Gone are the days of hotel suites, spas and corporate jets for business travelers. This year, as businesses tightened up their belts in response to the recession and preparation for Fed interest rate hikes, businesses have been cutting back on travel expenses for their employees.
Travel companies feel the squeeze
Business travel expenses make up a sizable portion of airline and hotel bookings, and these travel-affiliated industries have already started to feel the effects of company travel downgrades. According to an article in The New York Times, first quarter bookings for both Continental Airlines and Marriot Hotels are collecting up to 20% less in bookings than last year.
For airlines, this is devastating. Businesses that made up a great deal of the reservations above economy class are now moving back to coach, and many must be wondering if this will be the end of “business class.”
Travel now a buyer’s market
While this may be sad news for an executive accustomed to fine wines and mud baths on his business trips, this shift to a buyer’s market means great things for travel consumers, such as lower rates and more free benefits like breakfasts and rate cuts from low fare airlines like JetBlue.
Businesses also are taking advantage of the market while continuing to cut corners wherever they can. This shift is working to the benefit of small-scale businesses and travel companies that, once overlooked by corporate bookings, are now seeing a new influx of higher end customers.
Companies in the automobile and financial industries — running largely on government funds — are selling off private planes more to save face than to save money. As U.S. Rep. Gary Ackerman (D-NY) said in response to the auto industry executives showing up in Washington to ask for bailouts in private jets, “It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo.”