Corporate Travel Drops 15% from 2008
Tuesday, August 11th, 2009
While the economic downturn may be moving towards an upward trend in the next few months, hoteliers and airlines are still seeing a dramatic drop in demand for corporate travel, reporting significant losses for the first through third quarters of 2009. According to a story in the Los Angeles Times, a study by PhoCusWright, a market research firm in Sherman, Connecticut reports that corporate travel is expected to drop at a rate of about 15% compared to 2008, and overall travel is expected to drop at about 11% for the remainder of 2009. Corporate travel bookings account for a significant amount of revenue for the hotel and airline industry, and have represented nearly half of all bookings over the course of a year. As more companies reduce their workforce, limit extra expenses and cut down on traveling to conferences and events, demand for overnight stays and flights will continue to drop. The once-steady business expense accounts that paid for first-class seats and upgrades at hotels are now being reallocated towards other company priorities.
Many corporations are simply cutting down their travel budgets for the year in hopes of recovering their own losses from the economic slump. Conventions, tradeshows, conferences and other offsite events have become lower priorities for even the most profitable companies, and corporate executives may even put their travel plans on hold until the economic climate improves.
Airlines are attempting to offset the lost revenue by reducing airline routes, eliminating premium-class and upgrades on certain flights, and adding baggage fees and surcharges to both domestic and international economy flights. Still, these strategies may not be enough to counteract the effects of reduced demand from the corporate travel sector.
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