Getting With the Program - Carlson Wagonlit Travel

44 Ten Business Travel trends for 2010. Dynamic hotel pricing will take offRevenue or yield management is likely to evolve further in the hotel industry withdynamic pricing becoming increasingly common. As in the airline industry, dynamichotel pricing fluctuates with supply and demand, theoretically offering the best availablerates to customers. In practice, corporate buyers are not convinced they always get thebest deal, as prices may sometimes be higher than negotiated rates. Dynamic pricingcan, however, offer savings by simplifying the request for proposal process andongoing program management. One global company that has tested the systemreported that it broke even on prices at the majority of its hotels in the United Statesand achieved considerable soft-dollar benefits: “We can negotiate in two hours insteadof participating in constant discussions over six months.”8. Multiple forces will impact the competitive landscapeMany respondents underlined that the single largest force in the airline market will bethe EU-U.S. Open Skies agreement. (See the article on Pages 27-31.) In addition toderegulation, the new fuel-efficient Airbus A380 and Boeing 8 aircraft will impactcompetition on international routes by shaving approximately 15 percent off costs perseat. On domestic routes, budget carriers will continue to apply downward pressureon fares and drive growth. As a result, airline competition will inevitably increase in theshort-term and decrease in the medium-term, with weaker players being acquired orsqueezed out of the market. Nevertheless, acquired brands will not necessarilydisappear. In the hotel market, supply will remain short in key cities for the foreseeablefuture, despite the addition of new properties. In ground transportation, seasonalprice fluctuations are likely to be accentuated and rates will rise, reflecting the higher costof new vehicles.. Suppliers will increasingly segment services and apply selective discountsCustomer relationship management will become more sophisticated as suppliersincreasingly segment the market, seeking new ways to improve the customerexperience and pursue higher margins. Airlines will focus increasingly on their offeringfor elite travelers, especially on long-haul international routes. Another trend will showcarriers customizing their deals to different industry sectors, aiming to retain marketshare with those that are reducing their air spend (e.g., the pharmaceutical industry).Train companies, on the other hand, will step up their efforts to improve comfort forbusiness travelers, for example through dedicated on-board working spaces. At thesame time, suppliers in all areas may apply tougher market share requirements, whichcould provide fresh impetus for companies to consolidate their travel program regionallyor globally for greater aggregated volume. In the car and hotel industries, companieswill target different segments of business travelers through differentiated brands whiletrying to build loyalty among individual customers by way of tailored services. Here, thekey trend will be suppliers enabling travelers to enjoy their personal lifestyle whereverthey are, blurring the line between business and leisure.