United Kingdom
United States
Asia Pacific
TMCs to become ‘more relevant’
Tuesday, 19 Nov, 2009
0
Travel management companies will become more relevant as companies rethink their business travel requirements in the wake of the global financial crisis.
The prediction came from American Express as it released a study showing that 66% of companies reduced their business travel budgets by at least 31% this year.
Almost three quarters opted for using alternative ways of travel including video conferencing to make savings.
The American Express Business Travel 2009 European Barometer highlights the impact the global economic crisis has had on business travel expenditure, revealing an 18% fall in budgets reported on average.
The study found that 23% saw no change to their travel budgets while just 11% noted an increase (of +23%).
Online usage has increased – the internet continues to gain ground as an important means of booking business travel (60% of companies said they use online tools, up from 57% last year).
Looking forward to 2010, European companies are still adopting a wait-and-see attitude in view of the latest effects of the crisis.
Only 20% anticipate an increase in their travel budget, 61% anticipate no change and 19% predict a reduction.
Forecasts and optimism vary geographically: there are countries that forecast an above-average budget increase, such as Germany (33% of companies), the Netherlands (28%) or UK (23%).
Businesses in Belgium or Spain expect an above-average decrease of 22% and 24% respectively, and France and the Scandinavian countries’ expectations lie close to the European average.
Amex senior vice-president and general manager business travel EMEA David Herrick said: “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.
“Travel management companies will become increasingly relevant as companies redefine their business travel needs.”
Reviewing 2009, Herrick said: “Faced with an unprecedented economic crisis, we are seeing a new normal emerge with corporate behaviour.
“We’ve seen travel policies tighten up, purchasing controls increase and employee travel driven by client retention needs where as a focus was on driving new business.
“Travel management companies (TMC) play a key role in helping companies maximise savings without sacrificing the tangible benefits of a robust travel and entertainment programme.”
Organisations have placed greater importance on using travel and entertainment spend for maintaining existing clients, the research shows.
Ahead of trips for internal meetings (29%) and meetings with suppliers (8%), on average, 57% of European companies’ travel budgets are dedicated to maintaining or acquiring clients and markets.
This is a trend that affects small-to-medium sized enterprises (61%) more than companies with budgets exceeding €20 million (47%).
TOP 10 T&E Saving Practices:
· Best buy strategies
· Use of preferred TMC
· Renegotiation of supplier agreements
· Use of alternatives to travel (video conferencing)
· Tightening of travel policy
· Advance reservations
· Increased use of Self Booking Tools and the Internet
· Greater use of preferred suppliers
· Use of restricted fares
· Control of MICE budget
‘Best buy’ strategies lead the way in terms of measures that have immediate effect, with restricted fares or advanced reservations also being cited.
Smaller companies with travel budgets of less than €5 million tended to prefer the immediate effects of ‘best buy’ strategies, the use of the preferred TMC, and controlling seminar and conference expenditure.
Where budgets exceed €20 million, companies have combined more structural measures such as the renegotiation of supplier agreements, the increased use of preferred TMC with ‘best buy’ and the increase of restricted fares, according to the barometer.
Other trends identified include:
· Supplier negotiations becoming increasingly global, with the majority identifying air as the top category (81%) for international supplier agreements. The globalisation of agreements, which had already seen an increase last year, is now at 94% for companies with budgets exceeding €20 million.
· 89% of companies surveyed say that they now have a single travel policy and are including additional elements within the policy. Video conferencing is now an alternative to travel featuring among 70% of companies, and the inclusion of rules relating to incentive conferences or trade fairs, which is a cost item that has not been widely controlled to date.
· Environmental policies have reduced in priority, with only 18% of businesses indicating that they have put provisions in place.
However, despite tighter controls, 55% of companies still give employees partial autonomy for the travel expenses they incur.
*The 2009 Barometer was prepared from a poll with people responsible for travel budgets in 336 European companies based in Germany, Great Britain, France, Belgium, Luxembourg, the Netherlands, Italy, Denmark, Sweden and Norway.
by Phil Davies
Phil Davies
Tony from Gatto’s Pizza on Columbus’s Unique Pizza Trail
Sophia Hyder Hock on Global Social Inclusion in Tourism
Sustainable Tourism: Don Welsh on Community Values and Global Collaboration
Jane Cunningham: Enhancing European Engagement in Tourism
Kristin Dunne: Navigating Destination Strategy
Revolutionizing Mobile Connectivity: Boris Bijlstra on HUBBY eSIM
Capturing Glasgow’s Vibrancy: An Interview with Susan Deighan, Chief Executive of Glasgow Life
Lebua Hotel & Resorts: Rajan Khurana on Hospitality and Bangkok’s Charms
Sustainable Tourism and Growth: Insights from Chiravadee Khunsub from Tourism Authority of Thailand
Revolutionizing Travel: SmartSIM USA’s Dale Takio Unveils the Power of E Sims
TravelMole Interview with Hishan Singhawansa, Deputy CEO of Cinnamon Hotels & Resorts, Sri Lanka
Unveiling the Essence of Magari Tours: A Dive into Authentic Italian Experiences
EU airports bring back 100ml liquid rule
CLIA: Anti-cruise demos could cause itinerary changes in Europe
Co-pilot faints, easyJet flight issues ‘red alert’
Dozens fall ill in P&O Cruises ship outbreak
Woman dies after getting ‘entangled’ in baggage carousel