Accommodation
THE POTENTIAL IMPACT OF MARRIOTT’S US$13 billion acquisition of US rival Starwood was discussed in the last edition of Buying Business Travel (issue 82) and nobody is expecting it to have sig- nificant impact on the market in 2017, particularly as completion of the deal was delayed for a couple of months by the Chinese competition authorities. The CWT/GBTA study predicts considerable regional variations, particularly within Europe: it sees hotel rates on the western side of the continent rising by 1.8 per cent next year, while prices are forecast to fall by 2.4 per cent in eastern Europe due to corporate travel continuing to be depressed by low fuel and gas prices for key destinations, such as Russia. Prices in North America are set to go up by 4 per cent in 2017 and by an even higher rate in West Coast
technology hubs such as San Jose, Los Angeles, Seattle and Vancouver. However, rates in New York are likely to increase more slowly than average – or even drop – due to an “oversupply” of rooms in NYC. Buyers are set to face a 6.9 per cent increase in UK hotel rates, according to CWT/GBTA, which says that the UK continues to be “the strongest corporate market in Europe” despite the fallout from Brexit and the growth in the supply of hotel rooms, particularly in London since the 2012 Olympics. But Advito is predicting a more modest 2-4 per cent increase in
rates at British hotels in 2017, adding: “The UK has become a cheaper and more attractive destination for foreign travellers. With more UK travellers staying at home, and hotels anticipating an influx of foreign guests, pressure is growing on average daily rates”. And there is further disagreement on UK hotel prices – Price
Waterhouse Coopers (PWC) takes a much more conservative view on next year’s rates. It is predicting that average daily rates in London will increase only by 0.4 per cent from £141 in 2016 to £142 in 2017, while the average hotel rate elsewhere in the UK will rise from £68 to £70 year-on-year. Liz Hall, head of hospitality and leisure research at PWC, explains:
“Uncertainty is dangerous. And lower confidence pre- and post- the EU referendum, as well as an economic slowdown, has impacted corporate budgets. Add to this mix brisk growth in serviced apart- ments and Airbnb listings, and a case of weaker demand chasing more rooms.”
Road and rail
IT MAY NOT BE THE SEXIEST PART OF THE BUSI- NESS TRAVEL EXPERIENCE, but it’s probably the sector currently undergoing the most significant change and disruption – thanks to the likes of Uber and its competitors. CWT thinks that this “intensely competi-
tive climate” will keep ground transport prices flat across the world in 2017, and even decreasing by around 0.1 per cent in western Europe – although it expects prices in the UK to rise by around 0.5 per cent next year. But looking beyond 2017, prices for
car services could be pushed upwards by several factors, including some cities making it harder for the ‘sharing economy’ model to continue its rapid growth through the enforcement of tighter regulations, which has already led to several high- profile court cases. “The outcome of these legal battles has
already caused Uber to back out of certain markets, as regulating the business model could be complicated and costly, impacting its current attractive, low rates,” says the CWT/GBTA report. Advito also thinks these legal hurdles in Europe could have an impact on the growth
58 BBT November/December 2016
of “ride-hailing” services, while traditional taxi operators and car rental firms will continue to improve their technology to take on the likes of Uber. “Daimler will merge its Mytaxi booking
app with Hailo to better compete with Uber,” says Advito. “Europcar now oper- ates car sharing in five European countries through mobility start-up Ubeeqo. It’s using the company to develop a multi-modal platform, so that Ubeeqo customers can rent a car, order minicabs, book chauffeur services and rent cars by the hour with a single app.” The picture for train travel is more fragmented and depends on each coun- try’s rail industry and level of government regulation. In the UK, regulated fares set by the government, which account for around half of all tickets, will go up by 1.9 per cent from January 2017 – a steeper rise than in 2016 when these fares rose by around 1 per cent. Elsewhere in Europe, more high-speed
rail links are being added, particularly in France and Spain, which will increase competition with airlines on short-haul routes around the region.
BUYINGBUSINESSTRAVEL.COM
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