Be ready for travel headaches around Labor Day — and beyond
Airlines, hotels sock on fees, but Uber and Airbnb are shaking up some aspects of the travel industry, including business travel.
The New York Times
Northwest travel guides
For a heads-up on what to expect as the pace of business travel picks up after Labor Day, consider that airlines all summer have been reporting planes more full than ever, flight delays are at six-year highs and hotels are raising rates.
And everyone in the aviation industry is keeping a wary eye on the splendidly named Bardarbunga volcano that is rumbling and threatening to erupt in Iceland. The disturbance is four years after the last major Icelandic volcanic disruption, when the confoundingly named Eyjafjallajökull volcano spewed ash into the atmosphere that shut down European airspace for six days and stranded at least 5 million travelers in spring 2010.
So enjoy your holiday as much as you can. But keep in mind that getting to your destination may entail headaches. About 14 million people, up 2 percent from last year, are boarding those already nearly full airplanes during this Labor Day travel period, Aug. 17 to Sept. 2, according to Airlines for America, the industry trade group.
As fares and add-on fees steadily rise, airlines continue “getting their financial houses in order,” said John Heimlich, the trade group’s chief economist. In the first six months of this year, he said, the top nine domestic carriers earned $3.8 billion, compared with $1.6 billion during that period in 2013. And that was despite the clobbering that airlines (and passengers) took over the winter, when bad weather forced the cancellation of about 100,000 flights.
“There has been a 25 percent increase in airfares since 2008,” not counting the extra costs added by fees, Ben Baldanza, chief executive of the discount carrier Spirit Airlines, told an industry group Monday.
Clearly, the airlines are enjoying this era of growth, but for fliers, there is a sense of resignation. The J.D. Power North American Airline Satisfaction Study for this year underscores that, finding that overall passenger satisfaction with airlines, even considering added fees, rose significantly this year.
“It isn’t that passengers are satisfied with fees, it’s that they are simply less dissatisfied because they realize that fees have become a way of life with air travel,” said Rick Garlick, the firm’s lead travel and hospitality researcher.
There are some tiny signs of disruption in the status quo, however. As airlines have merged and consolidated routes, the era of heady competition in air travel has faded. Still, a few small startup airlines have begun emerging again, among them La Compagnie, a discount all-business-class airline that began flying a single Boeing 757 between Paris and Newark, New Jersey, this summer.
In the hotel industry, rates this year are expected to rise about 5 percent for corporate contracts, what companies negotiate to pay for hotels. The firm Smith Travel Research says average daily rates at American hotels grew more than 4 percent in the first half of 2014, and demand is increasing through the second half, giving hotels even more pricing power.
Also, the impact of millennial-generation business travelers is creating some ripples, if not yet waves, in the established order in lodging. Hotel chains are introducing new brands aimed at millennial travelers, who among other things are looking for free and fast Wi-Fi, and eliminating room service even in some big hotels in favor of “grab and go” food selections available in the lobby.
Changes prompted by younger travelers are also appearing in the ground transportation markets.
For example, United Airlines has begun promoting the use of Uber, the car-service innovator that allows people to hail rides via its mobile app.
Concur, which provides travel-expense management systems for more than 20,000 companies, has concluded that both Uber and the rapidly growing Airbnb, which enables people to rent out homes, apartments and even spare rooms to travelers, have arrived as players in the business-travel market. Concur recently announced a partnership with both companies to incorporate spending data into its corporate expense-management systems.
“Airbnb is an interesting trend in our customer base. It’s not a significant share of the lodging spend yet, but it’s growing exponentially and developing clearly as a choice for business travelers,” said Michael Hilton, a Concur executive vice president.
That’s partly because some business travelers in the millennial generation embraced Airbnb as leisure travelers and decided that the concept also worked for business. “They’ve had experience a few times with Airbnb and decided it’s not only cheaper than a hotel, but in a lot of cases better,” Hilton said. As word spreads, some older travelers are following suit.
With Airbnb charges showing up more often on expense accounts, travel managers need reliable data to gauge “how much of my spend is actually moving in this direction,” he said.
That’s truer still for ground-transportation expenses in the Uber network, he added. “Uber obviously is really disrupting the traditional ground transportation market. People who manage travel spend see it really becoming a very big line item in ground transportation, and companies want to get a handle on it,” he said.
Uber by definition operates online, through mobile apps with detailed data, not just expenses, but route-mapping and other information. Goodbye, ragged paper receipts!
Uber and other ride-share services are evolving amid opposition from the taxi industry and sometimes from regulators. In fact, Uber created a stir last month with its first appearance at the Global Business Travel Association convention in Los Angeles, where representatives from traditional limo and black-car companies openly grumbled about the upstart.
At the event, the company announced a new Uber for Business product, an acknowledgment that, Hilton said, “if they want to keep growing, they need to have a better relationship with the corporations.”