Anyone who read the press release that Carlson Wagonlit Travel released this week announcing "solid financial results for 2015" can be forgiven for wondering what announcing such a general number as "new business sales" can mean.
Private companies, unlike publicly listed ones, are not under any obligation to release any specific numbers — or definitions for those numbers. CWT is far from unique in choosing to emphasise figures which will convey a positive message. It regularly reports sales but not operating costs or profits. This is not wrong but it does mean that those looking to understand company and industry trends have to do more reading and thinking. But we will try.
CWT reports that its overall sales volume in 2015 was US$24.2 billion. It made 61.4 million transactions which meant an average transaction value of $394 last year.
The 2014 figures in contrast were sales volume of US$27.3 billion and 62.3 million transactions or an average transaction value of $438 in 2014.
In other words, sales volume, the number of transactions and the average transaction value all fell last year.
Given that CWT has a strong presence in the energy sector which has been having a very challenging time, it would be surprising if this were not the case.
HRG reports figures differently not purely because it chooses to do so but because it is subject to different statutory requirements as a publicly quoted company. Its results for the first six months of its 2015/16 financial year similarly show a drop in revenue.
For the six months HRG reported revenues of £156 million which would roughly equate to an annual figure of $500 million. Before readers jump to the conclusion that this means that HRG is only 1/50th the size of CWT, they should note that "sales" in travel are 'pass through', ie money spent on purchasing flights, hotels, etc on behalf of clients whereas revenue is actual income comprised of items including, but not exclusively, client transaction fees. HRG's IPO document put revenues at about 10% of total sales which would mean annual sales of about $5 billion for HRG.
HRG's interim results were significant for acknowledging a drop in revenue because of competitive pricing in the sector and an upturn in online bookings which, all things remaining equaly, means lower client fees. However, it reported higher profits because of restructuring.
Business Travel iQ recently looked at American Express predicting growth in business travel spend in Europe and the GBTA is also predicting that "US business travel spending will increase".
So the oil price and slower than expected growth in some markets such as China are slowing growth in business travel but it's not going away so those RFPs will still be done. And so when travel managers do their due diligence it is important they remember that sales does not equal revenue which does not equal profit — but that profit is essential for a sustainable supply chain.
And therefore something to celebrate.