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Take the
Cautious Road in '03
Power Trip · December 4, 2002
As I gaze into my crystal ball, here's what I see in 2003:
- Airline ticket prices will head back up again.
- Car rental rates will edge slightly higher.
- Hotel prices will stay about the same.
- I'll be named the CEO of a major airline.
I know better than to write a column that predicts the year ahead in business travel. And you probably know better than to read any story that claims to forecast what will happen with travel during 2003.
That hasn't stopped anyone from trying. The National Business Travel Association, a trade group for corporate travel managers, recently claimed that business travel costs will increase by 5% in 2003. Specifically, it said airfares will jump by 7% while hotel and car rates will inch 2% higher.
Nor has it prevented any of my fellow travel experts from giving it their best shot. One travel industry guru, who shall remain nameless, actually sends out regular press releases that foretell airfares - something even the airlines, which set ticket prices, are unable to do. (Consequently, he's often wrong.)
The leisure travelers who read the resulting news stories don't know any better. But business travelers do.
As to the question "What will happen in travel next year?," business owners and road warriors aren't so concerned about getting a good deal on a single hotel room or flight. They are looking at a line - a very big line - in their 2003 budget that says "Travel and Entertainment." For most ventures, it's the second-biggest expense behind salaries.
So you don't need an oddsmaker or soothsayer here; you need strategies to help you keep your T&E costs under control. With that in mind, here are four tactics that will serve business owners well in 2003:
Find a fair airfare. The conventional wisdom is that low airfares - as well as some of the major airlines - could vanish in 2003. Whether this is true or not, it seems that a new calendar year is an excellent time to revisit your loyalties. Is your preferred airline serving your current needs? Would a low-fare airline do better? Aviation analysts such as PA Consulting's Addison Schonland believe that when the books close on 2003, they'll call it the "Year of the No-Frills Carrier." He tells me, "I think people are going to start realizing that Southwest, AirTran and JetBlue are credible carriers, and they're going to start using them." Reviewing the airline you do business with also includes taking a hard look at your mileage rewards program, which often factors prominently into your choice of airline.
The strategy: Look beyond the "usual" suspects for a solution. You may find that more than one airline fits the bill. Or you may determine that a smaller airline serves your company's needs better. You may even conclude that fractional ownership of an aircraft is the most cost-effective way to keep your travel costs under control.
Be cautious about car rentals. Although demand from business travelers is expected to remain flat in 2003, an uptick in leisure travel could translate into higher overall rates for car rental customers. "It's still a very uncertain time," says Neil Abrams, a car rental analyst. "At this point, a lot still depends on the mood of the traveling public. We really don't know how it's going to feel in 2003." What we do know is that car rental companies aren't shy about imposing surcharges and additional fees on their customers. True, not all of the fees are up to the companies; many of the additional costs represent state and local taxes or airport facilities fees. But the fact is, you and your employees could end up paying a lot more for your bill than you had expected. In an earlier column about car rental traps, I mentioned that there are several innovative online solutions that helped you understand the real amount you would pay for your rental. One I neglected to mention is Travelocity.com's new Total Pricing for Cars, which lists all the fees and offers a grand total when you shop for a rental.
The strategy: Car rental companies operating under bankruptcy protection, including Alamo, National and Budget, remain among the best opportunities to find a lower rate. If you decided to focus your business on these agencies, remember to protect yourself by using a credit card for purchases.
Take the room with the view. Many analysts expect the lodging industry to continue its current struggle well into 2003. That's good news for business travelers, but not for the lodging industry, which is trying to rebound after a difficult two-year stretch. Brad Garner, a hotel analyst at Smith Travel Research, says an expected recovery in the hotel business has fizzled, leading to continued aggressive discounting by hotels. "We're expecting very slow growth in major markets, which is where most business travel takes place," Garner says. So you can probably ask for a room with a view - and get it - at the same special rate you're used to paying. Unfortunately, many of the same hotels are making cutbacks in service and amenities in order to save money, which can lead to more nickel-and-diming. So watch for the little extras at checkout time.
The strategy: Don't be shy about negotiating for lower rates or upgrades. It's going to be a buyer's market for hotel rooms in 2003. And if it isn't? Chances are, hotel managers will remain worried enough that even if occupancy soars, their generosity won't be deflated.
Hire a travel pro. I won't even call this person a travel agent or a travel consultant, because that's not really what you want. I'm talking here about a corporate travel manager - someone who can direct your company's travel policy and negotiate rates with suppliers. The Internet hasn't been kind to these consultants. Many of them were cast away in favor of self-booking systems that tried to automate their old job, according to the American Society of Travel Agents. But, for my "out on a limb" predictions for 2003, I think we're going to rediscover the value of these travel professionals. There are still some tricks that you can't teach a computer. Unfortunately, it's taken businesses a while to discover that the consultants they did away with a few years ago really were worth something.
The strategy: Even if these consultants don't make a comeback next year - hey, I'll be the first to admit I've been wrong before - it may be worth looking one up. Many travel agents have expanded their skills so that they can manage your business travel effectively. You might also consider bringing a new manager on board your company with travel know-how.
Amid these tactics, there's still the unanswered question: Will travel make a comeback in the year to come? Will we see business travelers spurning videoconferencing in favor of an in-person meeting? Will planes fly full schedules again, hotels become fully occupied and rental-car lots go empty?
It would be too bold and too risky of me to wager a guess. Remember the end of 2001, when everyone swore travel would bounce back the next year? Didn't happen. The early indicators suggest that demand is increasing for 2003. But if there's a war, all bets are off.
Christopher Elliott is a travel commentator based in Key Largo, Fla. All e-mailed questions may be edited, condensed or republished at the site's discretion.
