Corporate Travel...

Extracting Value in aRecovering Market

Chris Reynolds (CIPS)Nick Hurrell

CIPS, Manchester and North West Construction, 16 November 2010

Introductions and Agenda

• Corporate travel trends : 2010 – 2011

• Value: Smarter BuyingTravel management companiesTechnologies

• Where to next ?

2010...The market is growing

• Business Travel Growth ‘Steady but strong’A 12% increase in air travel transactions exceeds 2008 levels for the first time

• BA back in the BlackBefore tax profit of £158 million during the first half of this financial year

• Ryanair profits leap17% increase in half year net profit to €452m

• Capacity cuts boost Aer Lingus profits35% increase in profits in July, August and September.

• Virgin Trains increases Market shareManchester-London: 69% to 85%

• UK Hotel occupancy rates growing London 87%, Regions 75%

The Market Outlook - Air

3.6%

6.3%

10.6%

1.9%

8.1%

1.0%

1.6%

13.2%

2.5%

-0.2%

-5% 0% 5% 10% 15%

Europe

NorthAmerica

ASPAC

MiddleEast

Global

Capacity

Traffic

Airfares: likely outcome- 2011

2.0%

2.5%

4.0%

3.0%

4.5%

5.5%

5.0%

5.5%

2.5%

6.5%

0% 2% 4% 6% 8%

Europe

NorthAmerica

ASPAC

MiddleEast

Africa

Economy

Business

Airline Consolidation

• Global Alliances– Star Alliance– One World– Sky Team

• BA/Iberia– IAG ‘Interested’ in 12 carriers

• Continental/United• North West/Delta• American: Largest US to 4th in a year

Average Daily Hotel Rates 2010

Africa+7.5%

Europe-3.2%Nth America

-1.6%

Sth America+4.5%

M. East-2.6%

ASPAC-3.0%

Source: Advito

Predicted Hotel Rates 2011

Africa+4.0%

Europe+2.5%Nth America

+3.5%

Sth America+6.0%

M. East+4.5%

ASPAC+5.0%

Source: Advito

“Unbundling”

• 2011 ancillary revenues forecast at $22b– Ryanair alone: £600m in 2009 !

• Little transparency of cost– No like for like comparison at point of sale– Swallowed up in expenses

• Latest charges– Blankets/Pillows on flights– Mileage multipliers– Credit Card surcharge on hotel bills

Value: Smarter Buying

A Managed Travel Programme.....

Key Drivers:• Transparency of spend• Safety and Security of employees• Pooling of volumes• Traveller Confidence

Value: Smarter Buying

• Airlines:– Contract or Best deal on the day?

• Hotels:– Contract is a ceiling only– Negotiate on the extras– Manage your meetings spend

• Rail:– Book online and in advance

Value: Travel Management Companies

Too big a focus on agency fees– Accounts for only 2.5% - 5% of spend

Summary Travel Costs

Air: 45%Hotel: 35%Rail:12%Car Hire:4%TMC:4%

Travel Management Companies

Value and Cost

Savings

Online and Telephone booking

Policy Control

Access to best rates

Data and traveller tracking

Account Management

Travel Management Companies

• Should offer online and telephone booking

• Separate pricing for online and offline booking

• Global TMC, smaller agent or specialist?

• Choice of payment method

Value and Cost

Savings

Consolidated booking process

Policy Control

Access to best rates

Data and traveller tracking

Account Management

Travel Management Companies

• Mandate or encourage ?

• Compliance to booking process and preferred suppliers

• Reduce leakage• Consistent data

Value and Cost

Savings

Consolidated Booking Process

Policy Control

Access to best rates

Data and traveller tracking

Account Management

Travel Management Companies

• Multi channel sources

• Capture last minute reductions

• Strong relationships with their suppliers

Value and Cost

Savings

Consolidated Booking Process

Policy Control

Access to best rates

Data and traveller tracking

Account Management

Travel Management Companies

• Online and real time data

• Understand data sources

• Ability to hand off to 3rd parties (traveller tracking, expense management, etc)

Value and Cost

Savings

Consolidated Booking Process

Policy Control

Access to best rates

Data and traveller tracking

Account Management

Travel Management Companies

• The right person is vital– Thought

Leadership– Culture fit– Confidence

• Should provide travel alternatives

• Offer additional products only when they are right for you

• Can be outsourced

Value and Cost

Savings

Consolidated Booking Process

Policy Control

Access to best rates

Data and traveller tracking

Account Management

Where to next?

New Aircraft = More unbundling

Flexible Cabins:Personalised Service...Unbundled pricing

Rail - more prominent

• Other Operators will use High Speed 1 (Channel Tunnel)

• High Speed 2 likely• Airlines / Rail will market

together• Increasing Road

Congestion and Environmental issues

Technology (again...)

• “On the go” booking• Video Conferencing?• Social Networking

– No longer for the under 30’s...

Thank You...

Questions ?

Contact 3SIXTY Global at:

chris.reynolds@3sixty-global.comor:enquiries@3sixty-global.com

Tel: +44 (0) 8456 808 360