travel "Economic forecasts are showing that the economy will improve in 2004 and with this positive news companies will be eager to get back on the road," said Danny Hood, president, WorldTravel BTI. "While we will see an increase in passenger traffic, companies will be smart and cautious about their travel spending."

Orlando Hotel Airlines
WorldTravel is forecasting that global passenger traffic will increase by four percent with domestic traffic increasing by five percent and United States international passenger traffic increasing by nine percent. Barring the advent of another health or diplomatic crisis in 2004, WorldTravel believes the origination of international flights from the United States will also increase.

Booking Agency As the airline industry continues to evolve its business model, expect to see a mild overall increase in airfares. Domestic long haul fares will increase between two and three percent and international business class fares will increase by three to five percent. Low-cost carriers, however, bring competition to the network carriers, prompting what WorldTravel believes will be a decrease in short haul fares of approximately two percent.

International Travel Medical Hotels
Domestic transient hotel rates will remain flat in 2004 due to excess capacity of new hotels built prior to the weakening of the economy and the proliferation of Internet technology including hotel merchant programs. Overall negotiated rates are flat to slightly up year over year. Provided that there are no major changes in the political and economic climates, international hotel rates should see a slight increase of two to three percent.

New York Hotel "As the hotel chains and properties economies improve, we will see a mild skirmish over the 15-25% merchant model profits that have been claimed by the online travel agencies over the past two years. The hotel properties have been glad to give these net rates to the middle- man because they were grateful for the contribution to overhead during the tight economy. However, the big five chains would like to reclaim some of these profits as conditions improve. I would predict the merchant models will flourish, but the hotel chains and properties will want the online players to meet in the middle somewhere," said Hood.

Online Travel Booking Car Rentals
In 2004, the car rental sector will remain moderately flat with a one to two percent increase in rates. "Travelers have been driving the four-to-five hour destinations over the past two years as an alternative to flying. They were accurate in stating that the total time was the same when the commute to the airport, the security time and the airport downtime was factored in. However, the frequent traveler express lines, the TSA learning curve and the short haul deals have decreased the driving time decision by at least an hour. Other than Monday morning for 8-9 a.m. flights, the security lines have improved dramatically," noted Hood. "Driving and trains in the Northeast corridor will continue to become a preferred mode of business travel for regional trips due to cost savings incurred and company policy changes."

Travel Medical Insurance The WorldTravel BTI Benchmark Survey was conducted using an online survey in August 2003. The survey received a 36 percent response rate with 127 respondents. Additional information on the WorldTravel BTI 2003 Benchmark Survey is available on the Consulting page of www.worldtravel.com .

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