Travel consolidation, more effective company policies, and opportunities for greater savings and value will be key trends dominating the global corporate travel sector during 2009, according to FCm Travel Solutions
Based on recent client activity, FCm predicts the next 12 months will see companies increasingly turn to travel management consultancies (TMCs) and consolidation strategies to achieve cost reductions in their business travel.
FCm's UK executive general manager Debbie Carling said clients were primarily focused on increasing the value of their travel spend.
"Companies are recognising that the only way to achieve savings is with strategic direction from a consultancy that has the industry insight, the supplier relationships, and the commercial focus to drive efficiencies," she said.
"These measures include the consolidation of travel bookings through one TMC to drive tighter policy control. They also include working with their travel consultancy to negotiate better volume-based rates with fewer suppliers, and using reporting and data to keep their own travel performance in check.
"Consolidation and savings will be positive outcomes of the policy review process that is now occurring among many of our clients. We have seen a lot of companies already tightening their policies to cut costs and we expect this will continue at least until the second quarter of 2009
"There is also now a stronger emphasis on demand management within companies, to ensure their travel patterns and consumption are better aligned with their commercial goals.
"The upside is that these processes will give companies more effective policies, an improved travel culture, and more competitive rates and fares."
Debbie Carling said that globally, FCm had seen the following trends emerge in the corporate market over recent months and expected these to prevail during 2009.
- Lower volumes - demand for corporate travel in the short-term is likely to experience further reductions, particularly in softening markets such as the USA and UK. However, as more companies improve their policies, travel activity could stabilise later in 2009. Despite this trend, FCm has experienced an increase in new business due to the higher demand for strategic travel management.
- Cost-cutting measures - companies will aim to cut costs by placing restrictions on international travel, non-essential travel, and travel that cannot be on-billed to their clients.
- Flexibility - companies and travellers will become more flexible in attaining cost effective flights (eg. taking non-direct flights; using non-flag carriers; booking more restricted fares; using longer stop-over times).
- Class changes - the ‘class shift' already occurring in travel will continue to see the middle and rear sections of planes fuller than before. In the air, travellers are flying Economy and Premium Economy instead of Business Class. Companies may also extend the number of hours required on a flight to book Business Class (eg. eight hours instead of four). On the ground, companies are booking less expensive hotels, and standard rooms instead of deluxe suites. They are also asking more employees to share rooms.
- Air fare reductions - more airlines are likely to implement tactical measures such as price reductions and air fare specials to help increase demand on selected routes and classes. There may also be a continued lowering of fuel surcharges and an ongoing adjustment in services and schedules.
- Hotel savings - companies will reap possible savings in accommodation, as hoteliers in weakening markets reduce their rates or become more flexible in their negotiation to boost falling occupancy.
- MICE - travellers will be encouraged to combine meetings where possible, to reduce their number of trips. There may also be a change in spend in non-essential conferences and incentives.
- Alternatives - there will be an even stronger uptake of short-haul travel alternatives such as rail and car hire.
Carling said corporates would be seeking value at all levels of their travel management, and TMCs would need to focus on driving measurable savings.
"Generating value demands a holistic approach, and that is what we are what we are here for - to be a true consultancy and manage every aspect of our clients' travel. Value does not simply come from cheaper air fares. It involves reviewing each company's travel policy to achieve efficiencies, educating their people on the policy's benefits, negotiating regularly with suppliers to ensure year-on-year savings, and controlling costs with effective technologies and reporting," she said.