Industry Forecast

©2013 Advito

Industry Forecast2014

Connecticut Westchester BTA MeetingNovember 12, 2013

©2013 Advito2 ©2013 Advito

Content

Outlook and risk factors

Air

Hotel

Meetings

Car rental

Rail

Appendix 1: Spotlights

Appendix 2: Historical data charts

©2013 Advito©2013 Advito

2014 Outlook

3

Airlines are showing capacity

restraint in mature markets

Oil price should remain stable

Hotel rate increases will be

low outside primary cities

Travel demand remains generally

weak

Business travel demand will gain momentum in 2014, in line with

projected global economic recovery


Risk factors

4

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

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

Safety and security concerns low


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


Airfares most resilient in mature

markets

Capacity restraint supports small fare

rises in North America

and Europe

Consolidation may lead to

upward pressure on fares

Capacity growth to lower fares in most emerging

markets 2014 outlook Air

6

While airlines in the U.S. and Europe are keeping a firm grip on capacity, soft demand will likely

prevent significant fare hikes


Airline key performance indicators

7

IATA’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


Airfare predictions for 2014 – North America

8

Fares 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


Airfare predictions for 2014 – Europe

9

With 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)



Airfare predictions for 2014 – Asia

10

Weaker 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%



Airfare predictions for 2014 – Latin America

11

Airfares to rise across all segments


Business Economy


Regional +2% +3%



Airfare predictions for 2014 – Middle East

12

Intense competition between Gulf airlines will deliver lower airfares across all segments



Business Economy

Intercontinental -2% -2%

Regional -2% -2%


Airfare predictions for 2014 – Africa

13

Competition will lead to lower fares on intercontinental routes; rising demand will support increases on regional routes



Business Economy


Regional +2% +3%


Airfare predictions for 2014 – Southwest Pacific

14

Intense competition in Australian market will ensure that airfares remain largely unchanged



Business Economy

Intercontinental 0% 0%

Regional 0% -1%

©2013 Advito©2013 Advito15

ADR increases will be minimal in

Europe

Latin America to see strongest rise

in ADR

Argentina and 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


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%



Hotel ADR: 2014 forecast by market

17

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%


Demand growth is steady

Rates to rise faster in first-tier cities

Hotels to look for higher increases

in 2014

Supply remains tight in North America and

Europe2014 outlook MeetingsAvailability will become an

increasing problem, especially as booking lead times continue to

shrink


2014 outlook Car rental

1919

Rate rises unlikely to stick

Multinational agreements

becoming more popular

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%


Competition will keep rates in check



20

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 Rail


Appendix 1 Spotlights

21


• Legal challenge from U.S. DOJ based on industry capacity, pricing•Airlines appealing•Deal likely to succeed

(with concessions)

THE SCOOP

Four carriers would control80%of U.S. air traffic

American Airlines and

US Airways mergerSpotlight


Hybrid model

•Actively pursuing corporate traffic• Starting to fly long haul leisure

routes•Pay for legroom, baggage, fast track

and lounge

THE SCOOP

Hybrid airlinesSpotlight

Example hybrid airlines

Full-service model

Low cost model


Unbundling trend continues

Unbundling

THE SCOOP

Reporting remains major challenge

Loyalty program membership helps some travelers avoid these charges—at least for now

UnbundlingSpotlight


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


•Multinational corporate contracting on the rise•Competitive international

marketplace•But each player has gaps

THE SCOOP

3Global players

International corporate car rental agreementsSpotlight


Appendix 2 Historical Data Charts

27


Air

28


Cost per mile

29

North America

Source: Advito


Cost per mile

30

Europe

Source: Advito


Cost per mile

31

Asia

Source: Advito


Cost per mile

32

Latin America

Source: Advito


Cost per mile

33

Middle East

Source: Advito


Cost per mile

34

Africa

Source: Advito


Cost per mile

35

Southwest Pacific

Source: Advito


Economy class ratio

36

North America

Based on weighted average for first five months in each year

Source: Advito


Economy class ratio

37

Europe

Source: Advito Based on weighted average for first five months in each year


Economy class ratio

38

Asia



Economy class ratio

39

Latin America



Economy class ratio

40

Middle East



Economy class ratio

41

Africa



Economy class ratio

42

Southwest Pacific



Advance booking

43

North America



Advance booking

44

Europe



Advance booking

45

Asia



Advance booking

46

Latin America



Advance booking

47

Middle East



Advance booking

48

Africa



Advance booking

49

Southwest Pacific



Hotel rates

50


Hotel rate developments

51

Brazil

Source: Advito



52

Canada

Source: Advito



53

China

Source: Advito



54

France

Source: Advito



55

Germany

Source: Advito



56

India

Source: Advito



57

Ireland

Source: Advito



58

Italy

Source: Advito



59

Japan

Source: Advito



60

Korea

Source: Advito



61

Mexico

Source: Advito



62

Russia

Source: Advito



63

Singapore

Source: Advito



64

South Africa

Source: Advito



65

United Arab Emirates

Source: Advito



66

United Kingdom

Source: Advito



67

United States

Source: Advito


Historic hotel ADR development

Top U.S . cities 2012 2013

ADR US$ Q1 Q2 Q3 Q4 Q1

Atlanta ADRYoY

1393.0%

1394.7%

1373.7%

1427.5%

1433.0%

Boston ADRYoY

1977.2%

27313.7%

2573.9%

2392.3%

196-0.5%

Charlotte ADRYoY

1310.2%

1353.8%

1389.0%

1396.0%

14510.7%

Chicago ADRYoY

1646.4%

2226.8%

2176.9%

2216.1%

1724.8%

Dallas ADRYoY

1380.6%

1438.9%

1396.3%

1413.6%

1476.4%

Denver ADRYoY

1442.0%

1545.8%

1542.0%

1495.3%

1504.2%

Houston ADRYoY

1436.3%

1484.8%

1415.5%

1468.6%

1569.1%

Indianapolis ADRYoY

12010.5%

1174.6%

1175.1%

1175.9%

118-2.0%

Las Vegas ADRYoY

1568.9%

1448.6%

124-5.1%

132-1.8%

155-0.5%

Los Angeles ADRYoY

1817.6%

19515.0%

19011.7%

1899.9%

1915.3%

68

Top U.S . cities 2012 2013

ADR US$ Q1 Q2 Q3 Q4 Q1

New Orleans ADRYoY

1789.9%

1747.6%

1359.1%

1661.4%

1948.6%

New York ADRYoY

2610.1%

3423.5%

3280.3%

3805.3%

2827.9%

Philadelphia ADRYoY

1671.6%

1949.8%

1773.7%

177-0.2%

1712.3%

Phoenix ADRYoY

143-6.7%

117-3.0%

103-1.4%

1280.5%

1494.3%

Portland ADRYoY

1277.9%

1355.7%

1426.7%

1366.8%

1389.2%

St. Louis ADRYoY

1200.7%

1293.3%

1272.3%

1240.6%

1232.2%

San Diego ADRYoY

1504.4%

1525.7%

1563.2%

1461.4%

1500.2%

San Francisco ADRYoY

23613.9%

24514.7%

27115.3%

2569.3%

2506.1%

Seattle ADRYoY

1583.7%

1725.1%

1875.3%

1642.4%

1590.3%

Washington ADRYoY

244-0.4%

2813.5%

2433.5%

2572.4%

2471.0%

United States

Source: Advito


Top European cities 2012 2013

ADR local currency Q1 Q2 Q3 Q4 Q1

Amsterdam ADRYoY

1513.3%

1664.2%

1621.6%

1550.5%

144-5.0%

Barcelona ADRYoY

15326.1%

17117.8%

155-6.5%

1508.5%

1604.7%

Berlin ADRYoY

120-2.1%

1180.2%

13010.7%

1163.6%

117-2.2%

Brussels ADRYoY

1602.2%

1714.4%

1510.4%

1663.2%

159-0.9%

Copenhagen ADRYoY

11683.4%

13148.0%

12452.4%

1158-1.5%

1112-4.7%

Dublin ADRYoY

1154.1%

1278.5%

1307.7%

1201.9%

1161.2%

Düsseldorf ADRYoY

1242.1%

131-7.2%

1122.7%

1280.0%

120-3.5%

Frankfurt ADRYoY

1520.7%

16013.4%

1504.4%

1523.4%

1562.5%

Hamburg ADRYoY

1205.1%

1240.6%

127-0.1%

1191.6%

113-5.5%

London ADRYoY

1705.9%

1862.8%

1840.1%

1928.3%

1848.4%

69

Top European cities 2012 2013


Madrid ADRYoY

13312.8%

1387.1%

125-8.2%

1411.6%

1351.5%

Milan ADRYoY

1784.2%

1782.9%

1790.1%

158-7.0%

1907.1%

Moscow ADRYoY

96420.9%

102096.8%

9519-1.3%

99303.7%

9510-1.4%

Munich ADRYoY

135-0.5%

16416.5%

1667.1%

16113.4%

14810.0%

Paris ADRYoY

1977.1%

2253.5%

2234.3%

2126.0%

197-0.5%

Prague ADRYoY

28535.0%

33315.0%

33011.0%

30950.9%

2798-1.9%

Rome ADRYoY

156-0.8%

188-1.0%

1956.4%

1771.9%

18720.4%

Stockholm ADRYoY

16090.1%

17631.5%

1703-1.4%

1665-1.5%

1555-3.4%

Vienna ADRYoY

1384.8%

143-0.2%

1557.5%

1430.8%

133-3.7%

Warsaw ADRYoY

48314.9%

61822.3%

464-8.9%

468-11.6%

421-12.9%

Historic hotel ADR developmentEurope

Source: Advito


Historic hotel ADR developmentOther cities in Asia, North America and Latin America

Top Asian cities 2012 2013


BangkokADRYoY

4677-4.2%

4739-3.2%

4719-1.4%

4785-0.5%

50177.3%

Beijing ADRYoY

11405.7%

12106.1%

11281.4%

1100-2.1%

1085-4.8%

Delhi ADRYoY

644741.6%

5496-5.9%

3970N/A

7644-22.0%

5726-11.0%

Hong Kong ADRYoY

24381.2%

23079.5%

22194.1%

24612.8%

24761.6%

Mumbai ADRYoY

9670-5.3%

8716-4.5%

8462-1.9%

9269-6.7%

9372-3.1%

Seoul ADRYoY

2561495.5%

27388611.4%

2573953.6%

264134-1.7%

253077-1.2%

Shanghai ADRYoY

12524.6%

12864.8%

12222.8%

12391.1%

1168-6.7%

Singapore ADRYoY

3338.4%

3203.9%

314-2.5%

307-2.5%

316-5.0%

Sydney ADRYoY

2759.3%

2557.3%

2460.1%

2762.5%

2843.6%

Tokyo ADRYoY

229529.1%

232438.9%

226766.8%

2421010.4%

242955.9%

Canada & LatAm 2012 2013


Buenos Aires ADRYoY

80920.1%

74610.8%

745-0.8%

7929.2%

8282.3%

Lima ADRYoY

5564.5%

5660.7%

5645.0%

5475.3%

510-8.2%

Mexico City ADRYoY

18115.9%

192020.4%

17726.5%

1794-2.2%

18622.8%

Montreal ADRYoY

1512.2%

163-0.6%

159-2.4%

154-3.2%

150-0.4%

Rio de Janeiro ADRYoY

42519.6%

44223.1%

43918.5%

46013.0%

47912.7%

San Jose ADRYoY

8379511.3%

69663-9.5%

65932-12.0%

63895-22.0%

68786-21.0%

Santiago ADRYoY

10819426.8%

11450929.5%

954095.1%

108790-1.1%

99740-7.8%

Sao Paulo ADRYoY

40132.3%

44035.7%

40823.4%

42624.9%

44210.2%

Toronto ADRYoY

1636.7%

1673.5%

1671.4%

1681.2%

1672.2%

Vancouver ADRYoY

1582.9%

1833.4%

1830.1%

`1642.0%

1580.0%

Source: Advito


Tier distributionIn key markets

71

Source: Advito


Thank you

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