Surge in Inbound Travel Expected to Drive Up U.S. Hotel Prices
Visit USA Success Accelerates Hotel Price Rise
U.S. hotel rates are poised for a major jump that has nothing to do with business travel demand. The culprit is increased leisure demand from abroad, fueled largely by the new Visit USA campaign, Marriott Hotels & Resorts president and CEO Arne Sorenson said during a GBTA panel discussion in Boston last month. The U.S. has about 5 million hotel rooms and almost no new supply in the construction pipeline, Sorenson noted. At the same time, China is ramping up to send about 100 million leisure tourists into the international market every year. If the U.S. gets its typical share, that will mean an additional 10 million visitors from China alone.
The average Chinese leisure traveler spends a week in the U.S., Sorenson said. That means an additional 70 million room nights in a market where prices are already rising due to growing domestic demand. And that doesn’t count growth from other inbound markets, such as Brazil and India, Sorenson said. “The globalization of travel is a massive force.”
Making Air Passengers Happy
“We are introducing a whole new cabin because airline customers don’t want to look at the back of a seat, they want to see a screen. And you have never seen someone as pissed off as a passenger who expected wifi and it isn’t there. We are going to fleet-wide wifi.” – David Cush, president & CEO, Virgin America
The Future of Expense Reporting: No-Touch
Travelers hate the tedium of creating expense reports, including collecting, organizing, submitting and justifying travel expenses. Travel managers get just as tired of nagging road warriors for reports, then reviewing and organizing the mass of data. Back office software giant SAP has a plan to fix that, with a little help from partners AirPlus and JP Morgan Chase. The three are creating a combination of touchless, cloud-based expense reporting. The dream tool will start with SAP’s new Travel OnDemand reporting tool. AirPlus and JP Morgan are contributing a new payment and card system that incorporates near field communications (NFC) tied to the SAP reporting tool.
Instead of taking a photo of a receipt and texting or emailing it to be included in expense reporting, travelers will simply wave the new card over a merchant terminal. NFC-enabled cards are already in common use in Asia and Europe. That one wave of the card is enough to complete the transaction, add it to the day’s expense report and submit it for approval. In theory, the traveler could submit 100% of expenses for a trip without ever having to touch, or even see, a physical receipt or fill out an expense report. Data collection and consolidation for travel managers is also automated. The product is still in development with no projected launch date.
As much as airline ancillary fees annoy passengers who pay them and travel managers who try to track them, those ancillary revenues spell the difference between profit and loss for many carriers. Airline ancillary revenues jumped nearly two and a half times between 2009 and 2011, surging from $9 billion in 2009 to more than $22 billion in 2011. About half of the ancillary revenue came from credit card programs, the other half from travel service and product related fees. Over the same two-year period, air ticket prices rose about three times the rate of inflation – but airlines still couldn’t turn an operating profit, observed Andrew Pilkington, president, Global Commercial Card & Consumer Card, Canada, for JP Morgan Chase.
New AA Livery on the Way
American Airline’s silver fleet is about to become a relic of its pre-bankruptcy past. It’s not so much that American wants to retire the traditional livery as that it doesn’t have much choice. American has 100 Boeing 787s on order over the next five years and more than 400 other new aircraft. The 787 is made from composites, as are large parts of other Boeing and Airbus models. With no metal skin to polish to a gleaming silver, the company has to come up with a new look.
Chairman, president and CEO Tom Horton told the Global Business Travel Association that American would unveil its new livery in the near future, along with new print and video campaigns. It’s an easy bet the new look and new ads will launch about the time the airline emerges from bankruptcy.