Virtuoso Travel Network sees travel market comeback

The latest study from the Virtuoso Travel Network sees international leisure and luxury travel on a pleasant trajectory, providing a glimmer of hope for the beleaguered travel market. Corporate travel, on the other hand, continues to lag, but that’s a function of the economy and companies that will err on the side of fiscal conservatism for a while.

The member survey by Virtuoso, which consists of travel retailers, reports that 39 percent of respondents se international leisure travel as most insulated from broader econmic pressures, and stays of three-to-five days have continued to go strong (according to 21 percent of respondents). Few see the long vacation and corporate segments as resilient – only 18 percent and 13 pecent, respectively. But, more than half see both the corporate and leisure markets bouncing back in the next six months.

“Many people are not aware that travel represents the world’s largest service industry; that it makes up 9.4 percent of the world’s GDP and 220 million jobs worldwide. Travelers benefit the world economy and deepen world understanding. We are happy to help people travel again while benefiting countries that rely on tourism revenue,” said Virtuoso CEO Matthew D. Upchurch, CTC.

Eighty-one percent of Virtuoso members have reported a year-over-year increase in future bookings, and 80 percent report that sales are up over the last three month.

Business travelers on the brink of scoring free internet access

Having to pay for internet access in hotels is nothing more than moronic. If the revenue is such a big deal, hotels should just slap the $9.99 — or whatever it is — onto the room rate and tell us they’re giving it away for nothing. But, nothing’s worse than spending $250 a night and having to pay another fee to connect to the web, which you’re going to have to do even if you’re on vacation, let alone traveling for business.

The slump in the travel business is giving business travelers more negotiating leverage, which they are using to score free access to the web. The need to put heads in beds, and business travelers still command the big budgets. Back in my corporate travel days, I’d spend $1,000 or more simply on the room … every week. Most leisure travelers don’t come near that on an annual basis — and my spend was modest compared to executives with the approval to satisfy more discriminating tastes.

So, you’d think hotels would want to keep business travelers happy, right? And since internet access is what’s most important to this group of hotel buyersSome upscale hotels, like the new Andaz chain from Hyatt, are rolling internet access into their rates, while major chains such as Hilton, Marriott and Starwood are giving in to business traveler demands but not changing their policies (to avoid setting a precedent they’ll be stuck with when the market recovers).

For the hotel business, giving up the internet money isn’t easy. The industry is at its 20-year low point, with revenue per available room-night (RevPAR) off 17 percent last year. The top properties suffered RevPAR declines of 24 percent. So, when Toni Hinterstoisser, general manager of the Andaz Wall Street, calls internet access charges “an easy way to make money,” it’s clear that the fee is a hard one to give up. Easy money is the best kind when the travel market is in the tank.

A gloomy travel market for 2010 will follow an ugly 2009

Everybody seems to want the travel market to recover next year, but it looks like more time will be spent in yards, instead. According to a new USA Today/Gallup poll, only 16 percent of us are going to hit the skies or crash in hotels more than we did in what will go down in history as a dismal 2009. Close to a third said they are going to spend less time in guestrooms and cramped plane seats. The main reason, of course, continues to be the state of the economy.

Slow improvements to the economy, according to some industry analysts, should push demand for tickets and hotel rooms higher – not to mention services related to the convention and meetings business. But, the baseline is set pretty low, with 2009 having been so weak. American Express, the largest travel agency in the world, doesn’t see a recovery coming anytime soon.

The bar has been reset, and it’s low. It will stay low for a while.

The big beast to be tamed in the travel market, doubtless, is business travel. Until the corporations start to send people on the road more liberally, the airlines, hotels and other businesses involved in travel will continue to feel the squeeze.

What’s going to happen by sector? See below.

Airlines: Industry analysts see hints that the market is turning, with demand for seats up year-over-year (by month) since May. United Airlines sees “a very encouraging trend line,” and US Airways notes a steady improvement. But, the latter continues that a decline of 30 percent to 35 percent in corporate spending has been a drag, and November was the first month in which it was up year-over-year. And, November 2008 wasn’t a tough month to beat.

Analysts believe that “even a modest rise in the USA’s gross domestic product,” says USA Today, will kick the airlines back into profitability. Gary Kelly, CEO of Southwest, isn’t that optimistic, telling the newspaper, “Business travel still lags, and I don’t know that I’m comfortable in reporting that we’ve seen any improvement in that market.” He doesn’t expect business travel to bounce back next year.

Hotels: What can I say that Melanie Nayer hasn’t? Not much, really. The past year has been miserable, with PricewaterhouseCoopers reporting occupancy plunging to 55.2 percent this year, from a 2006 peak of 63.3 percent. Next year, it’s expected to tick up only to 55.8 percent.

Room rates fell precipitously in 2009 relative to 2008, causing an average decline of 16.4 percent in the industry’s average revenue per available room-night. PwC expects 2010 to be worse than 2009, conflicting with the Business Travel Monitor report from American Express. But, there’s room for both views. Leisure travelers will have to spend a bit more, but hotels in business-heavy markets will still win some favorable pricing.

Conventions: Look for a slight increase next year – again, relative to a brutal 2009. For the good news about the conventions, you’ll have to wait until 2011 and 2012, says Roger Dow, president of the U.S. Travel Association. Through the end of 2010, approximately 40 percent of corporate and association meeting planners, reports USA Today, are likely to postpone or sink off-site meetings for the next year.

Corporate travel databases: give morale a shot in the arm

“Corporate,” “database” and “morale” usually don’t show up in the same sentence – at least not without some sort of negative word nestled in there. Images of tedious data entry are conjured, which does nothing for your state of mind while on the road. Yet, these words can be joined, and the resulting concept can be a gold mine for any company with legions of road warriors. Every employee accumulates knowledge while traveling. They learn which restaurants are best (and worst) in a particular city, and they develop coping strategies that their colleagues may find useful.

The curse of a travel-heavy company, of course, is that the employees don’t see each other often enough. When they do, talk turns to business first, and many of these tips remain hidden. A single place where the collective wisdom can be stored and shared can make business travel much more enjoyable tolerable while fostering communication where it might not exist otherwise.

I’m still stunned by the fact that I only saw the corporate travel database in action once during close to a decade of frequent business travel (frequent = around 40 weeks a year). It was pure genius, worked well and was used regularly. With the social media tools now available, it’s even easier than it was back then to implement the concept. Rather than a “database” in the traditional sense, a company could use a Facebook page, LinkedIn account or even a simple message board to share ideas, experiences and advice with coworkers.

So, how do you get a corporate travel database off the ground?

1. Someone needs to own it

No project gets off the ground in Corporate America without a “champion.” Clear it with whoever has the rubber stamp before pulling the trigger, and become the first contributor. Post regularly, and tell people about it – especially those who are going where you’ve already been.

2. Identify likely helpers

Find the eager beavers who will join the cause – every company has a few. Everybody wants to be heard, and this is a save and easy way to gain a voice.

3. Publicize your successes

As people take advantage of these shared tips, let everyone know, especially if there was a business impact. For example, “John Smith’s client loved dinner at Pomodoro Rosso … we was so tired of restaurants in midtown.”

4. Get granular

Simply being redundant with TripAdvisor and other user-generated content sites won’t help you out. Think local, unusual and relevant to the travelers in your company. You’re looking to solve a problem. So, find and contribute real on-the-ground intelligence. Late-night bars that will be open after a day of marathon meetings, for example, are both valuable and had to find when you’re new in town. The names of restaurant managers who are sympathetic to a little palm-greasing can be gold when you need a table on short notice. Every detail counts.

5. Respect boundaries

Know your company’s policies, and abide by them. If you use Facebook for your travel-sharing tool, be sure access is tightly controlled. Also, management needs to be on board, and the “right” people (different in every company) have to be kept in the loop. If your tool is developed properly, you’ll have one hell of an intelligence file. Just think of what would happen if it got into the wrong hands!

So many companies fail to tap the collective knowledge of their employees in so many ways. While a corporate travel database may not boost sales or share business information, it can help with morale and client entertainment (and, ultimately, relationships). Knowledgeable people become more productive, especially when they don’t have to cope with the quirks of a strange place while figuring out the intricacies of a new project. And, it’s always good to have at your fingertips the info you need to blow off a little steam. In the end, performance goes up, and people feel better about their jobs.

We have the tools at our disposal, and there’s no shortage of information. The only thing missing is the effort that pulls the two together.

Seven trends that will change business travel

Obviously, the recession is changing the travel business. You’ve heard it all before – and if you’ve flow or stayed in a hotel lately, you’ve undoubtedly seen it. Sometimes, the big issue of the day can mask others that will be important down the road. Travel industry research firm PhoCusWright has identified seven trends in the travel business that you’ll want to keep an eye on. These are the factors that will have a long and profound effect on the business of getting suit-clad travelers from Point A to Point B. And, let’s face it: these are the people who matter most to travel and hospitality businesses.

“We have identified seven essential trends with the potential to shake corporate travel management to its core,” said Susan Steinbrink, PhoCusWright‘s senior research and corporate market analyst. “Ranging from the environment to videoconferencing, supply chain management, mobile services and more, these trends are poised to impact the amount spent on travel, alter corporate purchasing priorities and touch every player in the corporate travel landscape, including suppliers, TMCs, technology providers, credit card companies, and of course the corporate traveler.”

1. Managing the “Triple Bottom Line”
The “bottom line” is easy enough to understand: that’s the profit a company earns for all its hard work. But, two more bottom lines have entered the corporate lexicon, involving the environmental and social implications of how they operate. With more businesses committing to corporate social responsibility – and even hiring professionals to plan and manage these efforts – expect to see businesses that send their employees on the road to start considering the environmental effects of doing so. After payroll, travel and expense (T&E) is the second largest controllable expense in the business world, and air travel is responsible for 7 percent of the world’s carbon emissions. This is an area ripe for corporate action.

2. Integrated travel booking and expense management
Webs of partnerships have arisen, making it difficult for corporate travel buyers to get a single view of where and how travel dollars are being spent. Acquisitions and alliances are reshaping the booking business and will ultimately deliver a seamless solution for tracking and managing pre-trip spending through post-trip reconciliation and evaluation. With every budget dollar being watched closely, this is a natural result in an expense-sensitive business climate.

3. Tracking the travel supply chain
Businesses investing in travel for their employees are watching the data more closely, a trend that will only gain momentum, according to PhoCusWright. Buyers will start to watch every aspect of supplier relationships, looking for ways to increase collaboration and reduce costs. Metrics will reign supreme, as decisions that can be quantified can make a company’s cash more productive. And, incentives and penalties for expense management can be brought to bear on employees.

4. Switch from the trip to the traveler
An abundance of data will cause travel companies to look past the transaction, which has been their major focus to date. A wealth of information available now enables travel suppliers to examine consumer behavior more closely, providing insights that can lead to future opportunities to maximize revenue (a situation that these companies need desperately right now). As airlines, hotels and other travel companies learn more about you, they can do a better job of selling to you, ultimately leading to better financial performance (and possibly increased traveler satisfaction).

5. On your devices
Seventy percent of business travelers are using internet-enabled handheld devices, making mobile a promising channel for both sales and customer interaction. Enhanced technology will improve multimedia over the device-driven internet and improve payment systems. These developments will reshape how the traveler interacts with the service provider, challenging existing habits, loyalties and tolerances.

6. Skip the trip
Expense management has pushed travel spending downward this year, and memories of this recession won’t fade easily. Alternatives to travel – including conference calls and video conferencing – are increasing in popularity and should continue to erode travel spending.

7. Little guys become big players
Smaller and medium-sized businesses spend plenty of money on travel, but they tend to lack the resources to centralize the purchasing and management process. As they seek to control travel expenses, many will turn to hosted and integrated travel booking and reporting systems to help them find inefficiencies and save some cash. As this happens, the opacity of this sector will melt away, giving travel companies a better view of how to service this high-value segment of the market.