egencia 2010 forecast

8/9/2019 Egencia 2010 Forecast

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Egencia 2010 Global Outlookand Negotiability Index

October 2009


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Section I: 2010 Corporate Travel Forecast

North American Airline Overview

Global Lodging Overview

European Airline Overview

APAC Airline Overview

U.S. Car Rental Overview

Section II: Negotiability Index

Section III: US Travel Management Trends


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Top Business Destinations - North America YOY 2010 vs. 2009

Air prices for corporate travel to increase 5% 10% YoY for these topbusiness destinations

Lodging prices for corporate travel to decrease 0% - 5% YoY

Market ATP ADR

Atlanta -1% 3%

Boston 2% 2%

Calgary 3% -1%Chicago 3% -2%

Dallas 5% -3%

Denver 9% -5%

Hong Kong 1% -4%

Houston 6% -4%

London 3% 1%

Los Angeles 4% -1%

Minneapolis 5% -1%

Montreal 4% -2%

Market ATP ADR

Munich -2% 1%

New York 5% -4%

Paris 2% 1%Philadelphia 11% -4%

Phoenix 12% -6%

San Diego 16% -6%

San Francisco 4% -2%

Seattle 10% -3%

Tokyo 1% -1%

Toronto 5% 0%

Vancouver 2% 0%

Washington DC 9% -2%


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Pricing Landscape North America

Upward Pressure Positive economic indicators may

drive increase in corporate traveldemand

Airlines to maintain capacity

discipline while focusing onimproving the margins

Merger of Northwest & Delta, andFrontier & Midwest

Inflation risk to remain in 2010

Lower exchange rate of USD toincrease cost of international travel

AIR

Downward Pressure Corporations are still price

sensitive

Continued depressed demand forfront of the cabin travel

Increased low-cost competition insome key corporate markets

New fees & ancillary revenue mayprovide an ability to reduce fares


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Pricing Landscape Global Hotel

Upward Pressure Companies expected to reinvest in

in business travel

Key sectors expected to regainsome strength (pharma, financials)

Corporations to increase spend onmeetings / conferences

European business hubs willbenefit from the increased demand

H

OTEL

Downward Pressure Lower air capacity brings fewer

travelers

Increased hotel supply in the shortterm, new hotel properties addedin 2008 and 2009

Rising air prices to put pressureon hotel pricing

Corporate contracts signed in2009 for 2010 hotel stays are atreduced rates


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Top Business Destinations - Europe

YOY 2010 vs. 2009 ADRs to slowly adjust upwards

Short- and long-haul travel for topEuropean business destinations willrise slightly

Market ATP ADRAmsterdam 3% 0%

Barcelona 7% -1%

Berlin 0% 2%

Brussels 0% 3%

Chicago 6% -2%

Frankfurt 4% 1%

London 1% 1%

Los Angeles 3% -1%

Madrid 1% 2%

Milan 2% 1%

Munich 2% 1%

New York 4% -4%

Paris 0% 1%


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Pricing Landscape Europe

Upward Pressure European markets have shown

signs of positive growth

Increased business demandexpected

Recent airline capacity cuts and anincreased focus on the revenue

margins by airlines Merger of Northwest & Delta, JV

between Air France & Delta,additional consolidation

AIR

Downward Pressure Decline in front of cabin travel

Economic conditions continue todrive uncertainty

Increased competition on routes


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Top Business Destinations - APAC

YOY 2010 vs. 2009 Low to flat ADRs with only a few

exceptions

Small ATP increases

Market ATP ADRBeijing 4% -8%

Delhi 4% -4%

Hong Kong 4% -4%

Los Angeles 1% -1%

Melbourne 3% -1%

Mumbai 1% 0%

New York 1% -4%

San Francisco 6% -2%

Shanghai 2% -1%

Singapore 1% 1%

Sydney 0% 1%

Tokyo 0% -1%


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Pricing Landscape APAC

Upward Pressure APAC markets have shown signs

of positive growth

Increased business demandexpected

Recent airline capacity cuts and anincreased focus on the revenue

margins by airlines Merger of Northwest & Delta

Downward Pressure Decline in front of cabin travel

Economic conditions continue todrive uncertainty

Increased competition on routesAIR


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US Supply Landscape Car Rental

Upward Pressure

Difficult leasing conditions inventory cost is rising

Cost of financing has beenincreasing

Depressed used car market

Industry Consolidation (Hertzacquiring Advantage Rent-A-Car)

Shift from air to car rentals forshort trips

CAR

Downward Pressure

Constricted demand due toeconomic environment

Car class downsizing has becomea natural result of new policyrestrictions

Day trips and car-sharing havebecome more common

Market factors will shift in 2010 as more financing becomes available and the competitionfor the business traveler heats up.

Our forecast suggests 5% decrease in RPDs YoY in 2010


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Dallas

Boston

Chicago

Atlanta

Denver

Houston

Los Angeles

Minneapolis

New York

Philadelphia

PhoenixSan Diego

San Francisco

Seattle

Washington DC

Moderate

Calgary

Toronto

Montreal

Vancouver

StrongWeak

NA Supply Outlook - Negotiability


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Moderate

Strong

Weak

Amsterdam

Barcelona

Berlin

Brussels

FrankfurtLondon

Madrid

MunichParis

Milan

EU Supply Outlook - Negotiability


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Moderate

Strong

Weak

Beijing

SydneyMelbourne

Delhi

Hong KongMumbai

Shanghai

Singapore

Tokyo

APAC Supply Outlook - Negotiability


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Business Travel Landscape - Now vs. October 2008

Now

Current EnvironmentDue to the current economicconditions, has your companychanged its amount of businesstravel?

Looking AheadAre you planning to increase ordecrease your travel budget in2010?

Egencia Travel Manager Survey

Has notchanged

48%

Slightlyincreased

3%

Significantlyreduced

11%

Slightlyreduced37%

Source: Survey of over 100 Egencia clients, conducted

September/October 2009 | Survey of over 200 Egenciaclients, conducted October 2008

October 2008

Has not

changed29%

Slightlyincreased

10%

Significantlyreduced

17%

Slightly

reduced42%

Increase13%

DontKnow23%

Reduce9%

Remainthe same

55%

Increase19%

Dont

Know

27%

Reduce10%

Remainthe same

45%


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Controlling Travel Spend, Managing CostsNow vs. October 2008

Top Cost-Cutting Practices Now October 2008

1. Booking in advance 57% 55%

2. Rigorous enforcement of travel policy 52% 44%

3. Actively tracking unused tickets 45% 44%

4. Pre-trip approval requirements 44% 43%5. Lower class of service 23% 25%

Tighter budgets (including budget cuts and travel freezes) is the primaryreason for decreased business travel, representing 75% of those surveyed.


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Controlling Travel Spend, Cont.

Renegotiating:Have you dramatically changedhow/when you evaluate orrenegotiate your travel programdue to the economic climate?

No, but wellmake changes

in 201018%

Yes, were makingchanges more frequently

33%

Yes, were making changesless frequently

6%

No, and we haveno plans to do so

27%

I dont know

16%

Source: Survey of over 100 Egencia clients, conductedSeptember/October 2009


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Strategies to Monitor and Control Travel Costs

Control

Control unnecessary trips through pre-trip approval

Review and meet your supply commitments

Consolidate your meetings & travel spend

Monitor

Monitor spend weekly, not quarterly

Track and redeem un-used tickets

Identify reasons for leakage

Educate your travelers on how they can make a difference


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Meetings & Incentives Market

Short Term Work to limit liability

Evaluate hotel contractsand consolidate topreferred suppliers

Leverage short-haultravel as a way to cutcost

2010

Long Term Focus on budget-

management and ROI

Consolidate corporatetravel and M&I under

one program Enforce program

policies

egencia 2010 forecast

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