Video: Emburse Business Travel Snapshot Webinar | Duration: 3728s | Summary: Emburse Business Travel Snapshot Webinar

Transcript for "Emburse Business Travel Snapshot Webinar": Javier, we're live. Okay. Alright, folks. Looks like we're right at the 1 o'clock hour. I think we're gonna go ahead and, and start the webinar. Looks like we've got a decent amount, but it's growing. I'm I'm gonna give it another minute. We'll start at 101 because, the the number's climbing pretty consistently. Hope everybody's doing well. Happy holiday season for all. Enjoy your your time off if you're gonna get any. Go show. Alright. Let's give it a few more minutes. We had around 150 register expecting to get, you know, over a 100. So let's give it oh, there it just went to time. What the heck is that? Feel about that thing at the bottom? That's the real time. For everybody who's paying attention to this banter, this is the first time they've used this technology before. Now not the first time members has used this technology before and the first time we've used this technology before. So bear with them. It was rolling up, nicely to a 100, and then all of a sudden it changed. That's all right. But, anyway, alright. Let's go ahead and get started. Hi, everyone. This is Steve Reynolds, chief strategy officer over at Embers. We will do some introductions here in a minute. This is our business travel snapshot webinar. The intent of this webinar is to give you some at least our insights, that we feel are very data driven into what is likely to happen, in 2025. What are the stats showing us as far as hotel rates by market, by city, by region, also airfares, as well. If you'd like to have access to our market stats dashboards, we give that to all of our direct customers. Happy to provide at no charge. If you're a travel agency, you would like to have access, reach out, to your appropriate, you know, trip and EMBER's contact, and we'll figure something out. Alright. Abby, if you could advance the slide, please. So as I mentioned, chief strategy officer at Embers. Also wanna introduce Holly Brossam, who, heads our customer service department, and Dave Mollove, who leads our our hotel products. Holly, you wanna say hello? Hi, everyone. Good to be here. And David? Hey. How's it going? Good to see everyone. Short and sweet. Short and sweet. But, both these folks have been and myself have been in the industry for decades. We spent we're we're in hundreds of conversations throughout the year talking to clients about their air program, their hotel program, what the data is telling us about, where there's opportunities for additional savings, and so on. So our intent is to kinda consolidate that across all these clients and come up with what we think the consistent trends and stats are, and we share those, yeah, in the next hour. So I'm gonna cover if we go forward, Abby, the trending topics for 2025, kind of the top ten, and then I'm gonna hand it over to David and Holly. David's gonna cover the hotel in more detail, and Holly's got the air portion, of the presentation. So let's go to the next slide. So, key trends. First off, the volumes are back. You know, everybody kind of anticipated that, COVID volumes, where we'd be past the COVID situation around 2025, and it appears that's definitely the case. Based on what we're seeing, most of our customers are back if not beyond with a few exceptions. The high-tech, or the really large high-tech clients are still kinda controlling through budget, the overall spend, but it's creeping up, at a pretty consistent rate. So overall, when you include small, medium, and large customers, the volumes are kinda right back where they were, going into COVID in 2019 and 2020. Number 2, most hotels are averaging about a 60% occupancy rate, which is pretty much the historical norm up until 2019, 2020. When COVID hit, it dropped down to 10% or 20% has been gradually creeping back. So another indication, that volumes are kinda back, where they need to be. And 60% is a pretty healthy number. Some hotels kinda get to that 80% level. But if you can get to 60, you're profitable, and, you know, you're gonna have a a decent year revenue wise. Number 3, what we're seeing in the data, and if you follow the trend lines, we expect hotel rates to increase, by about 4%. Historically, it was about 3%, going into COVID. The 4%, I believe, a little bit higher rate is just because of demand. Supply is still a little bit down. There hasn't been as many new hotel openings and such, but those are coming around. I think there'll be quite a few in 25 and catching up, and the demand seems to be pretty strong. So as a result, just rates are gonna increase, just, across the board. Airfares are actually expected to increase by even more. We think those are gonna go up by about 5% overall. Heavy demand in the leisure market, the business market, as well as international. The one exception seems to be a a bit of a decrease in flights, to China, and in hotel stays in China for a variety of different reasons. But, overall, I would anticipate a 5% increase in your airfare spend, also factoring in, you know, for some growth. Number 5, air discounts will be easier to obtain if not already because of American Airlines changing strategy. So as we all know, they tried a new approach where they were just gonna back away from the corporate market. They've done a complete 360. They're now back in. As a result, they're trying to recapture the share that they've lost to Delta, United, and others. And to do that, they've gotta give some contracts, and those contracts have to be fairly reasonable, if not really good. So I would think now is the time if you aren't already, you know, talk to your American Airlines rep, assuming you have one, you know, and and negotiate the best deal that you can. Alright. Number 6, don't go forward yet. The NDC gap has shrunk to the AA. So before AA pulled back, we were seeing a pretty significant difference between the fares to NDC on a Direct Connect kind of situation, then through the GDS. Because of Americans pullback, that difference has really waned, if not gone away completely. We see about a 2 to 3% difference between the 2. So there's really not a a lot of pressure right now to have access to those NDC fares. Now I don't know that that my guess is that's going to evolve over time and that across the board, the airlines will use ND fares as an inducement to get more of a direct connection with customers. But we haven't seen that proven out today. We're gonna keep a close eye on it to see if it starts to change in the future. Number 7, hotel cancellation rates at 6% compared to 12% in 23. I still don't know the reason why. Maybe we get into our hotel section. Dave Malov might have some insight into this. But the the one's metric, the one stat that for whatever reason seems to be different between last year and this year is the cancellation rate of hotels. It's half. So customers now are booking hotels and staying and actually keeping their reservation, much more often. Number 8, flat rate discounts are averaging about 21%. This is actually a little bit better, than we've seen in the past. Historically, it was around 20 to 19, and I think this is partially just due to static rates, that are in place and market rates climbing a bit faster than anticipated because of demand. Also, that hotels are really starting to push dynamic. I was at a conference just recently where a couple of brands were saying dynamic is the way to go. But then there was buyer pushback saying, look, we're happy to accept them if they were reasonable. And we think something around 20% is reasonable, but hotels at the moment aren't willing to give those. The chains aren't. Most of them are around 18, 15, whatever. And I don't know why you would do that if you can get a 21 percent or better static rate. And last is we're starting to see, AI have an impact upon corporate travel and expense. It's been talked about now for probably at least a year, and there's lots of efforts kind of behind the scenes, in AI. Lots of investment being made mostly around data and analytics, a little bit about, automating the travel agent function. Where we're seeing it, most readily applied is in receipt capture, the OCR in your receipts. It dramatically improves the accuracy. And then in fraud detection, it's much better than a person in detecting fraudulent activity, mistakes made, and just, you know, the stuff that happens, that requires manual audit on expense report. It's much better if you use AI and audit it and cover a 100% of reports, not just sort of spot checking. Alright. So those are the key trends. If you have any questions around these, don't hesitate, to ask them, through the chat section, of the software. And with that, I believe I hand it over to mister Malov to handle hotel. Is that right? Yes. And there I am. And if I press this button, that works. Alright. Cool. Alright. Thanks, everyone. Thanks, Steve. Let's talk about the hotel segments. Alright. So to kind of dig a little into some of the stuff that Steve is talking about, what we've seen is that things are starting to get back to normal. We would talk about, COVID zigzags over the course of the last several years. You know, we had the, different variant dips, and then, you know, you have those dips eclipsing yourself each other, so you have these increases. We're now back to normal. And according to PWC, there's not much, in the way of increase in occupancy in 2025. The revenue that's going to go up is gonna be largely driven by rate, and that's gonna be kind of a theme of what I'm gonna talk about in the next section as it relates to the tel industry. Going a little deeper into this though, when you look at STR's forecast, which is roughly the same as PWCs, what you can see is that ADR is what's gonna drive RevPAR, but the real RevPAR against the benchmark rate benchmark data in 2019 is below. And so what that basically means is on a real basis, taking into account inflation, we are actually still behind where we are in 2019 as it relates to revenue. As it relates to volume, to Steve's point, we're there. But because the price of hotel rooms has gone up so much relative to inflation or it's gone up a lot, but inflation's gone up even more. We're still behind. In the hotel industry, the 2 biggest, cost sections are labor and financing costs. And so as a result, as you've seen through some of the strikes that have happened in some major markets, labor costs are going up, as you can see, according to interest rates that are constantly financing hotels. That is much higher, and so you're gonna be seeing hotels looking to recover, some of that revenue in the next cycle. And if you kinda look at what STR or where STR think that's gonna happen, it's predominantly in the upper upscale, upscale, and upper midscale markets, which is what we saw last year and what we're gonna see probably in 2025. And for those of you who are buyers, that is you. That is impacting you. This is kind of a page out of the old playbook, which is the idea that if, if there aren't the demand spikes that we've had in the past, the best way to increase prices with the price insensitive customers, which is the business travelers. And I think the other thing we've also seen is with a lot more focus on LRA and, and making sure that people are getting in dynamic pricing, Hotels are gonna be looking to yield, and if no one's paying attention, they're gonna yield the what places where people are not paying as much attention. So that's where we think, we're gonna see some revenue increase, and that's gonna have impact for the buyers in the room. Here's our numbers as it relates to, the last 30 days. Now as, Steve mentioned and as the numbers are are suggesting, things are kind of starting to slow down. They're they're flat. According to the bottom left chart, you can start to see the December seasonal impact, which is what happens every single year. In the bottom right, it's about volatility, and volatility is you know, don't let that throw you. It's between 17% 15%. But, you know, in the the back the back half of the year, you start to see pricing not changing as much, because there's not as much demand going on in the December time frame. So it's not really a surprise for us. What I thought was really interesting, though, is in the last 30 days, the average discount has increased 9 a half percent. And what that basically means, if you look at it, market rates have gone up $20 in the last 30 days, but the prices that bought business travelers are paying is only up 9 per $9, which is almost about 10%, which means that your benefit of of all the work that you've done over the course of the year is getting greater relative to, the market. And one of the things I think is going on in in November for that is you've got, Thanksgiving happening later in the in the, in the month, and so you have more more days of business travel. And that may be what a driver is in terms of, expansion of value. Hey, Dave. Yo. So quick question on my cancellation quandary. You know, it's half this year as compared to what it was. It's running at 6% versus 12. Any thoughts as to why that might be? Well, I think part of it is the Thanksgiving part may be part of it because, again, November of last year doesn't look like the same November as as this year. But I think the other thing that's going on is I think that, a lot of, you can see that the advanced purchase is looking similar to what it was before, but I think the other thing is that budgets aren't getting cut in the last quarter of the year as they as they have been in the past couple years. And so I think some of the trips that people were planning, people are still planning on taking. Alright. And then then then we learn I'm the I think the 10% increase in the discount level, that last column is significant. Yep. If I was a buyer, should I anticipate a 23 percent discount going forward? Well, actually, I I've got a slide on that, and I can I can show you what what we're thinking about for that? Okay. Let's see here. Any questions in the chat we need to go through here? What are you seeing as the average hotel occupancy from Monday through Friday excluding weekends? Well, that that I think, you know, you know, it it for us, you know, that that that is probably the, you know, the higher number. So if 60 what was it? What did PWC said? PWC said, 63% for the year. What that basically means for us is that those midweek patterns are gonna be what's pushing that up with the idea that the shoulder dates are the dates that push it back down. Alright. Let's let's press on. So the seasonal dip is on its way. That's what we see in December. What you got here is a really interesting picture of the last 2 years of demand. And on the left side of the chart, that's 2023, and the right side of after that dip is is to 2024. What we're starting to see is that things are following the same patterns as they usually have. The 1st and second quarters are are kind of flattish. It looks like this year was much stronger than the Q1 of last year. You've got that dip that happens in the the July ish time July, August time frame, and then you got the peak that happens in the October time frame. But this, is means that, you know, we're not seeing some of those big dips and those big spikes that we saw before. And as you can kind of see, the the trend started trail off on the right side of the, of the grid. That's, you know, what you're gonna see going into the rest of December, before we start picking back up in January. Now one thing to note is is, New York City, I think, is an exception to that. Now New York City is usually very busy in December. One thing we always see in the RFPs is that the, 4th quarter actually, the 4th quarter, but the the last month of the year, New York City usually increases their prices. But what's happened this year differently in the past is a lot of the Airbnb restrictions that went into place earlier in the year are starting to take shape. So there's less Airbnb inventory in New York City. Travelers leisure travelers have to stay in hotels. That's pushing some of the pricing on, on business travelers. I think there was an article in the Wall Street Journal this week that talked about it's getting impossible to stay in New York in December. So that's something to keep in mind as you think about your negotiations in the next year. So, Dave, are you saying that if I've got a business traveler going to New York, I should push them into January? Well, the reason why people go to New York, as you know, Steve, is that it's the best time of year to be here. I mean, you know, looking at the tree, people do their shopping. I don't know if those are necessarily business reasons to come to New York City, but it seems like it's always been a tradition that people come to New York in December. And so what I would do if I was looking at it is I would I'd be looking at my policies and trying to make sure that people if they have to go to New York, there's a really good reason why they're going. They're closing that year end deal, then it it better close. Yeah. Okay. So this is kind of the thing you were talking about, Steve, about the average discount over time. The interesting thing about this chart so what you're seeing here is what the effective discount is over the course of the past 2 years, and the low period, which is January, both in 23 and 24, the lowest discount was 22% this year. That basically means that the relative market price to what the buyers are paying was no less than 22%. Now again, that's across all customers across all markets that not that doesn't, you know, speak to every single customer. But the important thing is a lot of these these higher demand period discounts are somewhere around 28 to 30%. And so if a dynamic offer is less than 20%, I'd want to really have a hard look at why I'm I'm paying that or why I'm being offered that. Because if a hotelier wants a buyer to move to dynamic from static, they really need to be able to make a case to say, listen. This is just as good as you would get if you went with a static deal. The other thing that's interesting is that discount's not the same throughout the year. It it goes up and down. The reason for that is, you know, the seasonality. Right? And what this says, though, is during the higher demand times, buyers are getting better deals. So it's really important that when you're doing your RFP to look at those seasonal prices to say, okay. You know, is this price increase I'm looking at in the Q3 commiserate with what I'm looking for from last year? A lot of times, we have to aggregate a lot of information to make a lot of decisions, and it's really hard to do. But it's obviously very important that you look for great deals, and the hotelier certainly are doing it as well so that you can maximize your discount when the demand periods are higher. I just said a lot there. Any questions on that? Steve, that makes sense? I I guess. I guess so what would you anticipate in 2025 if I were to measure just the overall average discount for my hotel program where I was able to get a negotiated rate, so you're saying that it should I expect I'm one of the if I'm one of the whales, I'd be looking at 28 to 35. If I am, you know, an average size program, I'd be looking at 20 to 25%. That's a good point. I mean, it reads very pretty significantly by size of program. And so but if you do a weighted average kind of overall, we're we're probably right in that kinda middle range, 20 to 25. Yeah. Yeah. Yeah. And the thing is, a lot of buyers miss that point when they're looking at their program because they're looking at year over year increase. And what's really important is, that year over year increase is only important relative to what the market will bear. And, of course, you don't know what the market's gonna bear. But if you, stick to a flat rate program and you see that hotel industry rates aren't supposed to go up that much, they're only going up like 1%, 2%, which is what we said, that's gonna have downward pressure on your discount. And this does not include chain wide discounts, which are typically around that 15% range kind of at best. They're baked in there. Baked they're baked in there as well, but they're a smaller portion. No. I don't think they are. I think this only includes where you have a static or dynamic rate. At least that's the way I built it the way it should be. So chain wise It's a smaller proportion. It doesn't drive the numbers as much. The because, yeah, the flat rates, to your point, is, like, 60% of business that's spent. Okay. But they shouldn't be in these numbers. This might affect. Gotcha. Here's a a a another snapshot of the same conversation of dynamics. Now the interesting thing we're seeing here is in the last 30 days, dynamics are down 60% over the same period last year, and the, the average savings is up 15%. And so that we started asking our question ourselves questions, why would that be the case? And the interesting thing that we think of is because buyers are accepting dynamic discounts less, which is why you can see the 40% flat rate increase, is this may be part of the float down programs that some of the hotel companies have, which is the only time I'm paying dynamic is during a low demand time. It's floating down to the retail, which is why it's cow coded as dynamic, and that's why the deal is so much better. Because if I'm staying on a Thursday night during a lower day, then I'm paying dynamic. It's floating down to retail, and I'm getting a better deal. But that's interesting because, again, 40% increase over last year. 48,000 of the 99,000 that were that were sampled here, that means half of the business is flat. So it it continues to be the way that people do business. I think this is also just a byproduct of COVID. There were a lot of dynamic discounts given just because of all the rate volatility. Nobody knew what was gonna happen. If you don't know that, it's harder to give a static rate, so they were giving more dynamic. If it was the only option, companies were taking it. All that's changed. There's a lot more predictability in rates, which I can now set a static rate and have a lot more confidence that it's going to either make money for the hotel or save money for the company. Right? Well, there's also the part that people aren't believing them either. Right? This is a study that came out recently, that McKinsey did with, I think, with us with with our data and with, GBT. They took a sample of markets and and they said the average discount that they should have gotten was 24%. The average discount they actually got was 10%, which cost the customer $1,000,000 in perceived value that they did not receive. And, you know, the interesting thing about this is a lot of the hoteliers were pushing dynamic discounts for a while. Buyers were kind of dipping their toe into it slightly, but there wasn't a lot of confidence around it. And and, empirically, what we're able to see is suppliers are not necessarily giving those dynamic discounts as much as they say that they are. Now the one thing we've we've dug into this at at the GBTA accommodations committee, the only thing that's consistent from hotel to hotel about a bar is the place to go get cocktails because one hotel's best available rate is different than another hotel's best flexible rate. I think the accommodations committee is gonna tackle this and actually define what a dynamic program looks like so that there is some some knowledge around that in the industry. However, you know, the thing that that is difficult for a buyer is if you're in a dynamic program or if dynamic is a significant part of your program, your rate load audits are not gonna be able to capture that. Your availability audits are not gonna capture that. Only if you audit every single booking and compare it against the retail price would you be able to do that. And there's only one, one product in the market that I know of, wink wink, that does that. So the the important thing is if you're going to be in dynamic and that's gonna be something that's part of your program, there's obviously evidence to make sure that you need to make you you need to make sure that you are actually getting them. And I think the suppliers have a responsibility to show you, what you are getting discounted off of so you at least know, you know, you could count it. So, David, make sure I understand this right. So I have negotiated a deal with a a hotel at a 24% dynamic discount, which means take the bar rate, knock off 24%. That's the rate my travelers would pay for any room, whatever. Right? Well, there there are some curves around how they do that, but there's not there's nothing in the GBCA RFP that says that. Right? When you're talking about a standard rate, you're saying, okay, for king bedrooms or looking at the parking lot, there's 20 of those. My rate's $100. For deluxe rooms that are facing the I get all that. Yeah. I get the rate doesn't do that. Dynamic just says 20%. Is that the whole house? Is that part of the house? It's not clear. It doesn't matter. I'm gonna get 20% off the best available rate for that particular room type, bed type, whatever. Right? You'd think so, but I don't know that that's actually Right. So I'm just wondering how do I get to 10%. I mean, the only way to get to 10% is they're discounting something other than the best available rate. They're they're discounting something other than the best available rate, or they're not or they're yielding it out or, buyer travelers are paying up for higher room pips that are not covered by the dynamic discount. Any of those things together is how you get to 10% for 24. Yeah. I mean, I can understand flat rates are a lot easier to audit relative to dynamic. But even when you audit dynamic rates, I'm really shocked that it's only 10%. That that's just tells me I would I would I have a hard time signing up for a dynamic program. Well, that's again, that's that's for this particular study. I think the message for for the buyers out there is that if you're going to have a conversation with a hotelier about a dynamic program, you need to be able to they need to be able to tell you what rate is based off of, how do I know that it's gonna happen, and what part of the event of the house am I getting this for. You know? That needs to be clearly delineated. Alright. So I'm gonna finish up with my 7 recommendations. These are the things that a buyer can do, to better manage their program, better get value. One thing we always suggest is adding hotels to your program. If you give your travelers more choice, you reduce out of channel bookings. You know, if you're getting a discount, you may as well take a discount instead of having people pay elsewhere. Continuous sourcing, you know, you don't have to get it done by year end. I know everybody wants to have it done before they go away for the holidays. You can wait and see. You know, there is technology out there to to make that much easier. Dynamic pricing, we've talked to death at this point. But rate caps, I do wanna say there are some very intelligent, very strategic programs using rate caps, and they're not using in a draconian way. They're using it to help nudge travelers to make better decisions, and there's, information out there for that. Reshop, the only thing I wanna leave you with that is, you know, if you can configure your reshop tool to operate more in your favor, you absolutely can. Beware of free reshop because if it is free, it is not necessarily giving you what you want. Benchmarking is something that's also huge. Benchmarking is not necessarily the same elsewhere, but you have the ability to take a look at what your peers are paying and be able to make some more intelligent decisions there. And then lastly, based on that last slide, auditing is good. A good rate a flat rate's only as good as it's being made available, but same thing for dynamic. If you actually have a dynamic deal, you should see if you're gonna get it. Yeah. So, Dave, I do wanna ask a question on number 1. There was a pretty massive reduction in number of hotels and programs throughout COVID just because volume was way down and so on. And so my assumption would be it would gradually start to increase back. So if you had a 1,000 hotels going into COVID, you shrunk it down to maybe, 500. Now it's starting to creep back closer to a 1,000. Is that Every program that we've been working with this year has, like, practically doubled the size of their program. So I think buyers were very hesitant before because they didn't wanna add hotels that didn't have volume for. A lot of hotel a lot of, a lot of buyers are adding a lot of hotels this year. Yeah. Okay. Alright. Alright. Thanks for that. So let's now transition over to Holly. We're gonna cover air, and stats. Take it away, miss Brosnan. Alright. Thanks, Steve. I'm gonna kick us off with a quick year over year summary. We can advance to the next slide. There we go. And so what we're looking at on this slide in the shades of blue are the market fares 2023 to 2024, and the shades of yellow are the negotiated fares 2023 to 2024. And so what we saw throughout 2024 was airfares stabilized. But towards the end of the year, starting in November, we've seen moderate increases, and we expect those increases to continue into 2025. So November December 23 to 24 shows that upward trend. As an example, December 23 to December 24, we're showing an increase of 12.4%. And again, we do anticipate the fair increases continuing into 25, probably leveling out at around a 5% increase overall. And as we move to the next slide, we'll look more specifically at NDC where our data shows that the NDC savings varied widely in the past 90 days, depending on the carrier. So across the carriers overall, on average with a combined domestic and international, we see an average of 7% savings or roughly $20 per ticket. But if we drill down to some carrier specifics, as we referenced earlier in the presentation, American, we're seeing is averaging a 1% savings overall with Finnair coming in at a high of 19%, and United falling somewhere in the middle with a still impressive 10% savings. And if we can hop on to the next slide yes. Did you capture any savings for Delta? Or No. I don't have those handy. Okay. Okay. So Finnair is a y? That's right. Yes. Wow. Yeah. 19%. Okay. And so what we're saying here is that for FinAir, if you were to book all of your fares through NDC, they would be 19% cheaper than if you book them directly through the GDS. On EdiFact. Correct. Yes. Through EdiFact. Got it. Yep. Yeah. Okay. Okay. And, yep. Next slide. And so, just a little more detail. I'm looking at American and United. So this is, a city pair trend, American there at the top. And you can see for a couple of their city pairs, JFK to San Francisco, Jacksonville to Miami, there were some pretty substantial savings. But then it takes a material drop after that and, thus, we end up at a 1% average savings overall, whereas United seems pretty even, you know, mostly even across the board. And yes. Thank you, Abby. So post pandemic recovery, and according to the World Travel and Tourism Council, we've recovered. Business travels continued that steady recovery after the pandemic. We are set to surpass pre pandemic spending this year by 6.2% from 2019 levels to a record $1,500,000,000,000. And they anticipate by 2028 spending will exceed 2,000,000,000,000. So this increased demand for travel could push airfare prices even higher, of course, being very demand driven. Some key findings relative to this is that relative stability in the global economy continues to drive the growth. The rebounding demand with the return to office and more demand for face to face meetings is additionally, driving that increased travel. And while, generally speaking, there may be fewer workers traveling for sales and project work, The ones who are are on the road frequently, they're road warriors. The recovery, in business travel has varied by region with China and the US forecast to be the leaders for 2024. Business travel also continues to vary by industry with the most significant expansion being, in the insurance activity sec insurance activity sectors and the financial sectors. And then, of course, as we've seen the last few years, the growth of blended travel or bleisure is also a contributing factor in this recovery. Now let's take a look at what the future holds in 2025. So as I just touched on, fares remained relatively stable throughout 2024, but starting to trend up. Post pandemic recovery has increased the demand. Of course, inflation and fuel prices, and I know this is no surprise to anyone as always, the cost of fuel has a major impact on airfare prices. The global economic conditions, while stable right now, inflation rates and overall business conditions will influence, the pricing for air. As well corporate travel trends, including things like business policies that trend toward hybrid and remote work versus a return to office. And I know that in the last several months, we we've seen in the news, a lot more companies, demanding a return to office. Airline consolidation and competition mergers and that market consolidation could impact the competition in certain routes, which could drive costs up. However, on certain routes, the low cost carriers could still be, an an option to keep some fares in check. And then sustainability efforts, as the airlines do increase their focus on sustainability, that could lead to higher costs as they look to offset, their cost of doing business to the travelers. Holly, let's talk about China real quick. You know, to me, if there's if if the future White House administration starts putting tariffs in place as they've kind of as we kind of expect, then that would start to reduce the business activity out of China, which would probably you know, and also companies wanting to move manufacturing centers and other things kind of out of China into other areas like India or Latin America and so on, which I would anticipate sort of bringing airfares down because demand would drop. You think that's gonna happen as well? I think there's a potential for that to happen, but maybe not in 2025. I think that's the type of thing that would be, you know, the administration would have to get in, make their changes, and all of that has to trickle down. So maybe 2026 and beyond. Yeah. No. To your point, it does take a while to move manufacturing from one Mhmm. Country to another. The last bullet there, sustainability efforts. Mhmm. They seem to have went through COVID quite a bit. I know there is the safe fuel sort of thing going on, but have you heard of anything new or different? Nothing new. No. Nothing new or different. Just sort of, I would say the the the status quo that we've heard and seen the last couple of years. Yeah. I know it's still fairly hot in Europe, and companies headquartered out of there, but I'm just not seeing it really take hold in the US yet. Right. I know that we have we know a few corporations that have sustainability requirements built in, to their travel programs. But generally speaking, it it does seem to, be sitting on the back burner for the most part. Yeah. I mean, there's just so much talk in our quarterly business reviews with clients about sustainability pre COVID. Then it all of a sudden got just wasn't mentioned hardly at all. It felt like everybody was hitting their numbers by just not traveling, so they didn't care. And then now that it's back, they're still pretty quiet. Yes. That's what it feels like. So Yes. Okay. Alright. Next slide. So the airfare outlook for NDC, and in a nutshell, NDC is the future of corporate travel distribution. So in 2025, this NDC pricing will likely dominate in certain segments. We've all seen it gain traction through 2024. And as it, of course, as it gains momentum, Edifact will continue to decline. Some key points to consider here is as that adoption grows, the corporate clients will actually benefit from the greater flexibility, the personalization, the dynamic pricing, and loyalty incentives that can align with your business needs. More specific to the personalization aspect, I think we'll see a lot of forward progress on that in 2025. I think 2024 was just continuing that groundwork of the the pricing itself. But, 2025, we can expect to see more personalized offers, more packaged types of bundles and offers with NDC made available. Yeah. I was at a in a conference recently where they were talking about NDC, and they they really feel like this is the trend that's gonna grow and continue, into 25. And then you'll start to see a greater difference between fares through Edifact versus fares through NDC, which in other words, it's, look, direct connect, direct relationship with the airline or purchasing is gonna be significantly different than booking it through a third party channel, whether that's an OTA or a TMC or a GDS, whatever that might be. And that gap is just gonna continue to get wider and wider over time. Absolutely. Yes. It most definitely will. And and through all of this, with the continued adoption of NDC, the airlines will increasingly have more sophisticated tools to tailor those traveler experiences based on passenger preferences, their booking history, even bringing in predictive analytics. They'll leverage AI and big data to enhance that pricing and the personalized offers. So this is most certainly the future, and we can expect to just continue to see that grow for the next several years. Yeah. I kinda feel like our reshop solution is now the anti AI bot. You know, they're using AI to increase fares. We're using AI to decrease fares, and it's just, you know, this kinda constant battle back and forth, which I guess is healthy at the end of the day. It's always good to have healthy debate. Or healthy bots. Okay. Healthy bots. And and through this growth, you will also see more carriers factor NDC adoption requirements into contracts. And so statistically speaking, let's look at some of the growth expectations for 2025 on the next slide. So there are there are various channels, of course, here that that we talk about when we're talking about the growth. There's the airlines and, you know, roughly 50% of global airlines are, using NDC in 2024. That growth is expected to go to greater than 70% in 2025. So as I'm sure all of you are aware, a number of the major carriers like America and United, Lufthansa, they've already made significant strides in NDC adoption. In 2025, we're going to see more traditional, for lack of a better word, airlines, integrate NDC into their distribution strategies. And many low cost carriers are expected to fully embrace NDC as well because of the flexibility that it offers in managing the ancillary revenue streams and, of course, allows them to bypass the GDS, costs. On the OBT front, it's projected that in 2025, 90% of corporate booking tools will be integrated within DC, offering real time content for travelers. And the agency community, the TMCs, greater than 50% of TMCs are expected to be NDC compliant in 2025. Holly, I got a question for you on that. Yeah. Mhmm. So an OBT can get NDC fares in, I guess, in 2 different ways. I can get them through the GDS. Mhmm. Or I can actually do a direct connect with the airline. Or an aggregator. Yes. And use their API. Right? That's right. Mhmm. And if if you ask the aggregator or you ask the TMCs, you know, whatever, they tell there's really not any difference. And I have a hard time believing or understanding that. But look, if I'm an airline and you're con connecting to my system directly versus going through a GDS and a TMC and what have you, I just don't understand what's the value of NDC through a GDS as compare I mean, you're not saving a whole lot of money, I don't think. What am I missing? Yeah. I think that's a it's a really good question, and I don't have an answer to that. I'm it you know, on the surface, logically, it doesn't make sense because you're still going through the GDS. And without any insight into those commercials, for NDC within the GDS, I can't really say. Yeah. I mean, maybe they're not paying the GDS the same level of segment fees and incentives or whatever. That would be my guess. Mhmm. So they're saving a little bit of money. Yeah. But it's still going probably if it's at effect through a TMC and there's cost there, I would assume. Right. So, anyway, I I just think a direct connect long term is gonna have more value than one through a legacy system. So I I agree with that both for cost efficiency as well as access to full functionality that's offered in DC. Yeah. I mean, just going through the GDS is gonna limit some of your functionalities just because of the nature of the GDSs. Exactly. It has to be built out and, you know, when you talk about all the the ancillaries and the availability of the ancillaries and the packaging, that may be available in the API directly to the airline, but then the GDS has to turn around and build that out, which, of course, takes time. Yeah. Okay. Can you go? Alright. So with all of this adoption for NDC going on, there are, of course, still challenges to the growth and expansion of NDC starting with those integration costs. They remain a barrier for some airlines and TMCs, particularly the smaller players. Integration is not cheap and it's more than just building out the technical integration. There's the training of staff for new workloads that requires upfront investment investment. The legacy systems. So some airlines do still rely heavily on those legacy systems that are not NDC compatible and trans transitioning for them from these to a more flexible modern platform takes time and could cause delays in adoption for them. And then standardization. So NDC is still, you know, relatively new as a concept, and there's as such, there are challenges around standardizing within the NDC framework itself. IATA and industry players are working towards consistent definitions and formats, but it will take some time for NDC to achieve the same level of interoperability that the older systems had. And I think when you take all of that into consideration, we'll be living in a a world of transition or dual track in DC, edifact for a few more years. And then I'm going to wrap this up by covering some recommendations and tips for your airline contract strategy moving forward. Honing in again on NDC, our recommendation is to ensure that your air contract incorporates NDC based offerings, includes provisions for flexibility with the fare changes, the real time pricing adjustments, and personalized discounts. Our next recommendation is for flexibility and the fare classes and unbundling. So negotiate contracts that allow for flexibility in choosing the fare classes that align with your corporate policies, as well as providing the travelers with the option to pay for upgrades or add ons like extra baggage or seat selection, especially with those NDC options. Negotiate for discounts or bundled options on the ancillary services themselves. For instance, secure an agreement that includes discounted baggage fees or complimentary upgrades for premium travelers. That can overall lead to some really significant savings for you, with a frequent business traveler. Make sure your contract provisions for data sharing between the airline and your corporate travel management platform to allow for real time tracking, spending, compliance, booking patterns, everything that you need to make data driven decisions. Back to sustainability. So if this is a a corporate, driver of yours, negotiate with the airlines to include carbon offsetting options for sustainable flight choices. Next is negotiate for flexibility in the ticket changes and seek those flexible ticketing options, including provisions for last minute changes to travel dates or routes or negotiate waivers for last minute changes. Focus on the total cost of travel. Make sure and include clear service level agreements, particularly for priority customer service or dedicated support teams during peak travel or when issues arise. And last, and I think a really important one, is monitor continuously and include review clauses in your contracts that allow for periodic reassessments of the pricing terms. Holly, one thing I would have thought you'd have on this list is, status. Because Mhmm. You know, if you could if I'm an employee with status with a particular airline, my experience is quite a bit different than someone that does it. I board early. I get the phone answered quickly. You know, it's just a lot it's just a lot better experience. And I would think that most companies of size can probably negotiate status for employees. I mean, I'm just not going to fly an airline where I don't have status if there's a reasonable alternative that does. You know, even if it's gonna save the company, you know, some some amount of money. Right. So I think that's a key point shifting shares, getting status for employees. That's a great add on. Thank you. Yeah. Yeah. Okay. Alright. Abby, are there any questions? Alright. Let me take a look. No questions yet, but we can give it a minute as people start to type away, hopefully. Good. Well, we've been kinda answering them as they came in. So I think both of them, have been answered. I do have, one of that. The, there's a question about the pipeline, of new hotels coming on more online. And according to Smith Travel Research, an increase for the 7th consecutive month, through September, and it continues to. So, you know, the I think the, the prognosis is that you'll start to see a lot more hotels coming online, which is why demand is probably gonna be balanced by all those new hotels coming online. Yep. You would hope. On the airline side, are we hearing about any expansion in routes and planes? I still think with the Boeing situation, there's a huge backlog of, of new planes getting into the market, and that's not gonna get resolved anytime soon. So I just feel like we're gonna be flying older planes and supply is going to be restrained relative to demand, which means higher fare, as an end result. So not much can be done about it. Alright. I got a question here about, NLRA and dynamic. Looks like here the Marriott strategy to move to NLRA and dynamic only, how's that gonna impact corporate travel? It's gonna create a lot less transparency. If, you know, your entire program is based on trust me. I'll give it to you if it's available. Right? Then, you know, that's gonna have impact on a buyer's ability to measure the performance of their program to be able to, you know, bring value to their corporation. And, I I get that that's what the hotels are looking for as it relates to you know, they can pull it off in any marketplace. But I would say if that is the direction that people go in, you're gonna need to have tools to be able to audit. So you can actually determine to what extent you're actually getting value out of your program. Yeah. I I think there's 2 issues there. I mean, I think the because it's dynamic, it's really difficult, to know did I get my rate? With the static rate, you've got a rate of $200. You see, you got 200. I mean, it's just kinda not that hard. But with dynamic where you've got the bar rate fluctuating all over the place. And then what rate do you actually compare against? And what is bar, that whole 25 to 10% kind of disparity there is what potentially is gonna happen. And as Marriott goes, the rest of the industry follows. This could become kind of an industry norm, going forward. So again, to David's point, auditing is is gonna be key. Alright. We had one through the q and a portal. Outside of supply and demand, what do you see as the largest cost driver affecting the hotel industry? Right now, it's it's labor and it's financing costs. So, I think that it during the pandemic, it disrupted a lot of the labor force. A lot of people started asking themselves questions. Do I wanna work in this industry? Do I wanna provide the level of service that I usually did? And I think the expectation was that people were gonna start asking for more. And I believe with the, rise of some of the union activity happening in the last couple of years, we've certainly seen some significant increases in the hotel industry. And the properties have gotta recoup that, whether that's reducing services or increasing prices to pay for it. And the other one is financing cost, which has to do with the fact that, some of the larger hotels depend upon the CMBS market, the the collateralized mortgage backed securities market. And so if price if if interest rates go up as they have in the last, last couple years, that's gonna impact their ability to refinance and be able to, keep their their loans afloat. So, you know, you put those two things together, quarter point in in interest rate increases is 1,000,000 of dollars to some big properties. So I would say with interest rates potentially coming down, that'll be a good news for them. But in the last couple years, that's a big big piece of what's impacting our hotel balance sheet. Yeah. And if I could pile on a little bit, Dave, I think the inflation just in general, all of the costs that go into a hotel increased, which really and and also just a byproduct of COVID, the laying off employees and then hiring them back, just caused a big increase in wages. It was really difficult to find staff to keep the hotel open, for a period of time. So as a result, just wages went through the roof. And I think we're gonna see that as gonna be the the restaurants because the restaurants are where they weren't making much money to begin with. The margins aren't so great. And so you'll see less operating hours, less off, less restaurants on property, that kind of stuff. Yeah. Abby, any other questions? Oh, yes. We've got quite a few. Our hotel rates our our hotel rate increase is differing by US regions, higher in the northeast versus Midwest, etcetera. Yes. There is some variability across the country as it relates to where that is. We do have data on that in the market snapshot report. I don't have it available right now, but, that is something that, subscribing customers get access to. So next question is, what are your thoughts on corporate housing companies that are getting their inventory through the GDS? Is that being considered by clients? Do you see that growing or impacting in any way? I'm gonna assume this is we're talking about the Saunders and stuff like that, that are starting to get the GDS. I think that all these alternative accommodations solutions have been considered by clients. It's usually a regional thing. Some parts of Southeast Asia have this more so than others. I think the concern, though, is that, you know, when travelers are hitting the road, unless they're gonna be there for a long period of time, They're looking for places with chains that they have loyalty with. And so I think if you are not part of those major hotel companies, unless, you know, you don't travel very much, a lot of them are focused on that. And those hotel companies have long term stay solutions. And so, certainly, it it creates more opportunity for competition, but I don't know that it's actually changing or pushing the needle much. Awesome. Do you see the increased small meetings slash room blocks at hotels making a material difference in ADR? I'll I'll take this with a start. I mean, the data that we capture really doesn't include what I would consider small meeting room block type bookings. You know, those tend to be made directly with the hotel to get into the room block and so on and are not booked by business transient. So we're not going to see them. So but that doesn't mean it's not impacting ADR. I mean, if the hotel occupancy is, you know, getting close to 80% because it's all booked up to a small meeting or room block, that means the rate available to your travelers is gonna go up, assuming. But if you have a negotiated discount, maybe not. But then they start playing around with LRA and, you know, it will have an impact. So What I what I've heard about this is that meetings have actually gotten more expensive. And and that's because buyers are looking for everybody to stay at the same place. And it used to be, you know, and this goes back a while, the line by which, you know, you put the base of meetings business on relative to transit higher. So, essentially, that means that we could put more meetings in, and meetings were available as a discount to transient. But now because people want everybody together and there's a lot more small meetings happening with a lot of the remote workforce, it's pushing things up. I don't have empirical evidence to show what it's pushing up, but I do hear from buyers a lot that, meetings are more difficult to come by. Yeah. Or more expensive is what it comes down to. Yeah. Yeah. Alright. I think we have time for one more question. When it comes to financing, did most hotels refinance at lower rates during the pandemic? How often are hotels having to refinance or take on new debt? So, the REITs did. Right? So there's kind of 2 components of hotel financing. There's secured and unsecured. If you're a large real estate investment trust, a lot of your financing is unsecured, and so there's more flexibility as to when you do that. And I believe a lot of them did during the pandemic when rates were lower. However, there is secured financing, which is property specific financing, and those are based on standard terms of like, it's a, like, it's a 30 year amortization with a 5 year balloon with the idea that every 5 years, you gotta do it. So if you, did it during the last cycle, you may get you may get stuck during this cycle. And I think what we saw a year or 2 ago without getting too inside baseball on this is a handful of hotels, particularly in San Francisco, were actually going bankrupt. They're returning them back over to the to the bank. And that's, I think a function of what what you were seeing. Although, I think that's starting to settle itself out. Yeah. To echo that, I mean, there was quite a bit of talk last year around the whole financing of hotels and a lot of hotels are underwater. That seems to almost completely reversed this year where it's, hotels are doing a lot better, and have kind of found their way through covid and just able to increase those rates to cover the increasing costs and the financing costs or whatever else. So, you know, one thing I found surprising in the q and a was not a lot of questions around NDC. It sort of tells me with Americans pull back in their strategy, it's sort of released the pressure valve on NDC. I'm hoping that we all get back thinking about it and pushing the industry to to adopt it. But I'm starting to feel like, you know, that's not gonna happen for a while. So here's what it is. All right. Well, let me kind of wrap up. So guys, folks, thanks for attending. I hope you found it helpful. You know, this webinar is in conjunction with a report that we publish every year, that's free to download. If you just go to the, Embers website, there's a Abby, what's the name of the sections and all that where you can find this? You can find it right here on this screen. We have a docs tab and right next to the chat feature along the top, we I have the report listed in there as long as as well as today's slides. Excuse me. But then you can also, find the report and then any and then the other resources under the resources tab on the Amber's website. Yeah. Yeah. You sure can. And it it's quite a bit more extensive, and going into the the hotel and the airline industry, you know, in that report. So with that, we're right at time. Thanks, everybody, for attending. Appreciate all the questions, and, we hope to see you soon. Happy holidays. Bye, everyone. Bye. Bye bye. Did Mala stay or did he drop off?