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Travel budgets across Europe will increase in 2017, with many businesses predicting no impact from Brexit on the business travel market, new research has found.
A study of 982 travel, HR and procurement professionals across Europe showed travel budgets grew 1 per cent in 2016 with a 2.5 per cent rise predicted for this year.
The findings come from American Express Global Business Travel (GBT), which announced the findings of its European Business Travel Barometer during the annual EVP event in Paris.
If spend does grow by 2.5 per cent in 2017, it will be the third successive year budgets have increased.
Growth in travel spend in 2016 was driven by small and mid-size companies, which saw budget increases of 1.8 per cent and 2.1 per cent respectively.
The study showed that geopolitical developments haven’t dented overall confidence as 67 per cent predict Brexit would have no impact on the European business travel market.
Elyes Mrad, GBT’s MD for EMEA, said: “The findings of this year’s Barometer reflect the positivity we’re seeing in the marketplace. Businesses are now looking to corporate travel as an investment to support growth objectives rather than treating it as a cost, with small and mid-sized businesses (SMEs) in particular leading the way. This SME sector is the backbone of all European economies; their optimism is good news for entire marketplace.”
Key findings from the Barometer include:
1. Companies increasingly see business travel as a force for growth
The Barometer captures a shifting corporate perception of business travel; most now believe business travel plays a vital role in fulfilling business objectives. Instead of viewing it as a cost, almost half of companies consider travel as a form of investment; this proportion has increased by 28 percentage points in three years.
The trend is strongest in the UK, Germany and Scandinavia: More than three quarters (76%) of UK companies reported that business travel plays an essential role in facilitating growth. The figure was 54% in Germany and 53% in Scandinavia.
When asked about specific business activities underpinned by business travel, 32% of companies said budgets fund travel to existing marketplaces and retaining customers, while 22% said budgets were allocated against winning new business in new marketplaces. Small companies allocate the largest proportion of their budgets (69%) to developing their customer base.
2. Traveller safety remains the greatest priority for companies
Last year’s Barometer highlighted a shift towards prioritising traveller safety over cost. Following this year’s survey, traveller safety is again the main concern. In addition, for the first time, productivity and employee satisfaction were rated more important than cost, albeit by a slim margin.
Focus on traveller safety is reflected by the proportion of companies using traveller locating technology, which now stands at almost two-thirds (64%), up 5 per cent on 2015.
3. Cost control continues to be an important factor
Although companies are placing greater emphasis on safety, productivity, and employee satisfaction when developing travel programmes, cost control remains a fundamental pillar of managed travel. However, when asked if they still had room to optimise travel expense, almost half (48%) said there was either no scope, or very limited scope, to make savings. This number rises to 56 per cent among small businesses. Consequently, companies are looking at indirect costs – organisational structures and automation – to make savings.
Large companies place greatest emphasis on reducing indirect costs (46% versus 40% of mid-sized companies and 36% of small companies), while a greater proportion of small and mid-size companies believe costs can be optimised by improving traveller comfort and efficiency (20% of small companies and mid-size companies versus 12% of large companies).