THE COST of business travel from Asia to the US has surged, making it harder for corporate travel managers to secure good deals from airlines and hotels.

Airfares from China to the US have risen substantially in the last two years, noted
Jackie Teo, corporate travel manager of management consulting firm McKinsey & Company Shanghai.

A business class ticket on United Airlines or Continental Airlines, which cost RMB30,000 (US$4,706) in the past, is now RMB40,000, she said.

Dean Fowles, principal, travel & expense management, global sourcing-services, Rio Tinto, explained that volatile fuel prices and multiple global financial crises forced airlines to take a harder look at the way they run their businesses.

“Earnings have become more important and there is added emphasis on revenue,” he said. “Compared to before, airlines aren’t slashing prices to fill seats. Leisure travellers may still get great deals from airlines, but corporate travellers aren’t getting anything like they used to.”

Fowles added that contraction of air capacity in and out of the US with the two recent major American carrier mergers (United Airlines and Continental Airlines; Delta Air Lines and Northwest Airlines) had also affected the competitive rates of the past.

Margaret Li, director, procurement-Asia for American leather goods company Coach, agreed, pointing out that airfare discounts have fallen from 40-50 per cent to 10-15 per cent.

As a result, the burgeoning airfares have forced at least one company – McKinsey & Company Shanghai – to pressure hotels in the US for better rates in order to keep costs down.

The problem is, room rates in the US are also rising, with rates for a standard room leaping from US$100 several years ago to US$250 today, said Catty Yun, senior manager, global procurement, finance department of National Basketball Association (NBA) China.

Pricier multiple-entry business travel visas into the US are also to blame, said corporates.

Niranjan Phatak, manager-travel & immigration services, HSBC India, said the cost of these visas had risen from US$600-700 to about US$2,000 over the last two years.

As corporates cannot avoid travelling to the US for business meetings, the incentive market is the one bearing the brunt.

McKinsey’s Teo said incentives to the US have been shifted to Hong Kong and Singapore.

– Read more in IT&CMA and CTW Asia-Pacific Official Daily – Day 2 issue

ASIAN corporate travel has hit the amber light as companies begin to scale back on trips in view of the global economic uncertainty, which caused stock markets to plunge again yesterday and Monday.

Corporate travel buyers interviewed at the show said while trips had not been completely red-lighted, they had definitely hit the amber light at this juncture.

The head of procurement Asia-Pacific of a Hong Kong-based financial firm told the Daily that his company had, since July, placed a “freeze” on all travel except essential ones.

“Although I can’t cite figures, the drop is significant,” said the manager, who spoke on the condition of anonymity due to company policy.

The last time his company froze travel except essential ones, and even enforced economy class-only on essential travel, was in 2008, he said. “It would never come to no travel at all; there is no such thing. But, because of the lack of confidence in the market, we are getting prepared for the worst,” he said.

“If it gets worse, the next step is to enforce economy class-only on essential travel, as we did in 2008.”

The global category manager-travel global sourcing of a financial firm based in Singapore, who also requested anonymity, said: “I know for a fact that a lot of companies in the region are asking their employees to cut down on travel. Companies will be announcing their latest quarter results soon and you’ll see many are not meeting their numbers. Consequently, corporate travel will be affected. Internally, I know many have announced cuts, especially those in manufacturing, R&D, etc, which are not profit-driven sectors.”

Mediacorp Singapore assistant vice president-administration, Loong Chow Jin, said the broadcasting firm was cutting down on travel spend. The number of people sent for overseas training or meetings, for example, has been trimmed to 15 people, from 20 people, and fewer staff are going on overseas trips to acquire programmes.

“We started cutting back two months ago, but it has not come to the point when everyone – including the VPs (and higher-ranking staff) who travel business class for trips of more than seven hours – must travel on economy.”

– Read more in IT&CMA and CTW Asia-Pacific Official Daily – Day 2 issue

NEW government projects in Brunei involving oil drilling, deep-sea hub development and oil refinery are expected to spur corporate travel and meetings to the sultanate.

Anthony Lim, managing director of Anthony Tours in Brunei, notes that Petronas Malaysia is already “sending their people in”, adding he has high hopes of more inbound MICE business due to these works.

Inbound MICE business has already grown 30 per cent to date for Anthony Tours. Buoyed by the growth, the agency – which started its business as an outbound player – is expanding the inbound division by appointing a commercial director-inbound, Nordin Besar, former product manager of Golden Beach Holidays (now Royal Brunei Holidays).

“We just successfully handled a 600-pax military tattoo (military drum performance) with groups coming from the UK, Oman and Singapore, among other countries,” he said.

Another opportunity Lim is eyeing, apart from BT-MICE from the oil industry, is the school groups market, both inbound and outbound.

Said Lim: “In good or hard times, this market travels.

“Brunei has a lot of culture, history and natural environs that make it ideal as a ‘training’ ground for such groups. I see that the student and teacher conference market is growing.”

A LUXURY travel component will be added to IT&CMA from 2012, the year the show celebrates its 20th anniversary.

Far from being strange bedfellows, BT-MICE and luxury travel go well together, according to Darren Ng, managing director, TTG Asia Media (organiser of IT&CMA), who notes that these markets have more similarities than differences.

“They are both niches and high-end markets. We’re also noting an increase in luxury MICE groups, particularly from Asian markets such as China, Hong Kong, India and Singapore, and our feedback consistently shows buyers requesting for more ‘tailormade’ and ‘unique’ luxury products to cater to increasingly sophisticated clients,” Ng said.

The luxury travel component would attract a new set of luxury travel buyers worldwide, benefiting sellers, while IT&CMA buyers would stand to gain from a new range of products, Ng said.

The move brings for the first time a luxury travel show to South-east Asia, a region which Horwath HTL’s research, The Future of Luxury Travel, done in conjunction with International Luxury Travel Market, identifies as one of the fastest-growing luxury destinations in the world.

– Read more in IT&CMA and CTW Asia-Pacific Official Daily – Day 1 issue

Additional reporting by Linda Haden

ASSOCIATION meetings are holding up, with not-for-profit associations emerging as the market to watch.

Simon Pryor, president, Australian Society of Association Executives, said: “We have just discovered that the not-for-profit sector is bigger than the retail sector. In Australia, it is growing at twice the rate of the Australian economy.

“While people do target the sector, I don’t think they realise how huge it is in the US, Europe and Australia.”

The growth of the sector is attributed to the mood of governments to let professions regulate themselves and public services such as hospitals, schools and charities run themselves. In Australia, there are now around 60,000 economically-active not-for-profit associations, Pryor estimates, giving rise to bigger opportunities for meetings and conferences, he said.

Michael Anderson, president and CEO of the Canadian Society of Association Executives, agrees not-for-profit is growing in North America, albeit not at such as an aggressive rate as in Asia-Pacific, as North America is already a mature economy.

Concurring the association meetings market is holding up, Anderson also notes that attendance at congresses is stable in Canada, despite the global financial crisis (GFC) and the Internet revolution that opens new ways of communication and learning. “In Canada, we have seen attendance actually growing a bit,” he said.

– Read more in IT&CMA and CTW Asia-Pacific Official Daily – Day 1 issue

THE THAILAND Convention and Exhibition Bureau (TCEB) will be launching a new marketing campaign, Thailand Destination of Choices, to replace the year-long Believe in Thailand that concluded last month. The new campaign is designed to reflect the country’s multitude of choices.

TCEB president, Akapol Sorasuchart, told the Daily in an interview that under the new campaign, the bureau would offer “step by step” assistance for meetings and incentives headed for the kingdom. TCEB will help planners secure special services such as fast-track immigration clearance, connect with MICE suppliers and notable speakers and access more destinations in Thailand.

Apart from recommending themes for luxury events, corporate social responsibility programmes and small meeting and incentive groups, the campaign will also turn the spotlight on the variety of destinations and products available in Thailand, as well as two upcoming convention and exhibition centres in Chiang Mai and Phuket.

Akapol also said the bureau would make it easier for MICE planners to qualify for support.

“We want to extend our support to all sizes, from small to large meeting and incentive groups,” he added.

The campaign aims at maintaining the European market and will seek to court more traffic from eastern Europe, including Poland and Russia, amid the current crisis. In Asia, TCEB is looking to grow business from China, Japan, South Korea, India and Indonesia.

– Read more in IT&CMA and CTW Asia-Pacific Official Daily – Day 1 issue

By Sirima Eamtako