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According to a recent Forbes Insights study, “Business Meetings: The Case for Face-to-Face,” business executives prefer face-to-face meetings and conferences over virtual meetings, and overwhelmingly agree that they are necessary for building deeper, more profitable bonds with clients and business partners – and for maintaining productive relationships with co-workers. While web-, video- and teleconferencing have their role, they cannot substitute for human interaction when it comes to accomplishing certain business objectives.

“Face-to-face meetings and business travel are critical to business success and important drivers of our economy, so while travel is often the first budget item to suffer cuts in a recession, it can’t be the last to be restored if the economy is to grow,” said Kevin Gentzel, president and group publisher, Forbes Media. “This research shows that senior business decision makers overwhelmingly point to face-to-face interaction—traveling to meet clients, convening teams and the motivation born of live exchange—as a crucial element to their success.”

Highlights of the study:

• 58% of respondents said they were travelling for business less today than they were at the beginning of the recession in January 2008, with more than a third (34%) indicating they were travelling much less frequently.
• Lower costs and greater reliability have made teleconferences, videoconferences and web conferences more pervasive options for meetings, with 59% of executives saying their use of technology-driven meetings had increased during the recession.
• At the same time, executives still expressed an overwhelming preference for face-to-face meetings, with more than eight out of ten (84%) saying they prefer in-person contact to virtual.
• Those that prefer face-to-face meetings believe they facilitate the following:
  • Building stronger, more meaningful relationships (85%)
  • The ability to “read” another person (77%), and
  • Greater social interaction (75%).
  • Those who favored virtual meetings took more of a bottom-line approach, saying they saved them time (92%) and money (88%), or offered greater location flexibility (76%).
• Executives prefer face-to-face meetings when the decision-making process is fluid, requiring the kind of give-and-take typical of complex decisions and sales. Respondents said face-to-face meetings are best for:
  • Persuasion (91%),
  • Leadership (87%),
  • Engagement (86%),
  • Accountability (79%), and
  • Decision-making (82%).
  • When web-, video- and teleconferences were preferred, it was generally for the dissemination of data or when time was of greater concern.
• Attention is an issue of key concern among executives as well. Many executives expressed concern that attendees did not give their full attention to virtual meetings.
  • 58% admitted that they “frequently” surf the web, check their email, read unrelated materials and handle other ancillary work during digital meetings.
  • 64% of those who prefer technology-enabled business meetings like them because they allow them to multitask.
• 87% agree that there are tangible business benefits to in-person, face-to-face meetings that outweigh the cost savings of alternative, technology-based meeting methods such as webconferencing or videoconferencing.
• Executives also believe the following is true of in-person and face-to-face communications:
  • Being able to combine personal travel with business travel (64%)
  • Face-to-face interaction with co-workers is necessary for effective teamwork (80%)
  • “Down” time at in-person conferences builds stronger client bonds (81%).

This study is based on a survey of 760 business executives conducted by Forbes Insights in June 2009. Half of the respondents represented small businesses (under 100 employees), while 20% were from midsized businesses (100-999 employees), and 30% were from enterprises (1000-plus employees). In terms of title, 48% of respondents were either owners or c-level executives.

At the National Business Travel Association Conference, American Express Business Travel released its North America Business Travel Monitor (BTM) data and analysis including domestic and international airfare, hotel rates, and car rental prices paid for the second quarter of 2009.

The Business Travel Monitor, the industry’s pricing benchmark published by eXpert insights, the newly created research arm of Global Advisory Services, revealed that international and domestic airfare prices decreased year-over-year in the second quarter of 2009. Mixed results are seen in hotel rates year-over-year where rates decreased internationally and remained flat domestically. Signs point to corporations continuing to scale back on business travel spend and frequency. In addition, airlines are switching gears and are competing heavily to gain the business of a smaller pool of business travelers.

Highlights of the Q2 BTM included the following:

* Average International Airfares Paid Decreased 19 Percent Year-Over-Year
* Average Domestic Airfares Paid Decreased 18 Percent Year-Over-Year
* Average International Booked Hotel Rates Decreased 12 Percent Year-Over-Year, but Increased 6 Percent from Q1 to Q2
* Average Domestic Booked Hotel Rates Remained flat Year-Over-Year, but Decreased Two Percent from Q1 to Q2
* Car Rental Rates Posted Slight Decrease of Three Percent in Q2 2009 both from the previous quarter and the prior year

Q2 Average International Airfares Paid Percent Decreased 19 Percent Year-Over-Year in 2009:
There are several factors which led to the decrease in international airfares paid. One key factor is that companies are employing the cost saving measure of requiring travelers to use of coach class seats instead of business class. In the second quarter, 36% of booked travel was in business class versus 50% in the second quarter of 2008. Another reason for the drop is that airlines are making lower cost fares more available as they compete internationally and deepening corporate discounts on the majority of fare classes in Q2 2009.

Year-Over-Year Average International Airfares Paid in Q2; Q2 09 is Lowest Rate Since 2005:

Q2 2004 – $1,523
Q2 2005 – $1,609
Q2 2006 – $1,709
Q2 2007 – $1,788
Q2 2008 – $1,980
Q2 2009 – $1,603

Quarterly 2008 and Q1 through Q2 2009 International Average Airfares Paid:

Q1 2008 – $1911
Q2 2008 – $1980
Q3 2008 – $2010
Q4 2008 – $1918
Q1 2009 – $1680
Q2 2009 – $1603

Q2 Average Domestic Airfares Paid Decreased 18 Percent Year-Over-Year:
Airfares continued to fall due to a drop off in demand as economic conditions remained challenging, as they have since late 2008. The decrease can be attributed to lower fares becoming more available through the airlines, and corporate policies requiring travelers to book further in advance for those lower fares.

Q2 2004 – $233
Q2 2005 – $218
Q2 2006 – $247
Q2 2007 – $236
Q2 2008 – $260
Q2 2009 – $212

Quarterly 2008 and Q1 through Q2 Domestic Average Airfares Paid:

Q1 2008 – $233
Q2 2008 – $260
Q3 2008 – $253
Q4 2008 – $237
Q1 2009 – $213
Q2 2009 – $212

Average International Booked Hotel Rates Decreased 12 Percent Year-Over-Year, but Increased 6 Percent from Q1 to Q2
New hotels expanding globally increased supply and drove international average booked rates in 2008 down by five percent. So far this year, average room rates are up six percent from Q1 in Q2 internationally, which can be attributed to a number of European cities seeing increasing occupancy which pushes rates upward.

International Average Booked Rates Paid Increased in Q2:

2004 – $197
2005 – $212
2006 – $230
2007 – $266
2008 – $252
Q1 ’09 – $228
Q2 ‘09 – $241

Average Domestic Booked Hotel Rates remained flat Year-Over-Year, but Decreased 2 Percent from Q1 to Q2:
Slowing demand for domestic hotel bookings and increased availability pushed prices down nearly three percent in North America last year. This year Q1 to Q2 average room rates have decreased 2 percent.

Domestic Average Booked Rates Paid Decreased slightly in Q2:

2004 – $132
2005 – $137
2006 – $141
2007 – $157
2008 – $153
Q1 ’09 – $153
Q2 ‘09 – $150

Car Rental Rates Post Slight Quarterly Decrease of Three Percent in Q2 2009:
In Q2 2009, the overall cost of car rental decreased slightly from Q1, which can be attributed to difficult economic conditions which have led to changes in company and traveler behavior. An overall lower demand and reduced pricing is the net result of these conditions. Also contributing are slightly reduced inventories at the rental car companies and rental firms aggressively negotiating with corporate buyers to lock in more consistent volumes of business.

Average daily cost of car rental:

2004 – $65
2005 – $66
2006 – $69
2007 – $72
2008 – $74
Q1 ’09 – $73
Q2 ’09 – $71

Starwood has issued the following statement regarding a recent report that suggested the brand will give up their stars at some of their luxury hotels in order to reduce costs.

“St. Regis and The Luxury Collection continue to view Mobile Star and AAA Diamond ratings as an important third-party validation of the world-class service levels in our hotels. Both St. Regis and The Luxury Collection wholeheartedly support and endorse their hotels’ participation in these programs. Therefore, our luxury brands continue to maintain the high level of service and product that our luxury guests expect from St. Regis and The Luxury Collection properties. We are not aware of any hotels within these brands that have fallen below their current star ratings and it is absolutely not our intent for them to do so.  Our expectation is that all Luxury Collection properties maintain a minimum 4-star rating and we are proud that the vast majority of our St. Regis properties operate at a 5-star level.

“Given the current challenging economic environment, we as responsible owners and operators have diligently implemented protocols to control costs, largely behind the scenes. This is particularly crucial in the luxury segment where our guests’ expectations are understandingly high and we believe there has been no discernable impact on the guest experience.  Some examples of cost cutting include, consolidating vendors and leveraging the collective buying powers of Starwood’s brands. We are proud that even in this difficult environment, we’ve maintained high guest satisfaction scores across our luxury brands and are thrilled that our new hotels are opening to high ratings.”

Just in time for back to school, new swine flu fears have suddenly returned. And like the lingering infection itself, the H1N1 virus is one that just won’t seem to go away.

In fact, according to a 68-page report released on Monday, about half of all Americans can look forward to a brush with the swine flu this winter, while 1.8 million will likely end up with a trip to the hospital from exposure.

That’s the good news.

The bad news is that the new strain is so virulent that the author of the report, Dr. Harold Varmus, believes 90,000 Americans may eventually die from it.  That’s three times the average number of flu deaths experienced each year.

But while the fear engendered by the virus has been a big bonus for swine flu investments in pharmaceutical companies like Glaxo-Smith-Kline and Roche, the return of the flu promises to be nothing but a headache for the travel industry.

For most would-be travelers, it just won’t be worth the risk.

That has the potential to disrupt the entire $770-billion-dollar U.S. travel industry at a time when it can least afford it. And if the SARS outbreak of 2003 is any guide, a swine flu scare may be enough to send parts of this industry into the abyss.

Because by comparison, SARS caused only $18 billion in losses to the industry, as travel to Southeast Asia fell by almost 70%.  Moreover, SARS caused “only” 774 deaths worldwide before rapidly coming to an end just four months later.

Meanwhile, with over 1,000 swine flu deaths already so far, we’re only seeing the tip of the iceberg. . . The worst is yet to come, along with the requisite hysteria.

Scottsdale’s tourism bureau is pushing to lure business meetings back to its resorts by matching room rates at most U.S. destinations.

With hotel revenue off 30 percent through June, the Scottsdale Convention and Visitors Bureau announced a room rate-challenge at its quarterly meeting Tuesday to convince corporate planners that Scottsdale is affordable and a good value.

Scottsdale tourism leaders, like their counterparts elsewhere, are retooling their marketing and aggressively pursuing travelers in the face of a global recession that has stalled tourism.

Travel spending in Arizona declined 3.1 percent to $18.5 billion in 2008 compared to the previous year, said AnnDee Johnson, Arizona Office of Tourism director of research.

Scottsdale officials estimate that the area’s hotels in the past year lost about $100 million in meetings as groups canceled visits over fears that it would be a public relations nightmare to meet at a luxury resort in the troubled economic climate.

The room-rate challenge puts Scottsdale on equal footing with other destinations in terms of costs.

Meeting planners can submit a proposal from any U.S. hotel or resort, except in Hawaii or Maricopa County, and the Scottsdale tourism bureau will work with one of 40 participating properties to match or beat the rates and other meeting requirements.

The meeting has to be held in Scottsdale by March 31. Participating hotels include the Camelback Inn, Phoenician, Hyatt Regency Scottsdale, Boulders, Raddison Fort McDowell and the Inn at Eagle Mountain.

Scottsdale and the entire state of Arizona are heavily dependent on tourism. More than 166,000 jobs are directly tied to tourism and it generates $2.6 billion in tax revenue annually, said Johnson, the state tourism research director.

The U.S. Travel Association is forecasting an increase of 1.1 percent for business travel nationally in 2010 and 2.2 percent for vacationers.

Scottsdale area hotels endured a 30 percent decline in revenue per available room through June compared to a year ago, as occupancy fell 12 percent and room rates plunged 20 percent, according to figures from Smith Travel Research.