BTN Europe presents an overview of business travel and MICE predictions for this year
Business Travel Show Europe Kick Off, proudly
ExCeL London - 22-23 June 2021
Stanley Slaughter, editor of Air and Business Travel News (ABTN), reports from two forums, one in Rome, the other in London, organised by the Association of Corporate Travel Executives
Companies cutting back Companies are targeting internal meetings as a major area for savings on corporate travel spend.
A new survey by the Association of Corporate Travel Executives (ACTE) has found that 39 per cent of companies cutting back on travel budgets are reducing internal meetings. The poll also found that 31 per cent of organisations were cutting their travel budgets across the board, while 16 per cent were reducing international travel.
But the survey found that only one-third of respondents were actually planning to cut travel budgets next year, while a surprising 36 per cent said they would spend more. Just under one third said they expected to spend about the same as in 2008.
Susan Gurley, ACTE's executive director, suggested those spending the same would ultimately travel less as costs have climbed significantly. "Even those who stated they are spending more may fi nd they are barely keeping up with cost increases," she said.
Economic uncertainty and rising fuel costs were the two main reasons companies gave for cuts. Gurley said ACTE had been focusing in the past year on three techniques: "Value management, strategic meetings management and demand management, to discourage the deleterious decision to simply cut travel across the board."
Sustainable air fare levels Air fares will return to sustainable levels once the price of oil stabilises, according to Martin Cowley, senior vice president EMEA for Sabre Travel Network.
He also said that the current "year-on-year increases in round-trip fares will become a thing of the past."
This was one of four predictions he made for the business travel industry in 2012, once it emerges from its current "tough times". Cowley said there would also be consolidation of small or inefficient operators or of those with high operating costs. This would result in a more balanced airline industry, where capacity reflected demand "with more passenger-friendly schedules and choices." As a result, the hub-and-spoke systems at airports would be "confined to the history books".
He also forecast that corporates would no longer take the same "radical approach" to reducing costs. Instead, they would drive out costs by taking a "more objective and conservative approach" by consolidating their global travel programmes.
Finally, Cowley suggested the supplier landscape would evolve in the next four years and "intermodal travel would be a reality for business travellers" because of rail deregulation in Europe in 2010. He said rail travel would continue to grow, challenging the airlines, with the number of passengers using highspeed trains exceeding 700 million. At the same time, mobile services will have become a "fundamental part" of booking air travel.
But, he said, the industry would only reach these goals if it worked together. "History shows that moments of economic chaos and panic present wonderful opportunities. So let's work together to ensure that we pursue these opportunities."
Measuring the benefits of travel Travel is becoming a strategic investment, requiring travel managers to measure the total cost of a trip.
Herman Mensink, vice president of the Prism Group, maintained that "value management" was a new, emerging role for travel managers. For them, a key principle was to arm line managers with data so they could make the decision on whether or not their staff should travel. This was necessary to achieve the maximum value from a trip, he told delegates.
Travel managers need to advise senior executives that year-on-year savings on travel budgets were not possible. "Corporates have to recognise there must be a balance between costs and the needs of the business," said Mensink.
"The traditional travel managing role is moving into value management. The first thing in travel value assessment is to analyse the total travel base, and then create new tools to deal with it."
Travel managers needed to collect two to four months of data of their company's trips and patterns, and then benchmark it. "They can then show line managers and senior management with the data," said Mensink. "They should constantly be asking: 'What is the reason for this trip?' You must follow up on each trip - one of the most important things is that you leverage the experience and knowledge that you have with line managers rather than focusing on strategic sourcing and budgeting."
But Marc Hochman, a partner with consultants AT Kearney, said a recent survey by his company found that no companies were measuring their return on investment (ROI) in travel. "Half said it was too difficult to measure, while the other half said it was too difficult to get the data. Data is king but getting it is extremely difficult," he observed.
He said the survey also found that companies were using technology to reduce travel spend with 50 per cent saying they had specific policies for this. Most were using conference calls, and video and web conferencing, but none said they used collaboration tools, like SharePoint.
"These are being used in lots of industries and it bothers me that it is not happening in travel." he told delegates.
Organised by Management Solutions UK, in association with ACTE
'Be prepared to pay more' Airlines should charge more for their services, according to a leading aviation consultant.
Peter Dunkin, a former BA manager and country manager for Etihad Airways' launch in the UK, told the 65 delegates at the expense management forum in London: "I think that we have worked miracles in the aviation industry to have done what we have achieved.
"Getting people there safely is a huge task and we have taken as much as we can out of costs. What is left is to get realistic about what we charge. It is about persuading corporates that this is a very high cost product and that they should be prepared to pay more."
He was speaking in a discussion on how oil prices and Open Skies have affected the industry.
However, according to Thane Jackson, BCD Travel's industry relations manager for the UK and Ireland, this was not possible. "It would be great to increase fares by 25 per cent. But with Open Skies we have brought in a whole lot of new competition, so we can't do that." He said the current situation in aviation was "uncharted waters", with a number of factors coming together which had never done so before. These included the price of oil and the "unprecedented recession".
Marianne Sammann, general manager for Lufthansa in the UK, said the cost of oil had always been important but it was now "shaping things" for the industry. "Costs are changing the rules for everyone. They decide what you can do and how we balance the value proposition to the costs."
Frank Silvy, director of partner accounts for global corporate sales for Air France KLM, said his airline was hedging future oil needs, as well as adapting its fleet to cope with the increase in oil prices.
But he said airlines needed to bring "more transparency." He added: "We need to explain what is going on and how we are handling the increasing costs. There is a shift by customers from Business to Economy, but we are still investing in our fleet and we are not reducing capacity. We are increasing it this winter."
Speakers were optimistic that the industry would survive its current crisis. Thane Jackson said that while more carriers might go out of business, he thought the industry would emerge "stronger with fewer players but more efficiency".
Providing informed choices The new Corporate Manslaughter and Corporate Homicide Act in Britain meant that travel managers must give their travellers an informed choice about the destination to which they are travelling.
The advice came from Cynthia Barbor, a partner with law firm K&L Gates, who told delegates that the new Act aimed to bring companies, not individuals, to book if a death had been caused through the way a company did its business. The Act, which came into force in April, addressed the responsibility of senior managers and their failures.
But it also gave travel managers a duty of care to their travellers. "You have to give the individual employee an informed choice," she said.
Barbor also advised that business travellers also had responsibility for themselves. "But if you provide travel for them, it must be an informed choice," she said.
Her reading of the Act suggested that it applied to management decisions taken in the UK if they led to an employee's death.
Sue Kavanagh, until recently head of HR at Carlson Wagonlit Travel, said her former company had had a "lot of discussion" about where the liability of the TMC stopped and started in this area.
"Our view was that we had an advisory role to play for customers to make sure staff knew where to go to find out the situation in a country where they were travelling."
Matthew Judge, managing director of The Anvil Group, a security company, said that corporates needed not only a travel policy but also a travel safety policy.
"It is not just about what airline you use or which hotels, but also about which ones you choose for safety reasons," he said.
Technology must deliver New technology must be seen to deliver tangible cost or convenience benefits, according to Noel Lau Keng Lun, head of product management, Amadeus.
As an example, he cited the relatively slow adoption of self-booking tools in companies across the board, as first generation versions failed to deliver convenience to travellers and lower fares are still often found by simple net searches or use of comparison sites.
Johnny Thorsen, CEO of conTgo, suggested that technology was also still highly fragmented and there were at least five platforms currently in use by the mobile industry, with the introduction of the Google G1 phone adding a sixth. "This quickly developing 'technology on the move' sector will be the future battleground," he maintained. Hybrid phone/PC devices will be used by most future business travellers to communicate, work and book travel products themselves.
Karen Mcgee, of Sssource.com, described how many government agencies in the UK and elsewhere were ahead of the private sector in their adoption of online procurement products and technologies. Ssource.com was busy building an online marketplace for the business travel and meetings community to bring it in line with many other sectors. The lower cost of purchase and speed of comparison with online procurement is of huge benefit to buyers who are increasingly looking after several product and services categories.
Scott Taylor, UK manager, Talk and Vision, said that as broadband gained market penetration throughout the world, there was an opportunity for video conferencing to thrive as relative costs came down. PC-based applications for one-to-one video conversations were now very cost effective, he added.
Venue for the event
The Hesperia London Victoria is immediately adjacent to the railway station, with easy access to both the London Underground and Gatwick Express.
All 212 rooms, which include 24 executive rooms and seven jacuzzi suites, offer complimentary wireless internet access, plasma screens and satellite TV. Nine meeting rooms, with varying capacities up to 220 delegates, all enjoy natural daylight.
Says Danielle Keogh, director of sales: "We are delighted to have been selected by ACTE and Management Solutions UK as the venue for the expense management forums."