1 November 2022, London Marriott Hotel County Hall
21 November 2022, Hilton London Metropole
12 December 2022, etc.venues Monument, London
The profligate ways of the Square Mile have been put under the microscope of late, says Nick Easen – but has it embraced austerity, or is it business as usual?
IT DOESN’T SEEM THAT long ago when splashing out on yet another transatlantic ticket at the front of the plane didn’t merit a second thought, but to many involved in business travel it feels like a different era. At its peak, the vast spending power of the banks and financial service firms in the Square Mile supported a major industry of dependent travel businesses, from taxi firms to private jet providers.
Then came the rough-and-tumble of the global financial crisis five years ago: City firms slashed costs, and put the brakes on profligate corporate travel and entertainment. “At one point in the downturn, spending virtually switched off in the City,” says Ken McLeod, corporate director at Advantage Travel Centres.
After the shakedown, the collapse of Fannie Mae and Freddie Mac, then Lehman Brothers and the bailout of British banks, we saw increased regulation, margins squeezed and head-counts slashed. Iron-clad travel policies were then used as straitjackets to rein in the excess. They’re still firmly in place today. “Overall, the sector is clearly now more cost-conscious. There are also significantly less business travellers in this sector due to smaller workforces,” says Simon Bean, UK general manager at ATPI.
And, come 2013, we’re finally in a more realistic era. Travel budgets are under constant scrutiny in the knowledge that our ‘casino’ banking sector and financial services industries are very much in the public eye, from Goldman Sachs to Royal Bank of Scotland – with the media pouncing on signs of excess and the bonus culture.
“Certain high profile firms now have to be seen to do the right thing,” explains Anthony Rissbrook, managing director of Hillgate Travel. “With companies working hard to save money, travellers know that it’s best not to feature on the out-of-policy pre-trip report without a good reason.” Perception these days means everything to a City firm’s reputation.
INCREASED COMPLIANCE Many investment banks and finance houses have therefore witnessed a big increase in compliance with travel policies – applied to junior traders and board members alike. “Our clients tell us that they name
rule-breakers in internal reports to ensure they understand the impact their non-compliant activity can have on the overall budget of the company,” says Anthony Drury, general manager at American Express Business Travel UK.
The bigger the financial institution, the more compliance that’s likely to have been put in place. There’s also much stronger buy-in from senior level executives who now endorse specific travel policies. “There’s a real ‘we are all in this together’ mentality at the moment,” explains Bean. “This is extremely positive for buyers and travel management companies.”
Many top brass at Square Mile firms are increasingly leading by example when it comes to travel policies – and it’s their companies that are making the biggest savings. “Compliance has been responsible for an 11 per cent reduction in average room rates across our customer base in the financial sector,” says Capita Business Travel director Steve Banks.
One City firm insists all employees use an online booking tool as a means of reducing the cost of arranging travel – and if anyone makes an offline trip they have to personally answer to the CEO. It’s certainly not the norm, but it is an effective way of ensuring compliance.
FURTHER AFIELD In a more globalised financial world, where investments can be found from the Caspian oil fields of Kazakhstan to Indonesia’s mineral and metal mines, executive trips to far-flung locales are increasingly seen as critical business investments. They’re now part and parcel of financiers’ bids to compete for work on a global scale. It’s about leveraging growth opportunities in fast-growing economies where returns are better than in the eurozone and North America.
It is increasingly understood in the City that if firms are to chase solid returns, these need to be found in the emerging markets of acronym-strewn regions such as the BRICS (Brazil, Russia, India, China, South Africa) and the MISTs (Mexico, Indonesia, South Korea and Turkey). As one travel buyer puts it: “The world’s trade axis has moved eastwards, and so have travel buying patterns.”
Advantage’s McLeod adds: “Just look at the expansion of the Middle East hub carriers – Emirates, Etihad and Qatar Airways – to secondary cities in China and India. Connecting old markets with the new – that represents change.”
The banking industry has seen consolidation of regional offices, alongside a more global approach to travel buying, helping drive down costs by using fewer, more-global suppliers and ensuring more consistent travel policies. This trend also gives greater visibility to overall spending across the company – ‘big data’ can be crunched, analysed and spat out as global travel reports for further scrutiny in head office.
PLUS ÇA CHANGELet’s face it though, those pricey seats at the front of the plane are still occupied by the big dealmakers who overnight in hotels where hats are doffed as they’re greeted by name. A certain amount of ‘money-no-object’ travel will always be a part of City life. If a company is working on a £100 million deal and they need to charter a jet because there are no suitable scheduled flights to get to a critical meeting, they will do so.
“It is simple economics, although this type of scenario does not happen as often as the mainstream press would have you believe,” says Rissbrook. When these mega-deals do take place, the quality of travel can be more important than the cost: five-star comforts can be seen as a worthwhile investment to keep senior execs fighting fit and fully focused for the big business pitch.
The old ‘time is money’ maxim can be critically important for City workers. “We have one client
in the finance sector that never wants breakfast to be negotiated into their hotel programme, as their travellers don’t have time to eat breakfast,” says Bean.
Travel buyers may be able to save several hundred pounds by booking a different airline or route, but if that route takes an additional two hours it may cost more in the employee’s time than the costs saved. This is particularly important in City legal, financial and consulting roles that often recharge clients.
GREAT EXPECTATIONS Then there’s the issue of dealing with the expectations of City workers who still walk away with multimillion-pound bonuses each year. “In many cases, the quality of hotel or airline class an employee enjoys in their personal life does not match up to the quality offered within their employer’s travel policy,” says Mark Douglas, UK head of sales at hotel booking portal HRS. “An on-going challenge is implementing a policy that staff are happy to comply with.”
How strict policies are depends on where you work. There’s a sliding scale, with big financial institutions being the most stringent, moving down into smaller private equity companies and hedge funds, where it is typically the more senior individuals travelling – then policy is often more loosely defined, allowing for personal preferences to come into play.
Times have been tough on the stock market and when the bear market rears its head then travel budgets are under even closer scrutiny. When markets are bullish and there are deals to be done, then travel rules are typically relaxed.
Certainly on the travel buying front, the City remains a very dynamic sector, with the ability to upscale and downscale very quickly according to market conditions. With the FTSE 100 equity benchmark showing the best start to a year since 1989, times could be changing again.
TRENDS IN MANAGED TRAVEL
THE BUYER’S VIEWOur senior insider manages travel at a major financial institution in London for one of the world’s largest brokerages, looking after trillions in numerous asset classes
“TRAVEL SPEND HAS definitely become a lot stricter, especially at the junior level – every trip needs internal approval and justification these days. Flights and hotels for big deals get signed off easily, but there’s more questioning about trips for relationship building and client meetings. There are now more internal queries and dialogue before trips are ever booked with a TMC. Everything is scrutinised and there’s certainly more self-control when it comes to caps on spending.
“We’re finding that managing flights and hotel bookings is increasingly difficult since they need longer lead-in times if we want good rates. This isn’t helped by the fact that we’re doing more deals in emerging markets, where meetings are only fixed when the banker arrives in many cases. The travel booking process demands more certainty to save costs, but we’re doing business in a more uncertain market.”
THE TMC’S VIEW
Anthony Rissbrook is the managing director of Hillgate Travel, 50 per cent of whose clients are in the City and financial services sector
“THE CITY IS A FAST-PACED environment in which a traveller’s plans can change both quickly and often. It is not uncommon for travellers to hold several return flight options and to then call us on the way to the airport to let us know which flight they are taking.
“It is essential that those handling this type of business are knowledgeable, proactive and, on occasion, thick skinned. The modern City travel policy needs to look after the traveller, but also control expenditure to cut what, in the past, has been viewed as frivolous spend. This is the right balance.”