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Last year was tough, but is 2010 going to be any better? Bob Papworth talks to industry leaders and buyers about their predictions
Somewhat inevitably, 2010 will mean different things to different people. The Mexicans and Argentinians will be celebrating 200 years of independence; Czechs, Slovaks and Hungarians will all be going to the polls (we in the UK may be too busy marking the 50th anniversary of the passing of the farthing to do anything so rash); the South Africans get to host the FIFA World Cup; and the Norwegians cop the Eurovision Song Contest So what about corporate travel? You might think that this is one business that has reached a consensus over 2010. You've heard the rumours: it will be slow to start, with sluggish recovery over the year, but prospects looking up by 2011 - but no bounceback, and certainly no return to the halcyon pre-recession days of 2008. Nothing too exciting. End of story. Can we go home now?
However, listen to the many and varied opinions of the industry's great and good and it seems that, despite this mood of muted optimism, 2010 still means a number of different things to them, too.
Take Cathay Pacific chief executive Tony Tyler, making an end-of-year speech at London's Aviation Club. "I think most of us would agree that the crisis is deeper and more unpredictable than any crisis we have seen before - and we have seen plenty in our business," he said.
"I cannot remember the industry being in such bad shape in the 30 years I have been involved in it. The worst of it is that I cannot, at this stage, honestly say that I see the end of it." However. ATP International's group chief executive Graham Ramsey has a more positive take on matters. This is a man who opens his comments with: "I think 2010 will be an exciting year."
Run that one by us again? "The business travel industry in 2010 will be very different from 2008, with far greater emphasis on compliance and a rigorous approach to cost control at the highest level," he says. "Those TMCs [travel management companies] - and indeed all businesses - that made use of 2009 to control their cost base, tighten up their customer proposition and get close to their clients, will have a better 2010."
But Philip Carlisle, immediate past chief executive of the Guild of Travel Management Companies (GTMC), was clearly having a 'Tyler moment' when he reviewed his organisation's third-quarter transaction totals.
"There is a definite downward trend across the business travel sector in every category except rail," he says. "Which shows that, while politicians, analysts and economists talk of 'green shoots of recovery', UK plc doesn't necessarily share that view.
"The rate of decline in some categories is starting to slow down but we are yet to see any positive signs." GTMC chairman and The Appointment Group's chairman and chief executive, Maurice Veronique, has a more upbeat approach to the coming year. "2010 will be an up-and-down year, starting off very fl at and continuing that way through the second quarter, which will be a very uncertain time," he predicts.
"[But] once we have won the World Cup and a new government is in situ, I think the feel-good factor will result in the rest of 2010 being very buoyant, with significant growth year-on-year."
HRG (Hogg Robinson Group) commercial director Chris Fry is more cautious. "There are certainly signs of stability returning to our sector," he says. "I believe 2010 will see the industry as a whole maintaining a constant watch on both efficiency and value, whilst travel buyers will continue to balance long-term benefits with short-term gains.
"People are travelling, as the need to continue to do business with existing customers - and to establish trade links with new markets - prevails. He continues: "Cost-saving and compliance are now standard within every corporate strategy. Businesses will and should continue to seek a good return on their travel expenditure. Innovation that delivers expertise and knowledge, and service without compromise, will be the discriminators of 2010."
So much for the travel management fraternity; but what of the suppliers? They, at least according to Mary Ellen George, general manager of BCD Travel's consulting arm Advito, are about to become a whole lot cannier. In particular, she says, airlines may tire of fl ying Economy-heavy aircraft, while train operators will recognise that they are on to a good thing, and adjust prices accordingly.
"The negotiating outlook remains excellent for corporate clients in 2010 and there will be impressive discounts for customers who deliver ample business to their airline suppliers," says George.
"However, carriers may become fussier about their mix of business, possibly even withdrawing deals for clients who only buy tickets in the lowest fare classes. Prospects for a deal will remain particularly good in Business Class."
On rail, Advito says rising demand will probably result in fare increases, "especially on high-speed lines where heavy capital investment will need repaying for many years".
As far as the airlines are concerned, Sabre Airline Solutions says end-users can expect to be courted even more assiduously, while their bosses are asked to cough up for an ever-growing number of 'unbundled' trip components.
Sabre polled 90 airlines about their hopes and fears, and while fluctuating oil prices and ever-diminishing cost-cutting opportunities still keep them awake at night, 86 per cent say that customer retention is the new holy grail, and 50 per cent say "customer experience" is the key to winning that loyalty.
"The importance of customer loyalty and retention was distinctly higher in this year's survey compared to a similar study we did two years ago," says Gordon Locke, Sabre's vice-president of airline marketing.
"That's not surprising as airlines grapple with the challenge of introducing additional fees to generate much-needed new revenue, in a way that doesn't erode an airline's brand or negatively impact customer loyalty. The airline that finds that magic balance will become a model for the rest of the industry."
Locke goes on: "Customers are less loyal to brands and more apt to switching preferences now than ever before. In the next year or two, we will see more experimentation and a greater focus on the customer as airlines sharpen their ability to service customer needs using new technologies available to them."
Delving into the can of hotel worms produces the usual mixed bag of results (if it is possible to produce a bag out of a can - where's Tommy Cooper when you need him?).
Egencia produces something called the Hotel Negotiability Index, "an indicator of the overall supply landscape", which is basically an assessment of hoteliers' desperation levels.
While the US and Asia/Pacific markets will "continue to maintain high negotiability" - aka bite your hand off - the picture in Europe is rather different. The UK, France and Germany will be tough nuts to crack, while buyer negotiations could bring better results in Spain, "especially Barcelona, Milan and Madrid" - which leads Buying Business Travel to predict that, in 2010, Egencia will get really tired of being reminded that Milan isn't actually in Spain.
In London (which isn't in Spain either), hotel occupancy levels have held up pretty well, says FCm Travel Solutions' director of account management, Alex Cousins, which means that some hoteliers are playing hard to get. The smarter ones are keen to maintain or even increase their market share, in the hope of future rewards, and are proving more amenable.
As for travel managers, Advito's Mary Ellen George reckons the recession has given them a once-in-a-lifetime chance to drive through lasting travel programme and policy changes.
"While we predict travel managers will retain much of their newly-found influence on senior management, they should work as fast as they can to initiate and complete changes before the window of opportunity snaps shut," she says.
"Change management is much harder to drive in a flourishing economic climate."
American Express Business Travel says only 23 per cent of UK buyers are expecting an increase in budgets for 2010, compared with one-third of buyers in Germany and 28 per cent in the Netherlands.
Across Europe, according to Amex' European Barometer, 20 per cent of buyers are hoping for bigger budgets, 61 per cent reckon they'll be no better off and 19 per cent anticipate further cuts.
"Undoubtedly, the economic crisis has placed a significant strain on companies, who are having to think about their travel spend in a much smarter way and will continue to do so as we move into 2010," concludes David Herrick, senior vice-president and general manager for EMEA region business travel at Amex. The slightly better news is that if, as usual, Europe follows the US lead, the National Business Travel Association's Buyers' Cost Forecast for 2010 paints a rather rosier picture. While 31 per cent of NBTA buyer members expect budgets to remain at 2009 levels, a whopping 56 per cent are looking forward to having more to spend.
NBTA president Craig Banikowski said: "As the economic recovery begins taking hold in 2010, companies will take advantage of low travel costs to send employees on the road in greater volumes, thus fuelling the recovery.
"The uptick in business travel in 2010 will take place within the framework of a new corporate culture in terms of travel. In the 'new normal', we see stronger travel mandates, greater use of pre-trip approval and audits, tighter restrictions on premium class travel, more focus on travel ROI, and enterprise-wide strategic meetings management." Unquestionably, 2010 means different things to different people.
On February 14, the Chinese will be celebrating the start of the Year of the Tiger, and while the rest of us may still be some way off a tiger economy, there does seem to be some consensus between those in the know that things are going to get better - even if they can't entirely agree on how it will happen.
WORDS FROM THE WISE ...
"We expect recovery to be muted in 2010. The macro-picture will see the industry bumping along the bottom, with some ups and downs along the way, as we witness a gradual economic strengthening in the UK through the year. We expect some growth at WEXAS, and to see a pick-up in premium travel as companies move into a more positive mindset. Confidence is a key driver of activity, and face-to-face interaction will continue to be an essential part of doing business. Companies will spend wisely, and good TMCs will proactively support the move to 'smarter business travel' - the legacy of this recession."STEVE ALLEN MANAGING DIRECTOR, WEXAS TRAVEL MANAGEMENT
"In my view the economy won't 'bounce back' in 2010 - improvement will come like a gradually rising road. The biggest positive will come from the feel-good factor after the change of government in the general election."ADAM WHITE FORMER MANAGING DIRECTOR, BATH BUSINESS TRAVEL
"Consolidation of both travel management companies and travel principles is inevitable, and the banks will have a lot to do with that. Personally, I don't think things have bottomed out yet, but we at Ian Allan Travel must and will be ready to take advantage when the upturn does finally happen. "When the going gets tough ..." remains the catchphrase!"PAUL ALLAN CHAIRMAN, IAN ALLAN TRAVEL
"We have noticed a slight recovery in business over the last couple of months and we anticipate that there will be further slight but gradual growth in 2010. However, we believe that corporates will continue to seek cost savings by looking at alternative airlines, the class of travel and, possibly, indirect routings. We anticipate that the growth in rail travel will continue. This environment gives us, the travel management company, the opportunity to demonstrate our true worth by providing expertise in creative ticketing and sourcing the best fares rather than just 'order taking' according to travellers' own preferences."JEAN HOPKINS BUSINESS DEVELOPMENT DIRECTOR GRAY DAWES
IT'S NOT JUST THE SUPPLIERS who are having a tough time of it - corporate travel buyers are also having to come to terms with new economic realities.
Speaking at a recent educational forum staged by the Association of Corporate Travel Executives (ACTE), buyer panellists were also unanimous in the belief that many of the changes they were forced to implement in 2009 will become permanent fixtures. Anya Newton, executive director, Goldman Sachs International, revealed that she had to 'find' savings of more than 30 per cent, the vast bulk of which have come from internal demand management.
Taking a tough line on trip approvals will continue into 2010 and beyond, she reckoned, while Jan Tucker Jones, global business travel manager with BT, said her drive to encourage earlier bookings will have a similarly lasting effect.
Paul Cleveland, European category lead, travel, at Accenture procurement, has introduced 'travel smarter' guidelines, consolidated his hotel programme and introduced pre-trip approval for all air bookings in the face of travel volumes down by an estimated 30 per cent or more. He expected to see travel volumes remain flat or increase only very slightly during 2010, "but nothing like the volumes pre-2009". Accenture's focus for 2010 includes a tougher line on supplier prices, more effective demand management and greater simplifi cation of purchasing processes.
THE INSTITUTE OF TRAVEL & MEETINGS (ITM), meanwhile, is to research the true value of face-to-face meetings, and the impact of new communications technologies on transient travel. Caroline Strachan, ITM chairman and category lead for Astra Zeneca, said: "We are not looking to promote travel over technology or vice-versa, but to take a totally independent view to assess what the future might look like."