Despite positive market indications for business travel, 2014 got off to a rocky start thanks to Mother Nature. In the first quarter of this year, the Eastern Seaboard was shut down — literally — by winter storms. As of Jan. 1, there have been more than than 75,000 cancelled flights and record-breaking revenue loses reported by airlines.
And, with higher-than-average snow totals, ice, and some of the coldest temperatures in nearly two decades affecting much of the country during January, the combination of physical damages and business interruption costs have quickly aggregated into direct economic losses well into the billions of dollars.
This reverberates throughout the travel sector, including chauffeured transportation. As I write this one day before the International LCT Show in Las Vegas, operators nationwide are scrambling to deal with thousands of flight cancellations and stranded clients. So how will things look going forward, when all this ice finally melts?
Into the rest of the year, the Global Business Travel Association expects business travel spend to increase this year by 6.6% compared to 2013. To put this in perspective, from 2011-2012 spend increased by 1.6%. Then in 2012-2013 spend went up by 4.6%. So another sizable increase is something to welcome with open arms!
Group Travel Accelerates in 2014
The meetings business has been on an upward swing for the past two years and this trend should continue in 2014. GBTA expects group travel spending to rise by 6.5% to $124.5 billion based on a volume increase of 1.7%.
“This is the healthiest growth outlook for meetings activity since 2011,” said Michael McCormick, executive director of the GBTA. “Meetings are typically larger investments that require advance planning, and companies only make these decisions when they have confidence in the longer-term outlook for the economy.”
The corporate travel market is bracing for consolidation in ground transportation companies which they believe will drive chauffeured car service up. Another acknowledgement on their part that our rates will go up is the increased cost of the base cars.
Service reviews will play a key role in travel negotiations. One in two business travelers already posts reviews online. These reviews will hold more sway in the business travel program with the adoption of new corporate review sites.
Mobile Apps/On Demand Technology will be the traveler’s best friend with mobile/WiFi connectivity and a growing range of business travel apps.
Unmanaged travel programs will tempt companies with a low-control culture. The Gen Y business travelers are by nature social, mobile and keen to manage their own travel and expenses while on the go. Social media strategies will be implemented by two-thirds of the global travel managers as a key action to improve the traveler experience.
Business travel in the U.S. is responsible for $290 billion in spending and 2.3 million American jobs; more than $120 billion of this spending and one million American jobs are linked directly to meetings and events. For every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits.