Business travelers face a changing landscape
From premium seats on regional jets to overseas cellphone service. Ovation's Vice President of Client Solutions, Lisa Lundquist, quoted.
As a frequent flier, Bryndon Bay knows how the little things can improve a business trip.
Take premium seating on regional jets. "It makes a huge difference," said the president of Mel Bay Publications, a Pacific, Mo.-based music publishing company. Premium seating offers more leg room, ample work space and the ability to exit the plane faster, important for tight schedules.
US Airways announced last week that it would offer first-class seats on 110 of its regional jets starting in September, following the lead of competitors United, Delta and American.
The move is just the latest in a series of changes affecting business travelers, from overseas cell phone service to electronic boarding passes to rising hotel rates.
US Airways' decision is a smart move, especially given recent mergers, said Henry H. Harteveldt, travel industry analyst for Forrester Research. “Brand loyalty is under pressure,” he said, and premium seating helps create brand consistency, which increases loyalty. In some cases, regional carriers account for as much as 40 percent of the flights of some network airlines, he said.
As a whole, the forecast for business travel has been strong. While the uptick in the economy is good news, however, Harteveldt warned it may be too early for robust predictions.
Fuel and fares
The price of jet fuel continues to be a burden on airlines, which are paying 35 to 50 percent more than one year ago.
United, Delta, American, US Airways and Southwest, the five biggest domestic carriers, reported first-quarter losses of more than $1 billion, citing jet fuel prices as the biggest reason.
Airfares, meanwhile, are expected to go up, said Jay Sorensen, president of The IdeaWorks Company, a consulting firm for the airline industry. “The end of the recession, timid flight growth and fuel prices are all prompting the airlines to gradually return to higher prices,” he said.
However, not all business travelers consider fare increases a bad thing.
Slightly higher fares may mean better service “like it was years ago,” said Keith Allison, president and chief executive of Systel Business Equipment, based in Fayetteville, N.C. “When it got so cheap, it felt like you were on a bus,” he said.
Can you hear me now?
Another issue that could impact business travelers is AT&T's proposed takeover of T-Mobile, which has raised competition concerns, especially for those who travel overseas frequently.
Charles Golvin, an analyst with Forrester Research, said it is too early to accurately predict the impact of the deal. “It will be largely immaterial,” for business travelers in 2011, Golvin said, as obtaining governmental approval may take a while. If the deal is approved, which is uncertain, initially AT&T customers will continue to find it easier to connect overseas than Verizon and Sprint customers. However, after the deal's approval, the cost of international connections may increase, he said.
The challenge Sprint and Verizon customers face with international travel is that the technology they employ is not widely used in other parts of the world. However, Verizon is expected to introduce phones in the next several years that will be able to access next generation networks in other countries. “In the long term, there will be better competition, more even footing between the two carriers,” he said.
Bay, the Missouri businessman, said he was more concerned about the cost of data transfer overseas than for phone service. He recounted how during a trip to Paris recently he mistakenly thought the transfer of a series of images was included in a package rate. “My bill was almost $2,000,” he said. He was able to negotiate a retroactive deal with AT&T for $200, “which is still outrageous,” he said, adding that he was hopeful the possible merger would be beneficial to consumers. “There is need for improvement,” he said.
'Smartest guy in the airport'
Many developments in technology are positive, said Ron DiLeo, executive director for the Association of Corporate Travel Executives, allowing business travelers to check a flight's status, rebook and take care of problems on the road.
“The mobile app is an enabler,” said DiLeo, recounting how on several occasions, using a mobile app, he learned about a gate change before the airline gate attendant. “By the time the formal message is sent, I’m already there. It makes me the smartest guy in the airport.”
Advances in technology also help companies with their bottom line. DiLeo is aware of one company that gives incentives to its employees who save money while on road trips. If you’re a traveler with mobile technology, he said, “it’s a much better world.”
Lisa Lundquist, vice president of client solutions for Ovation Travel Group, a New York-based travel management company, said more clients are using electronic boarding passes, accessed by an attachment with a bar code that is scanned on the smartphone screen. And Amtrak’s new pilot disruption notification service, which alerts travelers about delays via Twitter, is also gaining interest.
Technology can also help travelers comply more easily with corporate travel policies, Lundquist said, by booking all travel through the travel management company. “Risk management is a big driver,” she said. Knowing the whereabouts of employees helps ensure they get home more quickly after natural disasters or political unrest.
Technology's dark side
But Michael W. McCormick, executive director for the Global Business Travel Association, a trade group for corporate travel managers and suppliers, said technology can also be the source of problems.“We’re starting to hear it as being a concern,” he said.
For example, sharing whereabouts on social networking sites can be potentially damaging to business travelers’ personal security and can jeopardize companies’ proprietary information. In addition, lost devices are among the biggest threat for security beaches for companies, and as devices get smaller, it happens more.
Another issue of concern, he said, is the importance of transparency regarding ancillary fees. “People need and want to know what they have to pay for.” Such information, he said “is not widely available.”
There are a number of issues in coming months affecting hotels that business travelers also should be aware of, said Bjorn Hanson, dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University.
“Occupancy has recovered enough so that availability becomes an issue,” he said. “Travelers need to make reservations earlier.”
And there will be a resurgence in hotel renovation, so it is important to be aware of possible inconveniences caused by noise and odor levels. “When I’m traveling, I often call to ask: ‘Is renovation under way? Will my room be near construction?’ ” Hanson said.
Also, because a record number of hotels will be rebranding in 2011, business travelers might consider inquiring about it when reserving a room, if brand is important. And while moderate rate increases are expected overall, rates may go up substantially depending on when and where travel occurs, he said.
Adam Weissenberg, vice chairman and U.S. leader of tourism and hospitality for Deloitte, a consulting firm, said the industry needs to become more sensitive to younger travelers. “Their travel habits are much different than those of the older travelers,” he said. “Gen X and Gen Y business travelers care more about the environment,” he said.
Hotels may have lights and the radio on for arriving guests, “but there’s lots of discussion going on that it is such a waste of money.” Similarly, many car rental companies offer upgrades. “My generation says, ‘Give me the biggest car you got,’ ” Weissenberg said. But Gen X and Gen Yers do not typically want upgrades, he said. They favor smaller, more “environmentally friendly options.”
“The recession is still front and center” for many family and closely held small businesses, said Wayne Rivers, president of the Family Business Institute, a consulting firm in Raleigh, N.C. Businesses that survived “are terrified. It was a painful and bitter experience,” Rivers said. Just as recovery seemed imminent, fuel costs skyrocketed. “Businesses are trying to keep people off of flights,” he said, “and when travel is necessary, they scrutinize expenses more than ever before.”
“In my estimation, it’s going to be a long time before people pay for premium seats or upgrades at hotels.”