Firms' travel bills to become larger

Corporate travel is set to get costlier, says a recent study by travel company Thomas Cook. Airline and hotel rates and car rentals may all rise during the course of the year, taking the cost per trip for a corporate traveller up by nine to 11 per cent, it predicts.

An increase in the number of mergers and acquisitions (M&As) by Indian companies has been listed as a reason for travel requirements to go up, as they want to establish a global footprint.

On an average, domestic fares are likely to go up by 12-15 per cent, most of it attributed to the increase in crude oil prices and constrained capacity at Indian airports, especially in the metros during prime time slots, according to the research.

International flights in the North American sector are expected to see the highest fare rises. The study says Europe and West Asis as transit hubs will have higher wave movements from support markets, thus increasing the fares for India-bound travellers.

“A strong demand generated by corporate India, in the backdrop of the above, presents tremendous opportunities for cost rationalisation by looking at the inter-linkages in the value chain,” the study said.

On the hotel side, domestic rates would go up by five-six per cent and on the international front by four to five per cent. This is mainly due to delay in execution of various hotel projects and rise in demand.

“Corporate volumes and loyalty with relationships will drive the savings the corporation can achieve,” says the study.

Besides, entry of new competition, consolidation among suppliers and emergence of alternative channels are expected to increase the spending on car rentals by six to seven per cent over 2010 levels.

“Corporates will need to plan their travel in advance and increase their price band for hotel costs, etc. We will work closely with them, understand their budget and plan their travel in the most cost-effective way,” said Suraj Nair, vice president, strategy and planning, Thomas Cook.