Tourism Industry News
Business travel: On the ground is the name of today's game
As the recession deepens, business travelers increasingly are staying on the ground.
Workers aren’t traveling to conferences for training and networking. Company meetings take place via conference call instead of in person. And when they do travel, corporate fliers are doing it on the cheap, taking shorter trips, flying on discount fares, and squeezing into coach rather than the more comfortable — and expensive — business and first-class cabins.
"Business travel is certainly down, there’s no question about it," said Lesley Harris, president of Travelocity Business, the corporate division of the Southlake-based online travel agent.
Worldwide, premium travel — first- and business-class fares typically purchased by corporate fliers — dropped more than 13 percent in December, according to the International Air Transport Association. The increase far outpaced the decline in coach-class fares, which dropped 5 percent during the month.
The decline in business travel is an ominous sign for the nation’s airlines. The major carriers traditionally earn a majority of their revenues from business fliers. That’s because corporate customers tend to pay more for last-minute refundable tickets, are more likely to fly in first or business class, and traditionally favor the most convenient schedules rather than the cheapest price.
For carriers like Fort Worth-based American Airlines, which has long focused on corporate accounts, a drop in business travel is far more serious than a similar decline in leisure passengers.
For Dallas-based Southwest Airlines, the decline in business travel makes it harder to achieve its goal of increasing corporate passengers. Still, that airline’s cheaper fares may help attract some business fliers who want to travel more cheaply.
Hotels have also reported slowdowns as travel demand weakens. Marriott International, for example, recently reported that revenue per available room was down 8.3 percent for the fourth quarter of 2008. Room revenues at Choice Hotels International are expected to drop by 12 percent during the first quarter of 2009. And the Gaylord Texan resort in Grapevine laid off 30 people last week, in part because of rising cancellations of group meetings.
Rental-car companies are also hurting. Hertz, for example, recently cut 4,000 employees, blaming reduced rental demand. "Everyone is tightening their belts," said Chuck Sharp, president of the American Small Business Travel Alliance, based in Flower Mound.
Get the full story at: StarTelegram