©2013 ©2013 Industry Forecast 2014
Jan 15, 2015
©2013 ©2013
Industry Forecast2014
2 ©2013 ©2013
Content
Outlook and risk factors
Air
Hotel
Meetings
Car rental
Rail
Appendix 1: Spotlights and September 2013 update
Appendix 2: Historical data charts
3 ©2013 ©2013
2014 Outlook
Airlines are showing capacity
restraint in mature markets
Oil price should remain
stable
Hotel rateincreases will
be lowoutside
primarycities
Travel demand
remains generally
weak
Business travel demand will gain momentum in 2014, in line with
projected global economic recovery
4 ©2013 ©2013
Risk factors
u Economic growth to pick upGlobal growth in 2013 will match 2012, pick up speed in 2014U.S. economy will see best performance since start of economic crisisGrowth to resume in Europe
u Oil price stable for now Oil prices above US$100/barrel for most of the last yearSupply and demand will keep prices at or below $110/barrelFuel surcharges more likely to rise than fall
u Safety and security concerns low
5 ©2013 ©2013
. .U S
2012+2.2%2013+1.9%2014+2.5%
Euro Area2012
-0.5%2013
- 0.8%2014
+0.6%
China2012+7.8%2013+7.7%2014+8.0% Emerging
economies2012+4.8%2013+5.1%2014+5.6%
World 2012+2.1%2013+2.1%2014+2.7%
Global economic outlook (GDP)Economic growth will firm up across all regions in 2014
Source: EIU forecast, July 15, 2013
6 ©2013 ©2013
Airfares most resilient in mature
markets
Capacity restraint
supports small fare rises in
North America and
Europe
Consolidatio n may lead to
upward pressure on
fares
Capacity growth to
lower fares in most
emerging markets2014 outlook
AirWhile airlines in the U.S. and
Europe are keeping a firm grip on capacity, soft demand will likely
prevent significant fare hikes
7 ©2013 ©2013
Airline key performance indicatorsIATA’s latest forecast for traffic and capacity confirms emerging economies’ strong
position
2013 Forecast% change Y-o-Y
Traffic (RPK) Capacity (ASK)
North America 2.5% 2.2%Europe 5.0% 5.0%Asia-Pacific 6.6% 6.5%Middle East 13.0% 12.0%
Latin America 8.5% 7.6%Africa 8.3% 6.0%Global 5.8% 5.0%
Source: IATA Financial Forecast, September 2013
8 ©2013 ©2013
Airfare predictions for 2014 – North AmericaFares will be flat or increase slightly in 2014,
with regional economy the most likely segment to see a rise
Business Economy
Intercontinental +1% 0%
Regional 0% +2%
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Source: Advito 2014 Industry Forecast
9 ©2013 ©2013
Airfare predictions for 2014 – EuropeWith demand weak, airlines continue to show restraint on capacity growth,
keeping fare increases in the region low
Business Economy
Intercontinental +1% +2%
Regional +1% +1%
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
Source: Advito 2014 Industry Forecast
10 ©2013 ©2013
Airfare predictions for 2014 – AsiaWeaker demand and down-trading will depress business fares,
but more resilient demand will provide some support to economy class fares
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Business Economy
Intercontinental -2% +3%
Regional -2% 0%
Source: Advito 2014 Industry Forecast
11 ©2013 ©2013
Airfare predictions for 2014 – Latin AmericaAirfares to rise across all segments
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Business Economy
Intercontinental +3% +2%
Regional +2% +3%
Source: Advito 2014 Industry Forecast
12 ©2013 ©2013
Airfare predictions for 2014 – Middle EastIntense competition between Gulf airlines will deliver lower airfares across all segments
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
Source: Advito 2014 Industry Forecast
Business Economy
Intercontinental -2% -2%
Regional -2% -2%
13 ©2013 ©2013
Airfare predictions for 2014 – AfricaCompetition will lead to lower fares on intercontinental routes;
rising demand will support increases on regional routes
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
Source: Advito 2014 Industry Forecast
Business Economy
Intercontinental +3% +2%
Regional +2% +3%
14 ©2013 ©2013
Airfare predictions for 2014 – Southwest PacificIntense competition in Australian market will ensure that airfares remain largely
unchanged
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
Source: Advito 2014 Industry Forecast
Business Economy
Intercontinental 0% 0%
Regional 0% -1%
15 ©2013 ©2013
ADR increases will
be minimal in Europe
Latin America to
see strongest rise in ADR
Argentinaand Brazil to
see biggest rises in ADR
Most other regions will
see modest ADR
increases2014 outlook Hotel
Hotel companies will look to raise corporate rates by 4-6% for 2014, but are likely to achieve only half
this level on average
16 ©2013 ©2013
North America
+2-4%
Europe+0-2%
Asia+1-3%
Latin America+6-8%
Southwest Pacific+1-3%
Hotel average daily rate (ADR) 2014 forecast by regionIn 2014, ADR will grow only slightly in Europe,
but we expect stronger rises in other regions—especially Latin America
Middle East+2-4%
Africa+3-5%
Source: Advito 2014 Industry Forecast
17 ©2013 ©2013
Hotel ADR: 2014 forecast by market
RU -2% to +1%
CN +0-3%
KO +0-2%
SG +2-3%
AE -1% to +2%
IN -1% to +1%MX -1% to +1%
BR +6-8%
TR +4-6%ES-IT-PT +1-3%DE-FR-UK +1-3% AT +1-2% CH+0-2% BE-SE +0-1% IE-NL -1% to +1% CZ -2% to +1%
AR +7-9%
AU +1-3%
JP +2-4%
DK-NO +0-1%FI + +1-3%
ZA +3-5%
SA +3-5%
US +3-5%
Forecast of average development of hotel rates used by corporate clients in 2014 against 2013 (local currency)
Source: Advito 2014 Industry Forecast
CA -1% to +1%
18 ©2013 ©2013
Demand growth is steady
Rates to rise faster in -first tier cities
Hotels to look for higher
increases in 2014
Supplyremains tightin North
America and Europe2014 outlook
Meetings
Availability will become an increasing problem, especially as booking lead times continue to
shrink
19 ©2013 ©2013
2014 outlook Car rental
19
Rate rises unlikely to
stick
Multinational agreements
becoming morepopular
Stricter capacity control may make it
harder to find cars at airport
locations
Intense competition should keep corporate car rental rates in check, with increases staying at or below
4%
2014 outlook
Competition will keep rates in check
20 ©2013 ©2013
2014 outlook Car rental
-High speed fares in Europe may
start to fallCalifornia won’t
see high-speed rail before 2020
China -high speed rail back on
track
Corporate rail bookings are increasingly moving online to
reduce booking fees
2014 outlook
21 ©2013 ©2013
Appendix
//Internal note//• Pick slides from the appendix that work
for your client
Appendix 1: Spotlights and September updates
Appendix 2: Historical data charts
22 ©2013 ©2013
Appendix 1 Spotlights and September 2013 update
23 ©2013 ©2013
Spotlights
24 ©2013 ©2013
• Legal challenge from U.S. DOJ based on industry capacity, pricing
•Airlines appealing
•Deal likely to succeed (with concessions)
THE SCOOP
Four carriers would control
80%of U.S. air traffic
American Airlines and US Airways merger
Spotlight
25 ©2013 ©2013
Hybrid
model
•Actively pursuing corporate traffic
•Starting to fly long haul leisure routes
•Pay for legroom, baggage, fast track and lounge
THE SCOOP
Hybrid airlines
Spotlight
Example hybrid airlines
26 ©2013 ©2013
Unbundling trend continues
Unbundling
THE SCOOP
Reporting remains major challenge
Loyalty program membership helps some travelers avoid these charges—at least for now
Unbundling
Spotlight
27 ©2013 ©2013
Increasing interest in merging transient travel and meetings programs• Improved leverage of spend
•Better risk management
Integrating travel and meetings
THE SCOOP
Initial focus is often sourcing
Under pressure to integrate travel and meetings, some hotels are reluctant to do so
Spotlight
28 ©2013 ©2013
•Multinational corporate contracting on the rise
•Competitive international marketplace
•But each player has gaps
THE SCOOP
3Global players
International corporate car rental agreementsSpotlight
29 ©2013 ©2013
Air – 2013 update
30 ©2013 ©2013
Business Economy
Intercontinental -1%◄ -2%◄
Regional -2%◄ 0%◄
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
◄ Indicates revision to previous forecast
Source: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – North AmericaSmall fare decreases now expected across almost all segments
31 ©2013 ©2013
Business Economy
Intercontinental +1%◄ +2%
Regional +1%◄ -1%◄
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
◄ Indicates revision to previous forecast
Source: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – EuropeForecasts have been lowered across all segments except intercontinental economy
32 ©2013 ©2013
Business Economy
Intercontinental 0%◄ 2%◄
Regional 0%◄ 0%◄
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
◄ Indicates revision to previous forecast
Source: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – AsiaThe forecast has been downgraded,
and fare rises are only expected in the intercontinental economy segment
33 ©2013 ©2013
Business Economy
Intercontinental +2%◄ +4%
Regional +3% +5%
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
◄ Indicates revision to previous forecast
Source: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – Latin AmericaThe outlook remains largely unchanged;
strong demand growth means airfares will rise across all segments
34 ©2013 ©2013
Business Economy
Intercontinental -5%◄ -1%◄
Regional -5%◄ -5%◄
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
◄ Indicates revision to previous forecast
Source: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – Middle EastIncreasing capacity by Gulf carriers is pushing prices down across the board
35 ©2013 ©2013
Business Economy
Intercontinental 0% +2%
Regional +2% 0%
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in € EUR)
◄ Indicates revision to previous forecast
Source: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – AfricaThere will be little or no growth in air fares in African markets
36 ©2013 ©2013
Business Economy
Intercontinental -2%◄ 0%
Regional +1% -2%◄
Forecast of average development of airfares used by corporate clients in 2014 against 2013 (in $USD)
◄ Indicates revision to previous forecastSource: Advito 2013 Industry Forecast Update, September 2013
Airfare predictions for 2013 – Southwest PacificExcess capacity and intense competition are leading to lower airfares
37 ©2013 ©2013
Hotels – 2013 update
38 ©2013 ©2013
North America
+4-7%
Europe+1-4%
Asia+4-6%
Latin America
+8-12%
Southwest Pacific+5-8%
Hotel average daily rate (ADR) 2014 forecast by regionIn 2014, ADR will grow only slightly in Europe,
but we expect stronger rises in other regions—especially Latin America
Middle East+2-4%
Africa+4-6%
Source: Advito 2013 Industry Forecast Update, September 2013
39 ©2013 ©2013
Hotel ADR: 2014 forecast by market
RU +2-3%
CN +2-5%
KO +5-7%
SG +2%◄
AE +2-4%
IN +1-4%MX +2-5%
BR +15-18%
BE-FR-NL-UK+2-3%AT-CH-IE-SE+2-3%TR +2-4% DE +3-4% CZ +0-2% ES-IT +0-1% PT -1% to +0%
AR +9-12%
AU +5-8%
JP +5-7%
DK-NO +0-1%FI + +0-1%
ZA +8-10%
SA +2-4% US +4-7%
Forecast of average development of hotel rates used by corporate clients in 2014 against 2013 (local currency)Source: Advito 2013 Industry Forecast Update, September 2013
CA +3-4%
◄ Indicates revision to previous forecast
40 ©2013 ©2013
Appendix 2Historical data charts
41 ©2013 ©2013
Air
42 ©2013 ©2013
Cost per mile
North America
Source: Advito
43 ©2013 ©2013
Cost per mile
Europe
Source: Advito
44 ©2013 ©2013
Cost per mile
Asia
Source: Advito
45 ©2013 ©2013
Cost per mile
Latin America
Source: Advito
46 ©2013 ©2013
Cost per mile
Middle East
Source: Advito
47 ©2013 ©2013
Cost per mile
Africa
Source: Advito
48 ©2013 ©2013
Cost per mile
Southwest Pacific
Source: Advito
49 ©2013 ©2013
Economy class ratio
North America
Based on weighted average for first five months in each year
Source: Advito
50 ©2013 ©2013
Economy class ratio
Europe
Source: Advito Based on weighted average for first five months in each year
51 ©2013 ©2013
Economy class ratio
Asia
Source: Advito Based on weighted average for first five months in each year
52 ©2013 ©2013
Economy class ratio
Latin America
Source: Advito Based on weighted average for first five months in each year
53 ©2013 ©2013
Economy class ratio
Middle East
Source: Advito Based on weighted average for first five months in each year
54 ©2013 ©2013
Economy class ratio
Africa
Source: Advito Based on weighted average for first five months in each year
55 ©2013 ©2013
Economy class ratio
Southwest Pacific
Source: Advito Based on weighted average for first five months in each year
56 ©2013 ©2013
Advance booking
North America
Source: Advito Based on weighted average for first five months in each year
57 ©2013 ©2013
Advance booking
Europe
Source: Advito Based on weighted average for first five months in each year
58 ©2013 ©2013
Advance booking
Asia
Source: Advito Based on weighted average for first five months in each year
59 ©2013 ©2013
Advance booking
Latin America
Source: Advito Based on weighted average for first five months in each year
60 ©2013 ©2013
Advance booking
Middle East
Source: Advito Based on weighted average for first five months in each year
61 ©2013 ©2013
Advance booking
Africa
Source: Advito Based on weighted average for first five months in each year
62 ©2013 ©2013
Advance booking
Southwest Pacific
Source: Advito Based on weighted average for first five months in each year
63 ©2013 ©2013
Hotel rates
64 ©2013 ©2013
Hotel rate developments
Brazil
Source: Advito
65 ©2013 ©2013
Hotel rate developments
Canada
Source: Advito
66 ©2013 ©2013
Hotel rate developments
China
Source: Advito
67 ©2013 ©2013
Hotel rate developments
France
Source: Advito
68 ©2013 ©2013
Hotel rate developments
Germany
Source: Advito
69 ©2013 ©2013
Hotel rate developments
India
Source: Advito
70 ©2013 ©2013
Hotel rate developments
Ireland
Source: Advito
71 ©2013 ©2013
Hotel rate developments
Italy
Source: Advito
72 ©2013 ©2013
Hotel rate developments
Japan
Source: Advito
73 ©2013 ©2013
Hotel rate developments
Korea
Source: Advito
74 ©2013 ©2013
Hotel rate developments
Mexico
Source: Advito
75 ©2013 ©2013
Hotel rate developments
Russia
Source: Advito
76 ©2013 ©2013
Hotel rate developments
Singapore
Source: Advito
77 ©2013 ©2013
Hotel rate developments
South Africa
Source: Advito
78 ©2013 ©2013
Hotel rate developments
United Arab Emirates
Source: Advito
79 ©2013 ©2013
Hotel rate developments
United Kingdom
Source: Advito
80 ©2013 ©2013
Hotel rate developments
United States
Source: Advito
81 ©2013 ©2013
Historic hotel ADR development
Top U.S . cities 2012 2013
ADR US$ Q1 Q2 Q3 Q4 Q1
Atlanta ADR
1393.0%
1394.7%
1373.7%
1427.5%
1433.0%
Boston ADR
1977.2%
27313.7%
2573.9%
2392.3%
196-0.5%
Charlotte ADR
1310.2%
1353.8%
1389.0%
1396.0%
14510.7%
Chicago ADR
1646.4%
2226.8%
2176.9%
2216.1%
1724.8%
Dallas ADR
1380.6%
1438.9%
1396.3%
1413.6%
1476.4%
Denver ADR
1442.0%
1545.8%
1542.0%
1495.3%
1504.2%
Houston ADR
1436.3%
1484.8%
1415.5%
1468.6%
1569.1%
Indianapolis ADR
12010.5%
1174.6%
1175.1%
1175.9%
118-2.0%
Las Vegas ADR
1568.9%
1448.6%
124-5.1%
132-1.8%
155-0.5%
Los Angeles ADR
1817.6%
19515.0%
19011.7%
1899.9%
1915.3%
Top U.S . cities 2012 2013
ADR US$ Q1 Q2 Q3 Q4 Q1
New Orleans ADR
1789.9%
1747.6%
1359.1%
1661.4%
1948.6%
New York ADR
2610.1%
3423.5%
3280.3%
3805.3%
2827.9%
Philadelphia ADR
1671.6%
1949.8%
1773.7%
177-0.2%
1712.3%
Phoenix ADR
143-6.7%
117-3.0%
103-1.4%
1280.5%
1494.3%
Portland ADR
1277.9%
1355.7%
1426.7%
1366.8%
1389.2%
St. Louis ADR
1200.7%
1293.3%
1272.3%
1240.6%
1232.2%
San Diego ADR
1504.4%
1525.7%
1563.2%
1461.4%
1500.2%
San Francisco
ADR
23613.9%
24514.7%
27115.3%
2569.3%
2506.1%
Seattle ADR
1583.7%
1725.1%
1875.3%
1642.4%
1590.3%
Washington ADR
244-0.4%
2813.5%
2433.5%
2572.4%
2471.0%
United States
Source: Advito
82 ©2013 ©2013
Top European cities 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Amsterdam ADR
1513.3%
1664.2%
1621.6%
1550.5%
144-5.0%
Barcelona ADR
15326.1%
17117.8%
155-6.5%
1508.5%
1604.7%
Berlin ADR
120-2.1%
1180.2%
13010.7%
1163.6%
117-2.2%
Brussels ADR
1602.2%
1714.4%
1510.4%
1663.2%
159-0.9%
Copenhagen ADR
11683.4%
13148.0%
12452.4%
1158-1.5%
1112-4.7%
Dublin ADR
1154.1%
1278.5%
1307.7%
1201.9%
1161.2%
Düsseldorf ADR
1242.1%
131-7.2%
1122.7%
1280.0%
120-3.5%
Frankfurt ADR
1520.7%
16013.4%
1504.4%
1523.4%
1562.5%
Hamburg ADR
1205.1%
1240.6%
127-0.1%
1191.6%
113-5.5%
London ADR
1705.9%
1862.8%
1840.1%
1928.3%
1848.4%
Top European cities 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Madrid ADR
13312.8%
1387.1%
125-8.2%
1411.6%
1351.5%
Milan ADR
1784.2%
1782.9%
1790.1%
158-7.0%
1907.1%
Moscow ADR
96420.9%
102096.8%
9519-1.3%
99303.7%
9510-1.4%
Munich ADR
135-0.5%
16416.5%
1667.1%
16113.4%
14810.0%
Paris ADR
1977.1%
2253.5%
2234.3%
2126.0%
197-0.5%
Prague ADR
28535.0%
33315.0%
33011.0%
30950.9%
2798-1.9%
Rome ADR
156-0.8%
188-1.0%
1956.4%
1771.9%
18720.4%
Stockholm ADR
16090.1%
17631.5%
1703-1.4%
1665-1.5%
1555-3.4%
Vienna ADR
1384.8%
143-0.2%
1557.5%
1430.8%
133-3.7%
Warsaw ADR
48314.9%
61822.3%
464-8.9%
468-11.6%
421-12.9%
Historic hotel ADR development
Europe
Source: Advito
83 ©2013 ©2013
Historic hotel ADR development
Other cities in Asia, North America and Latin America
Top Asian cities 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Bangkok ADRYoY
4677-4.2%
4739-3.2%
4719-1.4%
4785-0.5%
50177.3%
Beijing ADR
11405.7%
12106.1%
11281.4%
1100-2.1%
1085-4.8%
Delhi ADR
644741.6%
5496-5.9%
3970N/A
7644-22.0%
5726-11.0%
Hong Kong ADR
24381.2%
23079.5%
22194.1%
24612.8%
24761.6%
Mumbai ADR
9670-5.3%
8716-4.5%
8462-1.9%
9269-6.7%
9372-3.1%
Seoul ADR
2561495.5%
27388611.4%
2573953.6%
264134-1.7%
253077-1.2%
Shanghai ADR
12524.6%
12864.8%
12222.8%
12391.1%
1168-6.7%
Singapore ADR
3338.4%
3203.9%
314-2.5%
307-2.5%
316-5.0%
Sydney ADR
2759.3%
2557.3%
2460.1%
2762.5%
2843.6%
Tokyo ADR
229529.1%
232438.9%
226766.8%
2421010.4%
242955.9%
Canada & LatAm 2012 2013
ADR local currency Q1 Q2 Q3 Q4 Q1
Buenos Aires ADR
80920.1%
74610.8%
745-0.8%
7929.2%
8282.3%
Lima ADR
5564.5%
5660.7%
5645.0%
5475.3%
510-8.2%
Mexico City ADR
18115.9%
192020.4%
17726.5%
1794-2.2%
18622.8%
Montreal ADR
1512.2%
163-0.6%
159-2.4%
154-3.2%
150-0.4%
Rio de Janeiro
ADR
42519.6%
44223.1%
43918.5%
46013.0%
47912.7%
San Jose ADR
8379511.3%
69663-9.5%
65932-12.0%
63895-22.0%
68786-21.0%
Santiago ADR
10819426.8%
11450929.5%
954095.1%
108790-1.1%
99740-7.8%
Sao Paulo ADR
40132.3%
44035.7%
40823.4%
42624.9%
44210.2%
Toronto ADR
1636.7%
1673.5%
1671.4%
1681.2%
1672.2%
Vancouver ADR
1582.9%
1833.4%
1830.1%
`1642.0%
1580.0%
Source: Advito
84 ©2013 ©2013
Tier distributionIn key markets
Source: Advito
85 ©2013 ©2013
Thank you