Travel management companies and hoteliers need to relate to a new austerity in corporate travel as GDS Amadeus reports a fall in transactions and warns of plunging room rates. Amadeus has seen a 10% fall in hotel bookings this year, according to hospitality business group deputy managing director Jerome Destors, and witnessed a 13% fall…
Adjust to corporate austerity – Amadeus report
Travel management companies and hoteliers need to relate to a new austerity in corporate travel as GDS Amadeus reports a fall in transactions and warns of plunging room rates.
Amadeus has seen a 10% fall in hotel bookings this year, according to hospitality business group deputy managing director Jerome Destors, and witnessed a 13% fall in average hotel rates in the last two months of 2008.
Destors outlined the decline in traffic as Amadeus published the results of a survey suggesting almost one in two executives will travel less on business in the next 12 months and 16% will axe 30% or more company trips
More than one quarter will downgrade hotels, migrating from four or five-star properties to budget chains, and 36% will move from business class to economy on flights.
The study, entitled The Austere Traveller, involved 350 executives and was carried out by the Economist Intelligence Unit. It concludes corporate expectations are changing and suggests there is a need for “a major shift” in the offering from hotels as executives focus less on luxury and more on basic services.
A mere 16% of those surveyed reported no reduction in travel budget at their company.
Amadeus warns the hotel sector will become increasingly competitive as corporate travel declines, companies enforce travel policy more strictly and booking decisions become more sensitive to price.
However, it suggests hoteliers should react with selective cuts in room rates rather than across the board, while ensuring favourable rates are easy to find for corporate buyers.
Destors reveals: “The volume of bookings is visibly down in all channels. The average day rate fell 13% in the last two months of 2008 [compared with September]. We did not expect a drop at that level.”
He adds: “There is a double-digit reduction in the volume of [hotel] transactions so far this year and we see the same trend in the air. The US, UK and Australia have been deeply impacted, however [corporate] business in Germany has been sustained [by comparison].
“Our advice is to get things under control without going too fast. Competition is going to be stronger on all fronts, but we advise customers against dropping rates without control.”
Destors says hoteliers should be making more of revenue-management systems to set appropriate rates. The major chains already have the systems they require, but may not be making best use of them. “Sometimes chains acquire technology, but do not use it,” he says.
The report warns “the new austerity” may outlive the recession, suggesting: “It might be business use of budget hotels will remain part of the mainstream in the way that budget airlines did following the last downturn.”
Destors says: “We believe some patterns imposed by the crisis will remain long term.”
Top-line findings:
* 47% of executives will take fewer trips this year than last
* 46% of companies have cut travel for internal meetings
* 36% of travellers will move from business to economy class
* 33% of companies have cut travel for junior staff
* 28% of executives will downgrade from four and five-star hotels
What counts when booking a hotel?
* 76% say an in-room internet connection
* 68% say efficient check-in and check-out
* 64% say ease of changing a booking
* 61% say a trusted brand
* 56% say a quiet room
* 54% say good transport links
* 52% say a central location
* The Austere Traveller was produced by the Economist Intelligence Unit and sponsored by Amadeus. The survey was carried out in November-December 2008 and involved 354 executives – 44% at chief executive or board level, 29% based in Europe, 29% in North America, 29% in Asia-Pacific and 13% elsewhere. All travel at least once a quarter, 37% more than once a month and 7% weekly.
