Corporates are confident of sending out road warriors, but bottom lines are being scrutinised
The dark clouds have lifted on business travel this year, with overall spend expected to pick up in the coming months.
A round-up of corporate travel executives, their associations and TMCs found that they are generally optimistic about growth, albeit careful given the fluidity of political and economic events.
According to the GBTA BTI Outlook – Annual Global Report & Forecast published in August, 2012 was a tough year for business travel, with the European Union on the verge of collapsing, a sluggish US recovery and China’s economy downshifting. However, this year has brought more certainty, with global conditions described as “diminishing clouds with the sun beginning to break through”.
HRG’s figures paint a similar picture. Corporate travel transaction volumes recovered in the final quarter of 2012, showing five per cent year-on-year growth, and continued into the first quarter of 2013, when volumes rose by 3.2 per cent.
GBTA expects global GDP to advance by 2.8 per cent in 2013 – a slight improvement from 2012’s 2.6 per cent – further expanding by 3.1 per cent in 2014 and 4.1 per cent in 2015.
Asia-Pacific is predicted to do even better as it is still one of the most significant growth markets around the world, pointed out Greg Treasure, managing director, HRG Asia-Pacific, and president, HRG North America.
An April edition of the APEC Economic Trends Analysis showed that the GDPs of APEC economies are forecast to rise 4.2 per cent this year and 4.7 per cent next year, up from 4.1 per cent in 2011.
However, industry players urged caution in reading these numbers.
Referring to the Syrian conflict’s impact on oil prices and weakening currencies in India and Australia, Welf J Ebeling, vice president, operations – Asia, GBTA, said: “Taking a long-term view I am still positive that business travel volume will stay more or less on course, but we certainly have to accept that there might be a short-term slowdown particularly in export-depending economies.”
Mike Orchard, senior director, CWT Solutions Group, Asia-Pacific, added that while data do not suggest a “much brighter” outlook, the continued recovery in the Eurozone and US has helped to push demand for corporate travel, while Asia-Pacific’s economies are still generating business travel growth.
Companies tighten their belts
Even with the rosier macro environment, “CFOs are giving pressure to travel departments”, said Benson Tang, regional director, Asia, Association of Corporate Travel Executives (ACTE). “There are some signs of a higher number of companies implementing more stringent travel policies, such as tightening the time window for which business class travel is allowed, selecting lowest logical fares and using less prestigious hotel properties,” he noted, although the extent of these changes is not as severe as in 2009.
This was confirmed by travel managers at CTW Asia-Pacific 2013.
Kok Siok Mei, assistant to CEO, Continental Automotive Components Malaysia, said her company is keeping a tight rein on the number of employees travelling and allowing only the “bare minimum”. LCCs are also used for short flights.
Over in India, Usman E Gani, deputy manager – facilities (travel), Tavant Technologies, has been encouraging middle management travelling on lengthy trips to opt for serviced apartments instead of four-star hotels.
Gani said: “The winning pitch for employees is usually the cooking facilities at serviced residences. Although top management still stay at five-star hotels, that does not matter much in terms of savings, as they do not travel as frequently as middle management, their length of stay is shorter and not many of them take trips.”
CWT’s Orchard explained that companies are now looking at adaptive travel policies, where the flexibility given to employees varies based on a number of criteria such as staff seniority and whether the trip is client billable and longhaul or shorthaul. There is increasing attention on second-tier spend like ancillary fees with air, hotel or car suppliers and dining receipts, while reducing meetings and events costs is also a priority.
He said: “Today, most companies don’t make short-term decisions around major travel cutbacks, restrictions or policy changes. Having a strong focus on travel and continuously driving savings while supporting the business’ need to deliver growth is the new norm within travel management.”
For 2013, the CWT Travel Management Priorities study showed that travel buyers were focused most on improving compliance, driving air and ground transportation savings, and optimising hotel spend.
Likewise, HRG’s Treasure added: “The uncertainty of the world’s economy has led many MNCs to take a cautious outlook by tightening global travel policies and applying more control over approval processes and budget.”
He observed that data consolidation continues to be a major trend in the region as more companies start to comprehend its benefits. At the same time, LCCs, premium economy and economy seats are being utilised for short trips.
Mobility gets more emphasis
Going forward, both TMCs highlighted the growing importance of mobile in serving corporates (see pages 17 and 19).
“A new generation of business travellers is emerging and their entire trips would have almost no human interaction, from planning and booking to checking in at the airport,” said Treasure, adding that HRG recently launched a BlueSky-enabled mobile solution in China. CWT has also developed apps such as CWT Online China and CWT To Go.
“More firms are receptive to OBTs. Due to IT advancements, all major GDSs can also allow travel itineraries or air tickets to be displayed on iPhones or Android phones. TMCs can hence provide a more robust and automated service to clients,” said ACTE’s Tang. – Additional reporting by Lee Pei Qi and S Puvaneswary
VIEWPOINTS
How will business travel look like for your company over the next six months?
“There will be a 15 per cent increase over last year as our company has budgeted small, focused events for top clients. There will also be new projects rolled out next year, which will involve travel within Europe as well as domestically.
We hope Europe’s economy will improve as this means increased opportunities for getting new businesses.
Our company policy has always been to stretch the travel budget. That means we travel only when necessary and compare hotel rates. If it is cheaper to stay in a local branded hotel, we will do so. For long trips, we will also compare rates between hotels and serviced residences to see which can offer better savings.”
Eva Klejmova
Director, J&T Concierge Czech Republic
“We anticipate business trips to Asia will increase as our company wants to expand its client base outside of Australia, and Asia is a priority market.
We are in the process of collecting data on travel expenses of all employees so that we can develop a business travel strategy.
Clients will be billed on time spent travelling. Thus our travel policy is to fly with the airline that can provide efficient connections and reduce time spent waiting at airports.”
Stephani McKay
Travel team leader administration
Corrs Chambers Westgarth Australia
“We forecast 10 to 15 per cent growth in business travel to the US, South Korea and Singapore due to the expansion of projects we have in these countries.
The value of the rupee against major currencies such as the US dollar is a concern, as this will make travel more expensive.
We are also developing a new software to track travel expenses and show savings made. Our company policy is to use technology wherever possible to communicate and to travel only when absolutely necessary. Video- and teleconferencing are popular means of communicating with our clients and business partners overseas.”
Usman E Gani
Deputy manager – facilities (travel),Tavant Technologies India
