2019 Business Travel Outlook - OVBTA · • 5th annual GBTA Global Travel Forecast, in partnership...

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2019 Business Travel OutlookTravel Prices and the Trends That Will Shape Them

Today’s Speaker

© 2018 GBTA. All rights reserved.

Mark SharoffSr. Research AnalystGBTAmsharoff@gbta.org

Overview & Methodology• 5th annual GBTA Global Travel Forecast, in partnership with the Carlson Family

Foundation

• Projects air, hotel, and car rental prices for 2019

• 28 countries and 10 U.S. cities

• All projections shown are in local currencies

• Forecasts provided by CWT Solutions Group

• Data analysis conducted by Rockport Analytics

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So, What’s Changed? A Whole Lot…

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Curveball #1: Trade Tensions Heat Up as China Slows Down

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In 2016, China Overtook the U.S. as the World’s Top Business Travel Market…

Source: GBTA BTI™ Outlook: Annual Report and Global Forecast, August 2018

4 $51 3 $72 +1Germany Canada 11 $22 11 $25 --

Japan 3 $65 4 $64 -1 Australia 12 $21 12 $23 --

U.K. 5 $40 5 $50 -- Spain 15 $18 13 $22 +2

France 6 $35 6 $40 -- Netherlands 14 $18 14 $19 --

India 10 $22 7 $37 +3 Russia 13 $20 15 $19 -2

Rank Change

2012Rank $bil

2017Rank$bil

Country Country2012

Rank $bil

2017 Rank ChangeRank$bil

U.S. 1 $262 2 $292 -1 9 $30 10 $31 -1Brazil

China 2 $196 1 $347 +1 7 $32 9 $34 -2Italy

S. Korea Indonesia8 $30 8 $36 -- 16 $15 16 $17 --

Curveball #2: Getting Ready a “Hard” Brexit

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Curveball #3: The Government “Re-opens”

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Air Prices

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6 Trends Shaping Air Prices in 2019 and Beyond

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1) “Excuse me, is that seat taken?”

2) Oil’s wild ride

3) Airlines focus on the “premium” traveler

4) Low-cost options on the rise

5) Airfares “unbundle”

6) Airfares “rebundle?”

Trend #1: “Excuse me, is that seat taken?”

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583630 657 658 679 652 618 630 638 642 646 663 696 720 742

8.0%

4.4%

0.2%

3.2%

-4.0%

-5.2%

1.9% 1.4%

0.6% 0.5%

2.7%

5.0% 3.4%3.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

U.S. Domestic Passenger Volume

Annual passengers (millions) Annual % change

3 years of solid passenger growth

Source: U.S. Bureau of Transportation Statistics (https://www.bts.gov/content/annual-passengers-all-us-scheduled-airline-flights-domestic-international-and-foreign-1)

How Can More Passengers Fly?

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Full planes?

More flights?

Trend #1: “Excuse me, is that seat taken?”

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72.7% 74.5% 77.2% 79.1% 79.9% 79.7% 81.1% 82.2% 82.9% 83.4% 83.5% 84.5% 85.0% 84.6% 84.6%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

U.S. Domestic Load Factor (passenger miles/available seat miles)

Source: U.S. Bureau of Transportation Statistics (https://www.transtats.bts.gov/Data_Elements.aspx?Data=5)

Trend #1: “Excuse me, is that seat taken?”

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680731 740 729 744 715

667 675 681 684 693 705 743 781 8097.5%

1.2%

-1.5%

2.1%

-3.9%

-6.7%

1.2% 0.9%

0.4%1.3% 1.7%

5.4% 5.1%

3.6%

-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%10.0%

0100200300400500600700800900

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

U.S. Domestic Available Seat Miles

Available seat miles (billions) Annual % change

3 years of solid capacity growth

Source: U.S. Bureau of Transportation Statistics (https://www.transtats.bts.gov/Data_Elements.aspx?Data=4)

Trend #2: Oil’s wild ride

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In 2018…

Airlines spent $180 billion on fuel globally

Fuel represented about 23.5% of airline operating costs

Source: IATA (https://www.iata.org/pressroom/facts_figures/fact_sheets/Documents/fact-sheet-fuel.pdf)

Trend #2: Oil’s wild ride

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Price of WTI (Nymex) Crude

Source: Nasdaq (https://www.nasdaq.com/markets/crude-oil.aspx?timeframe=2y)

Major decline in Fall of 2018

Trend #3: Airlines focus on the “premium traveler”

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According to IATA…

5% of air passengers purchased premium seats in the first 7 months of 2018

However, these fares represented 30% of passenger revenue over this period

Source: Wall Street Journal (https://www.wsj.com/articles/united-delta-climb-on-business-class-demand-1539803503)

Trend #3: Airlines focus on the “premium traveler”

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First class

Business class

Premium economy12%

9%

40%

Never

When Do Policies Allow…?-survey of U.S.-based Travel Managers

30%

47%

46%

41%

42%

14%

17%

Occasionally Sometimes Always

Source: GBTA, Benchmark Your Air Travel Policy, 2018

Trend #4: Low-cost options on the rise

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18.0% 17.8%16.8%

15.0%

5.7% 5.5%3.8%

2.7% 2.7%1.6%

10.4%

AmericanAirlines

SouthwestAirlines

DeltaAirlines

UnitedAirlines

AlaskaAirlines

JetBlueAirlines

SpiritAirlines

FrontierAirlines

SkyWestAirlines

HawaiianAirlines

Other

U.S. Domestic Market Share (October 2017-September 2018)

29.8% low-cost U.S. carriers

Source: U.S. Bureau of Transportation Statistics (https://www.transtats.bts.gov/)

Trend #4: Low-cost options on the rise

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63% 79% of travel programs configure their booking tool to hide basic economy when travelers aren’t authorized

of U.S. Travel Managers say their company “never allows” basic economy

Do U.S. Travel Programs Allow Basic Economy?

Source: GBTA, Benchmark Your Air Travel Policy, 2018

Trend #5: Air travel “unbundles”

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29%

16%

16%

Never

25%

22%

16%

22%

24%

15%

25%

38%

52%

Occasionally Sometimes Always

Inflight F&B

Inflight Wi-Fi

Seat selection

6F

Source: GBTA, Benchmark Your Air Travel Policy, 2018

When Are Travelers Allowed to Reimburse Add-ons?

Trend #5: Air travel “unbundles”

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74%

54%

49%

Never

19%

27%

9%

5%

13%

12%

6%

30%

Occasionally Sometimes Always

Airport lounge access

Early boarding

Status upgrades

Elite

Source: GBTA, Benchmark Your Air Travel Policy, 2018

When Are Travelers Allowed to Reimburse Add-ons? (Cont.)

Trend #6: Air travel “rebundles?”

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Air Prices in 2019

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Source: GBTA, 2019 Global Travel Forecast, 2018

1.9%1.7% 1.6%

2.2%

2.9% 2.8%

1.9%

Global North America Western Europe Asia Pacific Latin America Middle East andAfrica

Eastern Europe

Air Price Forecast-by region in local currencies

Air Prices in 2019

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1.7%1.4%

1.1%

1.9%

3.3%

Total Economydomestic

Economyintercontinental

Businessdomestic

Businessintercontinental

U.S. Air Price Forecast-by fare class in $USD

Source: GBTA, 2019 Global Travel Forecast, 2018

Hotel Prices

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4 Trends Shaping Hotel Prices in 2019 and Beyond

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1) Supply chases demand

2) The big get bigger

3) Is “leakage” growing?

4) Hotel “content” comes to the fore

Trend #1: Supply chases demand

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Trend #2: The big get bigger

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Trend #3: Is “leakage” growing?

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15%

37%

Air Hotel

Average Percentage of Bookings Made Outside of Corporate Channels

Source: GBTA, Lost in Translation: Changing Landscape, Familiar Challenges, 2018

Trend #4: Hotel “content” comes to the fore

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84%

92%

95%

Non-negotiated rates

TMC's negotiated rates

Own negotiated rates

Which Rates Do Travel Programs Display Through Corporate Channels?-survey of U.S.-based Travel Managers

Source: GBTA, Hotel Booking: Content and Policies, 2019

Trend #4: Hotel “content” comes to the fore

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53%

23% 21%

5%

Our own negotiatedrates

Our TMC'snegotiated rates

Non-negotiatedrates

Other

Average percentage of bookings made through corporatechannels

Source: GBTA, Hotel Booking: Content and Policies, 2019Note: total does not add to 100% because of a data cleaning decision

Hotel Prices in 2019

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Source: GBTA, 2019 Global Travel Forecast, 2018

3.0% 2.8%2.4%

4.1%3.7%

3.2%

2.3%

Global North America Western Europe Asia Pacific Latin America Middle East andAfrica

Eastern Europe

Hotel Price Forecast-by region in local currencies

Hotel Prices in 2019

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2.7% 2.6%2.8%

Total Midscale Upscale

U.S. Hotel Price Forecast-by chain scale in $USD

Source: GBTA, 2019 Global Travel Forecast, 2018

Rental Car Prices

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Rental Car Prices in 2019

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0.7%

1.2%

0.3%

Total Midsize Full Size

U.S. Rental Car Price Forecast-by car size in $USD

Source: GBTA, 2019 Global Travel Forecast, 2018

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