Pricing trends:

Five TMCS share their insights on the pandemic's impact on air fares and hotel rates

ANTICIPATE A VOLATILE MARKET

The basic principle of offer and demand remains the same but the pandemic has brought a massive disruption and both have collapsed.

The global offering from airlines is around 50% of what it was last year and the vast majority of this is on domestic networks, driven by China and other parts of Asia.

Pricing is going to remain volatile. We are advising clients to identify what their travel is likely to be in the next 3-6 months, and to which destinations, and then chose airlines which are a good match and provide them with an estimate. We advise not to run an RFP. It will be a waste of time. Instead embark on very specific renegotiations on the terms agreed in 2020, based on market share and revenue goals.

At the same time, anticipate market volatility and consolidation in the aviation sector. Some airlines are partially grounded and could go bankrupt, leading to less competition on specific routes and pushing up prices. Finally, and importantly, consider biosafety. Ask, is this airline safe, is it following the right protocols? Olivier Benoit, Principal and Vice President Air I&A Advito

LOOK AT THE WIDER PICTURE

Previously, forecasting air, hotel and ground transportation pricing was based on five years of GBT data, macroeconomic data and industry metrics specific to cities and routes.

This is not currently possible without clarity on supply and demand trends. Now, more than ever, it’s time to think about the wider impact of the travel programme: what are its objectives and how can it support successful outcomes?

Often known as a commodity strategy, this has elevated sourcing discussions beyond narrow focus on savings on routes or properties and requires consideration of six foundational tenets: stay proactively and regularly engaged with your supplier partners; make sure stakeholders (HR, legal, security and so on) understand the reasons for your sourcing strategies and you understand their objectives; communicate and measure the value of your sourcing options; establish a framework to capture and process traveller feedback (how they feel, what they need, how willing they are to travel); monitor the supply landscape which will be volatile for some time; and finally, make sure your sourcing plan is flexible - your strategy may be right for now, but things may look very different in six months’ time. Jim Ranney, Director of Global Business Consulting American Express GBT