GBTA, HRS Reports Challenging Travel Market Dynamics

Corporate travel and procurement leaders are faced with a challenging environment as negotiations with suppliers for 2024 business travel volume start this quarter when flights to key corporate destinations are mostly full and hotel rates remain ‘stubbornly’ high.

According to data from the Global Business Travel Association (GBTA), the return of volume from the depths of the pandemic is forecast to return to 80% in 2023. While this revival is indisputably a sign of health for the global economy, corporate executives charged with managing travel budgets are increasingly concerned about long-term cost and program management ramifications.

These issues are among a broad set of results from an extensive survey of North American and European corporate travel and procurement leaders by GBTA and HRS in the newly released report — “The Power of One: How Breaking up Silos can Drive Value in Converged Hotel Program Management.”

Beyond the current negotiation climate with air and lodging suppliers, the research offers new findings on the opportunities for corporate programs to enhance transparency, leverage the totality of their lodging segments via convergence, and take ownership of new operational trends impacting travel expenditures.

Travel procurement leaders are having a hard time getting discounts and compelling pricing from air and hotel suppliers, and they’re not confident of any change on that front.

Results from the survey on the current negotiation climate indicate that:

  • Less than a quarter (23%) of buyers report that over the past year it was easy to obtain favorable hotel rates, while only 18% say it was easy to secure favorable air discounts.
  • European-based travel buyers are particularly challenged in the lodging arena. Nearly three quarters (74%) say it was “somewhat” or “very” difficult” to get favorable rates in the past year. This compares to about half (47%) of North American-based buyers with the same opinion.
  • When asked to pick two categories that will prove most challenging when it comes to securing favorable terms in the next two years, most respondents pick air (69%) and hotel (56%).
  • Despite this outlook, more than four in five travel managers (84%) say their company will conduct hotel Request for Proposals (RFPs) within the next year.

HRS CEO Tobias Ragge, said: “There is no question that suppliers have leverage today, and corporations remain challenged to keep travel costs in line even as business opportunities grow. That said, the fact that 84 percent will conduct hotel RFPs demonstrates confidence in the evolving procurement landscape. For example, we see more companies taking extra steps to uncover and compile the entirety of their lodging data in the quest to maximize the value of their business to preferred hotel partners.”

Ragge added: “In this environment, the ability to cumulatively bring transient, meeting and extended stay volume together – the core elements of convergence – is a necessary launching point for 2024 supplier negotiations.”

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