GBTA Panel: Outlook for Q4 Uncertain

During a general session on the final day of the three-day GBTA convention, held in Denver, Bryan Bedford, chairman, president, and CEO of Republic Airways and Frontier Airlines; Dara Khosrowshahi, president and CEO of Expedia Inc.; Jan Freitag, vice president of global development, Smith Travel Research; and Gordon Wilson, president and CEO of Travelport, shared their insights from 2011 and trends they see moving forward.

Among them:

• If revenues for the second half of the year remain even with those from the first half (as far as domestic business), Khosrowshahi said he and many CEOs in the travel industry “would consider that to be a success.”

• Because there is almost no new hotel supply coming online, Frietag confirmed that “the balance of power is unquestionably shifting to a seller’s market. Make sure you have relationships in place that will serve you in 2012 and ’13.” STR’s most recent prediction for hotel ADR growth (average daily rate) is 4.9 percent, which travel managers should build into their 2012 budgets.

• Khosrowshahi said that because hotels are seeing more short-term bookings, there is concern that some of the business they expected might not materialize in Q4. “Where we saw hoteliers confident at the beginning of the year, they are not as confident about Q4 now.” (Surprisingly, the majority—60 percent—of Expedia’s overall revenues come from hotel bookings, not air.)

• Bedford said that his two airlines are seeing fare increases of 10 to 12 percent, but that is a necessity with fuel prices rising as much as 30 percent. “But despite the increase in bookings we see, there’s such a barrage of negative headlines that there is this feeling of holding our breath for the other shoe to fall.”

Sea Changes in Distribution

All of the panelists acknowledged that with discount sites such as Priceline and new options for purchasing travel such as Groupon, there is an increasing fragmentation in the ways people book travel. Groupon, especially, has sparked a lot of experimentation, but all agreed the site was still in the embryonic stage.

In the next era of online purchasing—Web 3.0—distributors will offer lower rates only to specific groups of buyers they want to attract, such as travelers from Asia, which will be invisible to buyers in other parts of the world. This practice is just beginning, but travel managers need to be aware of it, said Khosrowshahi. Hotels are already changing their rates by the hour to target different distribution channels.

Bedford spoke of the unbundling of airline products, such as priority seating and seat assignments, as a practice that’s here to stay. He urged travel managers to get the reporting in place to track employees’ purchases and to create new policies around this.

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