American Express advises travel buyers “to trim fat, not muscle” of travel programs
By Susan Avery -- Purchasing, 9/23/2008 4:12:00 PM EDT
Travel buyers can expect to face many of the same challenges in 2009, only they may be more intense than they were in 2008.
So said Hervé Sedky, vice president and general manager, Global Advisory Services and Meetings Solutions, at American Express Business Travel in New York this morning. American Express Business Travel was expected to give its annual business review and forecast today, but opted to wait on it while determining the impact of the current financial crisis on the travel market.
Instead Sedky and others at American Express Business Travel presented a quick look at the market for travel services in 2009 and offered up some recommendations for travel buyers at companies that view travel as an investment in the future, yet still want to control rising costs.
A weaker economy and rising energy prices—which make up 40% of airlines’ operating costs—brought travel buyers higher airfares in the form of surcharges and new fees in 2008. The airlines also are eliminating some routes and retiring some equipment. At the same time, they are scrutinizing corporate contracts and eliminating discounts to customers not living up to volume expectations.
“Travel buyers are under increasing pressure to keep costs down in 2009, yet essential travelers on the road,” Sedky said, explaining that some companies like to use the opportunity of a sluggish economy to gain market share from customers. Traveling to meet with customers and suppliers can help them achieve this goal.
Frank Schnur, vice president, Global Advisory Services NA, American Express Business Travel, recommends travel buyers tighten travel policy, enforce compliance and ensure travelers understand the policy and travel programs, including use of preferred suppliers. “It is possible to reduce travel costs by 30% without reducing the amount of travel,” he said.
On the hotel side, it appears the market is beginning to shift in favor of travel buyers, Schnur said, explaining that a slight decline in occupancy, in part due to capacity reductions by the airlines, will help keep room rates below levels reached in 2008. Additional capacity brought online by the hotels also is expected to help stabilize costs. However, travel buyers still can expect hotel room rates to rise in some “gateway” cities such as New York due to an increase in international travelers.
American Express Business Travel also expects car rental rates to remain competitive in 2009. Next year buyers may see more travelers renting smaller cars to help reduce refueling costs, or simply renting cars more often as airlines eliminate some routes and travelers choose to drive to their destinations.
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