EARLY HOPES THAT THE European hotel sector bounce- back might continue into 2012 now look unlikely to be realised, says Pricewaterhouse Coopers’ European Cities Hotel Forecast, which prefers the term “resilience” to “recovery”.
In major cities, room rates in
Stockholm, London and Amsterdam are expected to show the biggest increases – at 9.5 per cent, 5.7 per
cent and 4.4 per cent respectively, but public sector spending cuts will take their toll in Belfast, where average daily rates are expected to drop by 6.5 per cent. In the US, hospitality industry number-crunchers at STR Global are predicting a 6.8 per cent rise, to US$109.16, in the average daily rate, and a 1.7 per cent rise in occupancy, which will still amount to only 59.5 per cent. Travel management company Egencia says supply in the Asia-Pacific region is still insufficient to meet demand but, with new hotels coming on stream almost daily, the gap is closing. However, the company warns of further big room rate increases in both Hong Kong and Singapore.
says it’s not just a case of getting more travel bang for the budget buck. “It’s not merely a case of costs,
48
but also the demand from SMEs [small- and medium-sized enterprises] for personal service from a travel management company that values their business,” he says. “Our average customer spend is £120,000 per annum. Most conventional travel management companies would find it difficult to prove value on a client of that size.” Milne also sees yet more evidence of belt-tightening. “Clients,” he says, “will continue to downgrade from business class to premium economy and focus on carriers with frequent flyer programmes as they want to feel they are getting something extra in return. “More clients will fly via routes where airport taxes are lower. APD [air passenger duty] is not the only tax to impact on business travellers – all taxes associated with air travel are high and clients are seeking ways to reduce costs if they can fly indirectly to a destination via an airport with lower rates.” He adds: “We have seen a significant move towards downgrading the class of rail travel, in particular travel policies that no longer allow first class, which will continue into 2012.” The need for savings will become greater over the coming year, because
prices are only going to head north, says Christa Degnan Manning, director of American Express Global Business Travel’s Expert Insights research. “As business travel is both an essential part of global economic performance as well as an enabler of business growth, we expect the combination of demand and effective travel supplier yield management to push up rates business travellers pay up across the board in 2012,” she warns. Again, this may mean a sharper focus on the role of TMCs. Manning says: “As travel suppliers have learned their lessons of the past two recessions, managed travel programmes have to help companies strike the balance between increasing budgets to keep pace with price hikes and business opportunities, while reviewing policies and tools
Maurice Veronique, chairman and chief executive, The Appointment Group “The economy is going to continue to be very challenging and corporates will be looking at squeezing every penny out of their travel budgets. On a lighter note, I predict that an airline will be launched in 2012 that is ‘smoking’ only, allowing all the stressed-out executives to puff their way across the Atlantic.”
TRAVEL RAIL
JANUARY’S FARE INCREASES – regulated fares rises were capped at 6.2 per cent in chancellor George Osborne’s autumn statement – may have attracted the headlines, but the big rail industry story of 2012 won’t start until the following month and won’t end until mid-summer. In February, the Office of Rail Regulation (ORR) is due to “offer guidance” to the governments in Westminster and Edinburgh on which rail projects should be adopted – and how much money should be set aside to pay for them – for the five-year period from 2014 to 2019. The governments’ responses
are expected some time over the summer, when the politicians will outline what they expect the rail industry to provide. They are also obliged to send the ORR statements of funds available (SoFAs), spelling out how much subsidy the sector can expect from the taxpayer. In an Initial Industry Plan
(IIP), rail sector bodies, including the train operators and Network Rail, have said that with government support and investment, they could cut the cost of running the railway by £1.3bn per annum by 2019. Those savings, the industry argues, could help reduce levels of subsidy.