ABTN talks to Anderson about CWT’s record-breaking sales in 2011 and trends in business travel across its UK, European and global businesses
CWT saw record-breaking sales in 2011 – how did you achieve this?
It was a good year and one of the key factors was our 96% client retention rate – we think this is because we are delivering on our promises to clients and that was our first priority in 2011. We also won more than €2.2 billion in new business – this was through either winning additional scope from existing clients or winning new clients. This has set us up in a very good position to grow and get new business in 2012.
Your highest levels of growth were in the Asia Pacific and Latin American regions but how important are your North American and European markets?
Transactions in North America and EMEA were up 5.2% and 6.2% respectively in 2011 and they are, of course, working on much higher base levels of business than Asia or Latin America. Around 40-45% of our sales are in EMEA and about 40% are in North America so that business is still very important. In the last two to three years we have seen the economies of Latin America and Asia Pacific grow at robust rates, even through the downturn and financial crisis, and we have enjoyed our share of that economic growth. We expect to see more travel into and out of these emerging regions.
How did your UK and European businesses perform last year and what are the prospects for 2012?
For the UK, it was a very good year. There was a 6% increase in sales last year to a total just under £1.19 billion in the UK. One thing we started to experience was a marked slowdown in public sector activity in the latter half of the year and we expect that to continue in 2012. We still have a very robust and viable public sector business in the UK although we were affected by this slowdown in spending. Overall we are forecasting moderate growth in the UK this year. We will have to see what happens but we don’t expect any marked downturn in the UK overall. Some European countries which were severely impacted in the 2008-9 period are continuing to be affected – business travel is down in Spain as there has been a pull-back with the high levels of unemployment there. Overall, we expect moderate growth in Europe in 2012.
CWT made three acquisitions in 2011 – Kaleva Travel, Centenial Group and Net Tours – do you plan on buying more companies this year?
The vast majority of our growth has been driven by organic sales. Having said that, we are - as we have been over the last three or four years - constantly continually looking for more tactical acquisition opportunities. There’s nothing imminent but we continue to have our eyes open and have a small team that does nothing but look for those opportunities on both strategic and tactical levels.
What are your feelings about the way 2012 has started – are there optimistic signs for this year?
If I can summarise what we are hearing from clients – it seems that clients expect to continue to travel to build their businesses and take care of their clients. There seems to be some recognisable curtailment or reduction in non-billable and internal travelling – in other words, companies travelling to talk to themselves. There were big cutbacks in this area in 2008-9 and some of that has continued to be managed down. Companies are using more of those travel dollars that they were spending on internal travel to drive top-line growth and client relationships. Business travel is alive and well. If we look at the first six or seven weeks of 2012, we have on a global basis experienced growth. It’s small growth – small single digit growth – but we are growing year-on-year.
Are airfares and hotel rates increasing this year – and do you see this upward trend continuing?
Average ticket price – when you look at the average value of the bookings we make – is up 3.5% compared to the same period last year. That’s driven by a couple of things: what we expected to happen with hotel rates and average airline ticket prices, and also by the mix of our bookings - for example, if companies are returning to the front end of airplane after the austerity cuts. We think 3.5% is a fairly strong increase and some of that is made up of ticket price and class of travel. There’s been a slight growth in transactions. We made some predictions in October for what we thought would happen in 2012. We said airline pricing would go up by around 6% and hotel rates by 9-11%. I think those numbers are probably still in range, given what we saw in January. If there’s a cutback in business travel then capacity will become available in the air and pricing will react, but I don’t see that happening in the next quarter or two, at least.
What are the main challenges and opportunities for the corporate travel world at the moment?
The macro-economic threat is obviously world economic growth, specifically Europe and trade from Europe to North America and Asia Pacific – the impact and uncertainty around that issue. Although generally corporate results are good, every bit of bad news causes maybe an over-reaction. The opportunities are very clear – we talked to 290 travel managers at the end of last year and they told us that their priorities this year were driving air and ground transportation savings, continuing to optimise their spend, improving and driving travel compliance, optimising hotel spend and online adoption which drives cost savings. The opportunities are around the five or six key levers that we have been focused on for the last two or three years and we are continuing to focus on those levers.
What trends do you see with business travellers using their smartphones?
On mobility, we have what I believe is a blockbuster, market-leading solution, CWT to Go, which addresses traveller efficiency, comfort and keeps them in touch. It also helps our clients to drive compliance. We believe we are ahead of the market. There are applications in the market that are provided by technology companies that aren’t in the TMC space which are competitive. But we have put into the market our own proprietary application app, CWT to Go, and I think we are very well positioned and also have a very clear road map of enhancements that we are working on and will be delivering over the course of 2012 - those will continue to propel us forward. The next big deal - and we are working with the airlines to get this done - is a more easy and streamlined way of doing online check-in. Then the holy grail is booking - booking airlines and then I hope, not too long after that, a clever way to book or rebook hotels. We are working hard on that and hope to have some news before the turn of the year.