Advito Travel Industry Economic Forecast 2014

©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)


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


Business Economy

Intercontinental -2% +3%

Regional -2% 0%


11 ©2013 ©2013

Airfare predictions for 2014 – Latin AmericaAirfares to rise across all segments


Business Economy


Regional +2% +3%


12 ©2013 ©2013

Airfare predictions for 2014 – Middle EastIntense competition between Gulf airlines will deliver lower airfares across all segments



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



Business Economy


Regional +2% +3%

14 ©2013 ©2013

Airfare predictions for 2014 – Southwest PacificIntense competition in Australian market will ensure that airfares remain largely

unchanged



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%


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)


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%◄


◄ 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%◄




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%◄




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%




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%◄




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%




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%◄


◄ 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%


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%


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


52 ©2013 ©2013

Economy class ratio

Latin America


53 ©2013 ©2013

Economy class ratio

Middle East


54 ©2013 ©2013

Economy class ratio

Africa


55 ©2013 ©2013

Economy class ratio

Southwest Pacific


56 ©2013 ©2013

Advance booking

North America


57 ©2013 ©2013

Advance booking

Europe


58 ©2013 ©2013

Advance booking

Asia


59 ©2013 ©2013

Advance booking

Latin America


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


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%


Europe

Source: Advito

83 ©2013 ©2013


Other cities in Asia, North America and Latin America

Top Asian cities 2012 2013


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


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

Advito Travel Industry Economic Forecast 2014

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Transcript of Advito Travel Industry Economic Forecast 2014