Whenever I’ve had the opportunity to chat with oil and gas professionals at conferences and other events, the conversation has often drifted to where their work has taken them. I’ve always found geography interesting, and I enjoy learning about various parts of the world from those who’ve worked and even lived in places I’ve only read about. Indeed, many of the folks who make up the oil and gas industry crisscross the globe on a regular basis.
Buying a plane ticket to reach some of the world’s oil and gas hubs, along with staying in a hotel while you’re there, should get more expensive over the next 18 months, according to a recent report by Carlson Wagonlit Travel (CWT). A CWT executive said the higher travel costs represent a positive sign for oil and gas and related industries, though.
“Companies in this realm are finally set up to operate with profits despite the continued lower price of oil,” Raphael Pasdeloup, a CWT senior vice president said in a press release announcing his company’s 2018 forecast for airfares to and hotels in common Energy, Resources and Marine (ERM) sector locales. “We are seeing investments going up, especially within supply chains. With this increased activity ERM travel prices will rise, which means costs will need to be managed appropriately as budgets catch up.”
Pricing in general will get a boost from an anticipated 3.6 percent growth in global gross domestic product next year along with favorable foreign exchange rates against the U.S. Dollar within many ERM-dependent countries, according to CWT. The global business travel management company also predicts that operations in remote areas will see more airline routes and increased hotel capacity, reversing a two-year trend. Here are some region-by-region highlights for 2018 from the report:
Overall, does this mean that the oil and gas travel market is finally improving? It really depends on the segment of the industry, the type of company and the geography, Pasdeloup told Rigzone.
“For instance, some companies cut deep into their travel spend early after oil prices started to decline and kept tightening their belts,” Pasdeloup said. “Others were slower to react and started to cut their travel spend much later.”
Companies that cut travel budgets early are allocating new dollars in travel to support their growth, Pasdeloup continued. In addition, he said that companies that cut later tend to reallocate existing dollars within their travel spending by “traveling smarter.”
“In this sense, they haven’t increased their travel spend, but they are still looking for ways to optimize their practices and can take more trips for the same overall costs,” Pasdeloup explained.
“With the increase in CAPEX and new products being launched, we see travel increasing to specific growth markets, and companies involved with the boom in West Texas are also increasing their travel,” Pasdeloup said.
Below is a list of CWT’s projected percentage changes in air and hotel prices for 2018 in selected oil and gas hub cities.