9 Replies Latest reply: Jul 16, 2009 7:23 PM by rcrodgersjr RSS

Travel shrinking

Alumni Steward Platinum 8 Reviews
Currently Being Moderated

Associated Press reports (emphasis mine):

 

"NEW YORK (AP) — Airfare wars and room-rate promotions are usually aimed at vacationers, but airlines and hotels are resorting to similar tactics to regain their traditional cash cow — the business traveler.

Corporate travelers, who pay higher airfares when they sit in the front cabins of planes or book close to the date of travel, are flying coach more often — or not traveling at all during the recession. And their employers are booking fewer banquet halls and blocks of rooms, leaving many hotels pining for the sizable and reliable revenue that business meetings used to generate.

Partly as a result, several major airlines are expected to post losses for the April-June quarter when they report their earnings starting this week. And hotel revenue — which fell sharply in the first quarter from a year earlier — is not expected to show much improvement in the second quarter, either. Marriott International Inc.'s results are due Thursday.

Business travelers tend to generate a higher percentage of overall industry revenue than the percentage of total travelers they represent. Of the $641 billion spent by U.S residents in 2007 on domestic travel and tourism, roughly 33 percent came from business travelers, according to the U.S. Travel Association. But the number of domestic business trips accounted for less than 25 percent of that year's 2 billion total domestic trips.

Boston-based aviation consultant Mark Kiefer of CRA International said the economy is keeping a lid on business travel this year.

"We have a case of certain sectors that were consumers of a lot of business travel, like banking and so forth," Kiefer said. "The other issue we are grappling with are expectations. There is a lot of uncertainty about when the economy will turn around and by how much."

Travel companies are using a range of strategies to lure business travelers. Hotels are offering bonus room nights, free snacks and drinks, and more flexibility on booking and cancellation policies. Airlines have been offering heavily discounted upgrades and business-oriented fare sales.

Discounts have helped lure some vacationers back onto the road. Deutsche Bank analyst Chris Woronka noted that, while U.S. revenue per available room, a key gauge of the hotel industry's performance, was still down by a double-digit percentage since late June, it has shown a marked improvement because summer leisure demand has picked up.

But in a recent survey of 285 senior finance executives around the world, 87 percent said their companies plan to spend less on business travel this year. The American Express/CFO Research Global Business & Spending Monitor found 44 percent of the executives expect their companies' travel to decline more than 10 percent.

The survey did find that most companies will continue to spend on travel that could generate revenue. Frank Schnur, of American Express' business travel group, predicts that clients will continue to expect a financial return on their investments in travel, even after the economic recovery.

For now, many companies are cutting back. Drew Ramsey, a 33-year-old information security manager in Phoenix who is a Southwest Airlines frequent flier, says his company has essentially shut down business travel.

"Any business travel has to be a necessity; otherwise people are being asked to use videoconferencing or teleconferences," Ramsey said.

Traffic in high-end airline seats fell 22 percent in April, compared with the same month a year earlier, according to the International Air Transport Association. Meanwhile, the number of travelers on coach tickets rose 0.3 percent.

With a shrinking pot of corporate travel dollars, airlines like Southwest are trying new strategies to get business travelers on board. Ramsey said Southwest offered to fast-track him to "A-List" status. That provides a year of reserved-boarding privileges to passengers who belong to the airline's frequent-flier program and take a certain number of flights within a given period.

Airlines also are giving business travelers things like Wi-Fi, satellite radio, advance seat assignments and priority boarding to lure them in.

In the hotel industry, all kinds of chains that rely on business travelers are feeling the pain. Extended Stay Hotels LLC — which caters to business travelers who need longer-term lodging at lower rates — has filed for Chapter 11 bankruptcy protection, citing a heavy debtload and a sharp drop in business travel.

Starwood Hotels & Resorts Inc. is offering a 4 percent discount to business meeting planners who book an event for 10 or more room-nights at some of its brands, including the W, Westin and Sheraton chains. They also get a free snack break from PepsiCo Inc., through Aug. 31, and a hefty bonus of loyalty program points they can use for personal travel.

Hotels are not as agile because they typically negotiate corporate rates months or years in advance. So the rate cuts they're offering now could have a long term impact on revenue.

Continental Airlines CEO Larry Kellner said at a June investor conference that his airline is working its "business (traveler) side very hard because ... we could also see a recovery much more quicker if we could get the business traffic back on the airplanes.""

  • Re: Business Travel shrinking, Not Leisure
    tjcnewyork Platinum
    Currently Being Moderated

    Based upon recent experiences at airports in New York, Los Angeles, Orlando, Tampa, Boston among others, business travel is most definitely shrinking.  But the flip side, leisure travel appears just as strong as ever.  That segment appears to be expanding compared to last year.  In general, business travelers tend to travel light and carry-on luggage.  But the lines at the airports for bag drop-off are HUGE as are the lines for Security Check.  In each of the airports mentioned, there was not one empty departure lounge.  Our return flight from LAX to JFK arrived at 10:30 pm and all of the departure lounges that lined the route to baggage claim had people waiting for flights. 

     

    Certainly, filling rooms whether business or leisure is a major objective for any hotel brand.  The question is, what is Marriott doing to capture this surge in leisure travel?  

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    Alumni Steward Platinum 8 Reviews
    Currently Being Moderated
    One indicator of the state of things is the abrupt disappearance of CLEAR, the security screening service that failed to price itself right or garner enough business travelers in a down economy. I have found airports less crowded as well.

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    tjcnewyork Platinum
    Currently Being Moderated

    http://farm3.static.flickr.com/2442/3653067274_f76e84ef19_m.jpg

     

    "abrupt disappearance of CLEAR, the security screening service"

     

    Yep. CLEAR lanes ceased to exist as of June 22nd.* 

     

    Strict implementation of TSA mandated passenger screening at all airports in the US requires that all travelers provide extra time.  As a native New Yorker, a very active traveler and an eyewitness to the events of 9-11, I believe that all travelers should vigorously support and cooperate with the security screening that services like CLEAR and FLO seek to bypass. 

     

    Anyone can be a victim of a plot.  With or without a person's knowledge or consent, identity can be stolen or a weapon or device could be concealed and without screening, become the root cause for a violation and worst yet, a security breach. 

     

    While the desire to provide a value-add to their loyal customers is understood, Marriott's affiliation with the CLEAR security screening service was misguided, IMO.  With a price tag exceeding $1,000 let's hope that the identity records of the 150,000 plus CLEAR customers does not fall into the wrong hands. I would be ~VERY~ concerned.

     

    * Clear Airport Security Program Closes Abruptly; Goodbye Flo, Too?

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    rcrodgersjr Platinum
    Currently Being Moderated
    I for one will miss Clear. Most of the planes that I fly aboard these days are full but the planes are smaller.

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    tjcnewyork Platinum
    Currently Being Moderated

    "I for one will miss Clear. Most of the planes that I fly aboard these days are full but the planes are smaller."

     

    Did the parent company of Clear contact you to confirm deletion of your ID records and refund of the unused portion of your subscription?  Consider that Clear employees used laptops with your information stored on it to update and share with the TSA at the airports where CLEAR had authorization.  Consider the impact that an information breach would have.  It's unclear if the company has filed Chapter 11, so best consult an attorney before they become untouchable.  

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    Alumni Steward Platinum 8 Reviews
    Currently Being Moderated

    I am one (or was--who can tell with all the changes) of the USG's Trusted Travelers, http://www.cbp.gov/xp/cgov/travel/trusted_traveler/

    http://www.cbp.gov/xp/cgov/travel/trusted_traveler/a program that might or might not be continued depending on airline resistance and FAA/FBI's concurrence, so I never joined CLEAR. All this meant for me is that I was given the same treatment as others, but to date have not been wanded or given a pass to a shorter line.

     

    I would write the FCC and the FAA with the question of the disposition your personal data--as you recall the way in which you were vetted for CLEAR used government databases.  

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    rcrodgersjr Platinum
    Currently Being Moderated
    "

    "Did the parent company of Clear contact you to confirm deletion of your ID records and refund of the unused portion of your subscription?  Consider that Clear employees used laptops with your information stored on it to update and share with the TSA at the airports where CLEAR had authorization.  Consider the impact that an information breach would have.  It's unclear if the company has filed Chapter 11, so best consult an attorney before they become untouchable."

    I did receive a letter stating that my information would be destroyed as the entire database was to be deleted. That letter came only after I made a personal inquiry.  

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    tjcnewyork Platinum
    Currently Being Moderated

    "That letter came only after I made a personal inquiry"

     

    That's a relief.  What about a refund of the unused portion of your plan?

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

  • Re: Travel shrinking
    rcrodgersjr Platinum
    Currently Being Moderated

    "That's a relief.  What about a refund of the unused portion of your plan?"

    I've disputed the charge with my credit card company. It's slowly moving through the channels I guess. I'm sure I'll eventually be refunded if the process is completed before their legal process is completed.

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

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