The Business Travel Show recently released its sixth annual forecast for business travel buying. This survey and forecast provides indicators that help business travel buyers anticipate coming challenges. Results of the forecast for 2016 show that business travel buyers are concerned about the coming year.
While travel costs are rising, according to the survey, business travel budgets are increasing at a slower rate than previous years. Twenty-five percent of buyers surveyed expect budgets to drop next year, compared to only 20% who expected smaller budgets during 2015.
In past years, there seemed to have been pressure to buy more for less, which showed in buyers arranging more trips in spite of rising costs. This year, 6% fewer buyers are planning to arrange more trips as compared to 2015. Likewise, 19% of buyers are arranging fewer trips this year, compared to 14% in 2015.
Airline and accommodation forecast for business travel buyers
Now, let’s narrow the focus to the two most major business travel services: airfare and accommodations. From 2015 to 2016, the Business Travel Show report showed no increase in buyers expecting their budgets to rise for airfare. However, more buyers expect budgets for airline travel to shrink (1/4 of buyers expected this for 2016, as compared to 1/5 of buyers for 2015). In addition, more business travel buyers are booking fewer business class flights.
As with airline spend and overall business travel expenditures, there is no great drop in the level of spending for business travel accommodation, however no great increase is expected. The same percentage of buyers will have more to spend on accommodation this year as they did last year.
Areas of greatest concern for business travel buyers
Part of the Business Travel Show survey each year is a top 20 list of concerns identified by surveyed buyers. This year, the most notable change is that business travel buyers’ worry about travel costs rose five places in the list since last year. Cost concerns include potential fuel increases.
Perhaps partly because of increased costs, figures from the Global Business Travel Association (GBTA) show a forecasted increase in total business travel spend of 3.7% in 2016. The growth of business travel spend, which measures the change from year to year, is expected to break records.
Other concerns of business travel buyers noted in the Business Travel Show survey included data issues related to the NDC, as well as technological developments including mobile apps and virtual meetings as options replacing managed travel. Buyers noted integration of social and travel tools will be a big issue in 2016.Travel management 2.0 and relaxation of travel policy are other areas of concern, with buyers saying they will rely less on travel management companies.
Additional focus areas include sustainability, meetings management and terrorism. Many buyers are concerned about airline mergers and bankruptcies.
The GBTA, in addition to producing a forecast consistent with that of Business Travel Show, identified other issues buyers expect to face in 2016. These figures provide additional insight into why some things are changing. For example, the GBTA identifies growing demand and decreased new supply as reasons for hotel rates rising 46%. Although airfares are expected to increase gradually, increases could be moderate if oil prices stay steady.
According to the GBTA, because the car rental market is competitive, rates are expected to rise. However, larger companies may have leverage to control increases. In many cases, this would be done by switching suppliers. Meetings buyers will face increased rates, but the greater challenge may be reduced offerings and availability.
What will business travel buyers do in 2016 to meet challenges?
In addition to measuring areas of concern, the Business Travel Show survey measures how business travel buyers are planning to change the way they manage travel. For 2016, three areas of change rose above the rest for buyers surveyed:
- 53% said they will increase use of online booking
- 31% said they will increase compliance
- 22% said they will have a changing relationship with travel management companies
The GBTA identified a number of trends expected in business travel buying for 2016. Overall, traveler satisfaction is becoming a huge focus. Not only are regular business travelers demanding more flexibility and accessibility, but this is becoming important for employee recruitment and retention.
The GBTA identified the following trends expected to shape the business travel landscape this year:
- Mobile advances and personalized experiences
- Virtual payments
- Travel safety
- Sharing economy options
- Combining business and leisure travel
Many of these trends will help buyers face increased costs and complexity. For example, the collection and automatic management of mobile data will create efficiencies, such as storing traveler preferences and customizing purchases. The name of the game next year in business travel buying will be increasing economy, convenience, security and satisfaction.