Corporate Travel On The Up

The business tourism market will move back into growth in 2004, although the sector will be marked by a cost-cutting mindset for some years, according to a new report by the International Association of Convention and Visitors Bureaus (IACVB). Although steady growth in both the US and Europe this year is underpinning a recovery, IACVB president and CEO Michael Gehrisch says recent trading conditions have changed companies’ focus. “The cost-savings mantra has become ingrained in many corporations’ mindsets. In general, there appears to be a permanent resetting of corporate travel business,” said Gehrisch. He supported predictions of an upturn with figures from the Travel Industry Association of America (TIA). After a three-year decline, US corporate business trips are expected to rise by 4.2% in 2004 and 3.5% in 2005. European business travel is also bouncing back by 2.7%, according to UK forecaster the Centre for Economic and Business Research (CEBR). But the IACVB predicts that Europe will not see an increase in US business, although this will be offset by an upturn in internal travel and more inbound business from China, Russia and India. Senior lecturer in business travel and tourism at Westminster University Rob Davidson said that although business is picking up, there is evidence that the recent downturn had hardened attitudes to negotiation. “There is downwards pressure on rates. People are trading down,” he said. ICCA chief executive officer Martin Sirk added that convention centre expansion has brought a new level of competition to the market. “Second-tier destinations have come of age. China, Korea, Mexico and Eastern Europe are really hungry for business,” he said. ICCA members are said to be more optimistic with regards to 2004 than they have been for several years. “We believe that 2004 is going to be the recovery year and 2005 should represent a return to growth,” said Sirk. “There have been indicators of the health of the sector such as the early return to profitability of airlines.”

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