2015 Energy, Resources
and Marine Forecast
December 2014
WELCOME
The 2015 Energy, Resources and Marine Forecast has been designed to
provide essential information tailored to the intricacies of our specialized
industry. We highlight trends — ranging from economic factors to safety
and security updates — and provide expert advice to help ensure your
travel program thrives in 2015.
So, what does the 2015 landscape look like? With oil prices currently at a
five-year low, many companies are facing mounting cost pressure, looking
for new ways to operate more efficiently and re-evaluating their travel
policies. Data and proactive change management communication will be
key. We foresee organizations encouraging their travelers to consider the lowest logical airfare and
increasingly conducting business from new low-cost markets, making traveler safety and security a
continued key focus in 2015. Trusted supplier partnerships will be vital in making sure your travelers
receive the appropriate support on location; additionally, these partnerships help companies
secure good prices when negotiating room rates and air fares. Companies will increasingly deploy
virtual payment solutions as a secure, PCI-compliant way to manage hotel payments in high-risk
destinations, while new technologies will automate many of the time-consuming tasks buyers have
traditionally managed manually.
We hope this publication, in conjunction with our 2015 Global Travel Price Outlook, will prove
a valuable resource for you, both today as you plan for 2015 and throughout the year as you
continue to evaluate and optimize your travel program.
On behalf of our entire team, thank you for the continued trust you place in CWT Energy,
Resources & Marine.
Monisa Cline
Senior Vice President
CWT Energy, Resources & Marine
The 2015 Energy, Resources and Marine Forecast by CWT Energy, Resources & Marine is a supplement to the 2015 Global
Travel Price Outlook, which was produced jointly by Carlson Wagonlit Travel in partnership with the GBTA Foundation.
INDUSTRY INSIGHT
from our sponsor
As a strategic partner that provides
access to approximately 130 oil and gas
destinations worldwide, Delta Air Lines
is pleased to sponsor the 2015 Energy,
Resources & Marine Forecast.
Looking to 2015, the future of air travel will
continue to be shaped by innovation and
service. At Delta, we’ll move forward with
plans to restructure our fleet, both to enhance
the traveler experience and to improve cost
efficiencies. To meet the specialized needs of the
energy industry, we’ll leverage our presence in
multiple oil and gas markets in the Americas — and
offer service from conveniently positioned hubs that
easily connect the transatlantic network to all major
European, Middle Eastern and African oil capitals.
As always, traveler safety and security will remain a
top priority at Delta. You can rely on Delta to mitigate
travel risks through a robust infrastructure of resources,
operational reliability, an expansive schedule offering
along with our airline partners and a premium suite of
customized services that are designed to enhance your
travelers’ experience throughout their journey.
Bob Somers, Vice President
Global Sales, Delta Air Lines
2
GLOBAL MACROECONOMIC OVERVIEW
Key points
Global GDP
to reach
l Global growth continues to strengthen as a result of U.S.,
Asia Pacific and other advanced economy expansion.
l Emerging market performance is mixed, based on slower
by 2015
exports, higher domestic inflation, flat-to-falling commodity
prices and financial imbalances.
l Global GDP growth (at 3% in 2013) is expected to reach 4% by 2015,
largely driven by emerging market expansion. However, the gap between
emerging and advanced economies will continue to narrow.
4%
l Emerging markets have been tested by a weaker external environment (Brazil
and Russia), credit imbalances (China and Turkey), rising inflation (India and
Argentina) and slower investment growth driven by higher interest rates and
reduced foreign investments.
Meanwhile, despite a tough winter storm season in Q1 2014, the U.S. economy has
slowly gathered strength. Europe continues its sluggish emergence from recession,
and other advanced economies are gradually accelerating. The good news is that
generally improving economic conditions worldwide should benefit all.
GLOBAL GROWTH IMPROVING
Annual percent change in real GDP*
2012
2013
2014
2015
ASIA-PACIFIC
SUBSAHARAN
AFRICA
MIDEASTN. AFRICA
EMERGING
EUROPE
WESTERN
EUROPE
LATIN
AMERICA
NORTH
AMERICA
2016-18
WORLD
6%
5%
4%
3%
2%
1%
0%
-1%
*Source: Organization for Economic Co-operation and Development, IHS Global Insight, Rockport Analytics
3
2015 Energy, Resources and Marine Forecast
Source: CWT-GBTA Foundation 2015 Global Travel Price Outlook.
SECTOR OUTLOOK
Growth in demand for petroleum and other liquid fuels is most significant in China, India and
the Middle East. Conversely, demand for liquid fuels in regions with well-established oil markets such
as the U.S. and Europe appears to have hit a plateau.
Since 2008, growth in North America has brought more than 4 million barrels per day (MMbbl/d)
of additional liquids supplies to market, according to U.S. Energy Information Administration’s
International Energy Outlook 2014. In comparison, that increase has largely been offset by
geopolitical difficulties in Libya, Iran, South Sudan and Syria, which is causing supply disruptions.
The result is uncertainty around mid- and long-term projections.
However, with Exploration and Production’s Price Perspective revealing the price of Brent crude fell
by nearly a third between June and December 2014, short-term predictions are that the disruptions
will not impact supply for some time.
The future’s bright for the energy industry*
Growing supplies of tight oil (oil found in
reservoirs with very low permeability) and
shale oil in the U.S. bringing new resources
to market
Large production increases in Brazil, Argentina
and elsewhere to ensure availability of liquid
fuel supplies for many years
$
Return to higher
sustained oil
prices
Progress with
extraction
technologies
Legislative
change
in Mexico
reverses the
trend of slowly
declining oil
production
*Source: U.S. Energy Information Administration’s International Energy Outlook 2014
2015 Energy, Resources and Marine Forecast
4
SECTOR OUTLOOK
In the mining industry, a decade-long decline in productivity has resulted in commodity prices continuing
to soften, margins being cut and fewer areas to look to for profitability.
Global demand for energy is expected to increase 36% by 2025*, which is expected to create new
challenges due to falling ore grades.
As such, organizations are shifting internal structures and looking for new markets from which to
conduct business. Access to water and energy should remain a priority for companies establishing new
projects in African and South American destinations, as should gaining and maintaining support from
communities impacted by a project.
In 2015, we expect the shipping industry to remain highly competitive, with a forecasted alignment
between supply and demand stemming from an increasing but fragile return of consumer confidence.
Top 10 challenges the resources industry faced in 2014*
1
2
3
4
5
6
7
8
9
10
Productivity improvement
Capital dilemmas
Social license to operate (SLTO)
Resource nationalism
Capital projects
Price and currency volatility
Infrastructure access
Sharing the benefits
Balancing talent requirements
Access to water and energy
*Source: Business risks facing mining and metals 2014–2015, Ernst and Young.
Additional information taken from the U.S. Energy Information Administration’s International Energy Outlook 2014; Business
risks facing mining and metals 2014–2015, Ernst and Young; and A Price Perspective, Exploration & Production 2014.
5
think4photop / Shutterstock.com
FLYING HIGH - AIR PROJECTIONS FOR 2015
7.2 7.2
6.9
5.1
4.5
4.4
4.2
3.8 3.7
3.2
2.7
2.4
1.4
1.3
1.6
0.4
0.1
TOKYO
SHANGHAI
RIYADH
RIO DE JANEIRO
PERTH
PARIS
NAIROBI
MUMBAI
MANILA
LUANDA
LAGOS
JAKARTA
HOUSTON
HONG KONG
HAMBURG
DUBAI
DAR ES SALAAM
COPENHAGEN
CARACAS
CAPE TOWN
CALGARY
BUENOS AIRES
ATHENS
0.3
-0.6 -0.5
-0.7
ANTWERP
1.0
1.0
STOCKHOLM
2.6
3.2
3.0
STAVANGER
3.2
SINGAPORE
3.3
ABERDEEN
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
Source: CWT, GBTA Foundation, Rockport Analytics
2015 Energy, Resources and Marine Forecast
6
FLYING HIGH - AIR PROJECTIONS FOR 2015
Europe, Middle East and Africa
Airlines will continue to develop new routes to destinations in Africa and South America as
organizations in the energy, resources and marine industries target business in lower-cost
markets. As such, in 2015, we predict inflated airfares of up to 7.2% in destinations such as
Lagos and Luanda.
Moving south to Cape Town, average air price increases of 6.9% are expected as a result of the
national carrier phasing out larger aircraft. These increases will come despite other international
carriers introducing A380 routes to cope with demand from leisure travelers. Russia’s Sakhalin
will develop into a prime sellers’ market as demand from energy, resources and marine
companies increases exponentially. Riyadh, a major origin destination, is expected to see
average price increases of up to 3.7%.
We anticipate that Hamburg will see a drop of 0.7% across economy and business class.
However, it remains the offshore industry’s leading gateway and boasts steady demand, so
economy prices are expected to increase by 2.5% despite easyJet launching a base to rival
German Wings.
Buyers can expect inflated airfares of up
to 7.2% in Lagos and Luanda.
Americas
Demand is up in South America, and Caracas and Rio de Janeiro will see price increases of
5.1% and 3.8% respectively. There will be fewer flights to Venezuela, driving an increase in
chartered flights. Double-digit inflation in Argentina will also impact organizations with interests
in Buenos Aires.
2015 Energy, Resources and Marine Forecast
7
FLYING HIGH - AIR PROJECTIONS FOR 2015
Houston will offer some relief as more and more global carriers now
offer service there, driven primarily by the energy industry. We expect that
increased competition for suppliers will lead to price decreases of 0.6%.
Turkish Airlines recently added business class seats on its Houston route,
Emirates is increasing capacity and China Air has launched daily nonstop
flights. Korean Airlines is also new to the market, and SAS has added a
nonstop service.
TOP TIPS
Low-cost carriers still chase corporate
business — Carefully consider if adding carriers
benefit or dilute your travel program.
Airlines will continue to develop
new routes to destinations in
Africa and South America.
Asia Pacific
In Intra-Western Australia, carriers scheduled available seat kilometers
will decrease by 10% in 2015, driven by an over capacity in 2014 and
expected softening in mining sector growth. As a result, fares from Perth
are expected to increase by 4.2% in 2015. In Shanghai, we expect a
1% price increase after two years of 3-5% gains. This trend is driven
by a slowing domestic economy as well as more competition from
high-speed rail between regional city pairs. Recent reforms and the
liberalization of GDSs in China will also help promote competition and
temper airfare increases.
2015 Energy, Resources and Marine Forecast
Airline consolidation — Work with suppliers
to shift volume accordingly and increase
buying power.
$
Ancillary fees and fuel surcharges — Factor
these into negotiations, as they represent a
significant percentage of the total flying cost.
Automated bulk crew travel bookings and
workforce management — Understand how
these tools can drive benefits and efficiencies.
8
STAYING THE COURSE - HOTEL PROJECTIONS FOR 2015
15.2
9.1
7.2
6.2
6.0
4.5
4.2
4.3
4.2
3.4
2.2
0.9
0.3
-0.3
-1.8
RIYADH
RIO DE JANEIRO
PERTH
PARIS
NAIROBI
MUMBAI
MANILA
LAGOS
JAKARTA
HOUSTON
HONG KONG
HAMBURG
DUBAI
DAR ES SALAAM
COPENHAGEN
CARACAS
CAPE TOWN
CALGARY
BUENOS AIRES
ATHENS
ANTWERP
-2.0
0.2
-1.0
STOCKHOLM
1.0
1.9
STAVANGER
0.9
1.4
SINGAPORE
1.7
3.5
SHANGHAI
1.5
2.8
TOKYO
5.0
ABERDEEN
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
Source: CWT, GBTA Foundation, Rockport Analytics
2015 Energy, Resources and Marine Forecast
9
STAYING THE COURSE - HOTEL PROJECTIONS FOR 2015
Europe, Middle East and Africa
Many hotel companies will focus on developing markets like Africa and South America as
organizations seek opportunities to expand into new low-cost markets.
Safety and security of travelers in the energy, resources and marine sector remains a priority,
particularly in developing markets such as Lagos. Thus, hotel prices will remain high as
organizations expect to pay a premium for trusted supplier partners. Buyers can expect price
increases of 3.4% in Lagos, while Kenya, Mozambique and Tanzania will also see higher
demand and corresponding price increases. Luanda, an increasingly popular destination
for energy, resources and marine organizations, continues to feel the impact of economic
sanctions and resulting inflated hotel prices.
Destinations like Dubai are building more budget accommodation options, which helps keep
upscale prices competitive. In Paris, several upscale hotels will reopen in 2015 following
refurbishment, leading to greater competition and lower prices as competition increases.
New budget accommodation options in Dubai
will keep upscale hotel prices competitive.
Americas
Prices are rising, particularly in South America, where Caracas and Rio de Janeiro will see
increases of 15.2% and 9.1% respectively when midscale and upscale properties are
reviewed. High inflation in Caracas and major sporting events in Rio are the primary causes.
In Mexico, privatization of the state-owned oil company will allow for outside investment.
2015 Energy, Resources and Marine Forecast
10
think4photop / Shutterstock.com
STAYING THE COURSE - HOTEL PROJECTIONS FOR 2015
In North America, Houston’s expansion outside of the city center will
eventually have a positive effect on pricing for buyers, but for the
moment, lagging supply will drive an average price increase of 6% in
2015. Additionally, Calgary will see inflated rates prompted by strong
demand from oil companies and limited supply, which we expect to
continue for the foreseeable future.
Caracas and Rio de Janeiro will see increases
of 15.2% and 9.1% respectively.
Asia Pacific
With the Western Australian mining market slowing down, Perth and
surrounding markets will see a 0.3% decrease in prices. However, the
pickup in energy and marine offshore activities may cause demand to
improve and stabilize. Malaysia and Indonesia are still showing a good
economic growth and rising inflationary pressure. Jakarta and Manila will
see the highest increases based on strong demand – 4.5% and 4.3%
respectively. However, as more hotel openings continue to be announced,
especially in Jakarta, the rate of inflation may slow over time.
TOP TIPS
Compliance is still a key issue, particularly in new
markets. Virtual cards offer a secure, PCI-compliant
way to manage hotel payments.
Hotels have begun charging more for high-speed
internet. Encourage travelers to join preferred
supplier loyalty programs for favorable rates.
With less available real estate and long build cycles,
consider alternative accommodations like campsites
or converted ships.
Many corporate contracts now include fifth seasons
and “fair rates” during blackout dates, so be
proactive when negotiating contracts.
2015 Energy, Resources and Marine Forecast
11
CREATING A STRONG PROGRAM FOR 2015
Secure support from upper management
Executive support for your program will be essential as
you seek to promote compliance and manage traveler
behavior.
Make compliance an ongoing focus
Communicate effectively
To ensure success, track and monitor compliance
via key performance indicators.
Communicate your policy to all stakeholders to
explain how it supports your company objectives.
You can also enhance the traveler experience by
promoting online and mobile booking.
Focus on safety and security
Engage with travelers
Ensure your program includes destination
intelligence, traveler tracking capabilities,
medical assistance and repatriation support.
Create a feedback channel to gather
information on traveler experience, preferences
and more to gain their buy-in and promote
compliance.
Automate messaging
Use tools like CWT Program Messenger to deliver
targeted messages directly to travelers and help
them make informed, policy-compliant decisions.
By delivering messages before reservations are
ticketed, you can mitigate non-compliant travel.
2015 Energy, Resources and Marine Forecast
Build a policy that supports
company culture
Tailor your program to your organization by either
recommending or mandating the use of preferred
booking channels. In this way, you will steer your
travelers toward your preferred suppliers and ensure
all reservation data is captured.
12
Maria Hetting / Shutterstock.com
2015 RECOMMENDATIONS
$
LOWEST LOGICAL FARE
GREAT CREW CHANGE
To be more cost-effective,
consider amending your
policy to encourage travelers
to choose the lowest logical
airfares.
Half of the industry’s
experienced personnel are
expected to retire this decade;
tailor your travel policy as a
strategic talent recruitment tool.
COMPLIANCE
Mitigate the risk of bribery and corruption issues
by making compliance a top priority. Manage
spend centrally where possible and partner only
with reputable suppliers.
VIRTUAL PAYMENT
DOOR-TO-DOOR BOOKING
Online full-trip bookings are
popular with energy, resources
and marine companies. Ask your
travel management company to
integrate non-traditional hotel
content, charter helicopters and
air transport in 2015.
Virtual payment solutions will become
prevalent in 2015, as will end-to-end payment
options that promote data capture, compliance
and greater reconciliation and control.
MOBILE BOOKING
In the next two years, we expect
corporate travel reservations
being made on mobile devices
to double.* Approved, policycompliant apps like CWT To Go™
will allow your travelers to book
seamless end-to-end trips.
INCREASED USE OF LOW-COST AIRLINES
European low-cost carriers are increasing capacity at 14 times the rate of legacy
carriers. Consider budget airlines to control costs and ensure options and
availability for travelers.
*Source: Tap into mobile service: Managed travel in the digital economy, 2014. CWT Travel Management Institute
2015 Energy, Resources and Marine Forecast
13
Methodology
The projections in the 2015 Energy, Resources and Marine Forecast were formed from the combination of:
l A statistical model, developed by market and economic research firm, Rockport Analytics, that evaluates historical price behavior and forecasts future
price references
l The market-specific expertise and travel industry knowledge of CWT personnel worldwide
l Macroeconomic information sourced from Moody’s Analytics, the International Monetary Fund Research Department, the United Nations and others
Projections were derived based on the transaction data of CWT’s global client portfolio, including clients’ travel footprints and patterns, over the past six
years. Key macroeconomic and per-country indicators, such as current and expected gross domestic product (GDP) growth, the consumer price index,
unemployment rates and crude oil prices, were used in the statistical model, as well as key supply-side drivers sourced from OAG and STR Global. All
air statistics represent Point of Origin and include all trip types (long and short haul/domestic, continental and intercontinental).
In addition to the modeling process, data from GBTA’s Travel Manager Sentiment survey were analyzed. The online survey was conducted of corporate
travel managers in Asia Pacific, Europe, Latin America and North America and includes members and non-members of GBTA. Fielding of the survey
took place from February 12 to March 5, 2014. An email invitation was sent to 6,400 travel managers around the world. A total of 624 travel managers
completed the survey, for a response rate of 10%.
About CWT Energy, Resources & Marine
CWT Energy, Resources & Marine provides specialized travel management solutions for organizations operating in oil and gas, diversified resources and
mining, offshore, marine services and alternative energies. Building on more than 30 years of experience, we work closely with clients worldwide to find
the right solutions for their complex travel needs, providing first-class service and leading-edge technology and products.
For more information contact [email protected], or visit www.cwt-energy-resources-marine.com
© 2014 CWT