Travel & Fleet

Activities like maintaining a fleet of vehicles and arranging for employee travel are time-consuming and are often outsourced to specialized companies. IBISWorld research covers all of the major categories in this sector and can be helpful when it comes time to budget for the upcoming year.

This graphic shows next year’s average forecast price change for the travel & fleet category as a whole, along with a selection of specific sub - categories of travel & fleet products and services. Click into each sub - category to see a buying guide that will get you up to speed quickly on the product or service.


CATEGORY FORECAST     SUB-CATEGORY PRICE FORECAST  
Travel & Fleet
1.6%
  Corporate Travel Services
0.2%
Domestic Air Travel
2.4%
Fleet Management Services
1.6%
Fleet Vehicle Leasing
0.6%
Hotel Rooms
3.2%

KEY   <0.1% 0.1% - 1% 1.1% - 2% 2.1% - 3% >3%
See All Categories          

Trends in the travel and fleet sector largely follow the health and sentiment of US businesses that procure these services. However, travel and fleet services rely heavily on transportation inputs, which are notoriously volatile, posing a moderate level of risk to buyers of these services. Still, substantial profit margins generated by travel and fleet suppliers give buyers an opportunity for effective negotiation.

Price Trends                                   

  • Price trends for travel services have largely been favorable for buyers, in part due to falling transportation service prices resulting from low fuel costs
  • Uncertainty in corporate profit has caused demand for travel and fleet services to contract, as businesses have reduced their discretionary spending, including travel budgets
  • Increased automation, especially for Corporate Travel Services and Fleet Management Services, has pressured vendor wage costs downward, keeping price growth slow
  • However, prices are forecast to rise moderately in the coming years as input costs and demand for services increase

    Key Takeaway: Buyers can benefit from entering into service contracts soon to lock in current rates while they are low.


Supply Chain Risks

  • Supply chain risk is moderate for travel and fleet service providers
  • Domestic Air Travel is particularly risky, with limited airport capacity, disrupted or delayed flight schedules, and potential airline bankruptcies all posing a threat to buyers
  • Metal and fuel-based inputs are particularly susceptible to price fluctuations, and are expected to increase during the next three years
  • The growing popularity of solutions like Travel Risk Management Services and Fleet Management Services that help buyers increase efficiency will help businesses ease their travel risks

    Key Takeaway: Buyers should expect some shifts in the prices and supply of sector services as upstream inputs fluctuate in the coming years. Buyers can aim to reduce some of their supply chain risks by purchasing Group Travel insurance, or by sourcing other discretionary systems and services that specifically seek to reduce the risks associated with these markets. 


Profitability

  • The majority of travel and fleet service suppliers earn high profit margins
  • During the past three years, profit margins have been increasing as fuel and wage costs have declined
  • Rising demand for travel and fleet services will enable vendors to increase their profitability further during the next three years
  • High and rising profit margins give providers the flexibility to negotiate on prices, presenting an opportunity for buyers to gain negotiation leverage

    Key Takeaway: Buyers may be able to negotiate service prices downward, especially with smaller, more competitive vendors. However, buyers are encouraged to thoroughly research the financial health of a potential supplier before procuring services from them in order to avoid unnecessary supply chain risks or service disruptions.


Outlook

Although pricing trends have favored buyers during the past three years, shifts in key inputs are expected to pressure travel and fleet prices upward in the next three years. Moderate supply chain risk will persist, with input prices continuing to remain susceptible to volatility. However, the high average profitability of market providers will ensure that fluctuations in the prices of inputs will not necessarily cause supply shortages or vendor bankruptcies. As such, buyers can benefit from securing long-term travel and fleet service contracts sooner rather than later, locking in stable vendors and low prices now.

 

Get more detailed information, including vendor statistics, RFP elements, negotiating tactics, market dynamics and more on this and hundreds of other products and services. More Info