Technology is growing at a rapid rate, connecting people around the globe and providing instant options for businesses to communicate. However, even with these technology advancements, travelling for business continues to rise.
The need for face-to-face meetings and conferences has not diminished and the value of personal relationships is paramount for businesses. This is evident in a November 2016 survey by FCM New Zealand which saw only five per cent of clients would be reducing their international travel volumes in the coming year.
The International Air Transport Association (IATA), announced full-year global passenger traffic results for 2016 showing demand lifting 6.3% over 2015, with the Asia Pacific region demand growing by 8.3%.
It will come as no surprise that the average cost per international trip has increased over the past 12 years with the average spend in 2005 sitting at $3,350 compared to 2016 at $4,600.
These costs can largely be attributed to the steady increase in the cost of living and is in line with inflation. Within this cost of living, petrol as a commodity has fluctuated in price, but the increase since 2005 has been significant, meaning airlines have had to gradually raise fares to cover these costs.
These fare spikes have been noted across classes, however as highlighted in the Spotlight series, there has been a price war, with a surge in the number of carriers contending for business which as a result means greater choice, price and to entice the executive traveller back into business class.
Low cost carriers and the introduction of Jetstar to the New Zealand domestic market in 2009 has given businesses another option on fare prices, however not all business travel policies include low cost carriers. Loyalty programmes, scheduling and onboard options
draw businesses to legacy or more premium carriers at a cost. A cost, many businesses are happy to bear.
Travel can be complicated – ironically choosing a more expensive fare can save the business money long term. Seeking advice around travel and travel policies can attract significant savings for businesses each year.
FCM’s Spotlight on Domestic Travel article highlighted 30 new hotels are required across the country by 2025 to keep up with demand and that potentially only 15 will eventuate. This level of demand and supply issues has seen room rates
Many properties are also tapping into the world of ‘added extras’ by charging for services such as WiFi, business centres and breakfast, knowing often they’re a requirement for many executive travellers. These extras have added to the increase in spend on hotels for many New Zealand businesses.