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CWT PerspectivesTravel Management Priorities for 2013

January 2013

Travel Management Priorities for 2013 | 3

Contents

Executive summary ......................................................................................................5

2013 priorities and planned measures ..................................................................8 Global annual survey ....................................................................................................................................................................... 8

2013 priorities .................................................................................................................................................................................... 8

2013 business travel trends from A to Z .......................................................... 20 Ancillary fees .....................................................................................................................................................................................21

Brazil, India and China ...................................................................................................................................................................24

Carbon emission trading ..............................................................................................................................................................30

Duty of care to employees ..........................................................................................................................................................32

Expense management ..................................................................................................................................................................34

Foggy economic outlook ..............................................................................................................................................................35

Game techniques ...........................................................................................................................................................................37

Hotel reviews ....................................................................................................................................................................................39

Inflation in prices .............................................................................................................................................................................41

Joint agreements between airlines ...........................................................................................................................................44

Key performance indicators ........................................................................................................................................................47

Low-cost carriers ..............................................................................................................................................................................49

Meetings and events (hybrid and virtual) ..............................................................................................................................52

New virtual agents ..........................................................................................................................................................................54

Online adoption ...............................................................................................................................................................................55

Packed planes ..................................................................................................................................................................................56

Quick quiz ..........................................................................................................................................................................................57

Rail travel ............................................................................................................................................................................................58

Social media......................................................................................................................................................................................61

Technology.........................................................................................................................................................................................62

Unmanaged travel programs ......................................................................................................................................................64

Visa regulations ................................................................................................................................................................................67

Well-being ..........................................................................................................................................................................................69

Generations X and Y ......................................................................................................................................................................70

Zh�ng Guó (China) ........................................................................................................................................................................72

About the CWT Travel Management Institute ................................................... 74


Executive summary

Survey on travel management priorities for 2013Large and mid-sized companies share the same travel priorities, according to CWT’s latest global client survey on travel management priorities. In 2013, companies of all profiles will continue to make driving air and ground savings their top focus, followed by improving traveler compliance and optimizing hotel spend. As areas that offer major savings opportunities, it is no surprise they dominate the rankings in these economically challenging times. Other recognized sources of hard savings, optimizing online adoption and optimizing the travel policy, come next, while “softer” ways to enhance program performance take on less importance overall.

This year’s results also reveal some differences between regions, reflecting the market conditions faced by respondents as well as program maturity. For example, while driving air and ground savings remains the top priority for country/regional travel managers in Europe, the Middle East and Africa, and Latin America, improving traveler compliance is considered more important by travel managers in Asia Pacific and North America, as well as those responsible for global programs. Compared to the total sample, optimizing online adoption is also a stronger focus for country/regional travel managers in EMEA and global travel managers (who rank it 3rd instead of 4th). As could be expected, global travel managers accord a higher priority than their regional colleagues to further consolidating the travel program. Travel managers in Asia Pacific, on the other hand, rank safety and security higher (7th vs. 9th in the total sample), while in Latin America, more importance is attached to developing key performance indicators (4th vs. 8th) and enhancing the traveler experience (5th vs. 6th).

Notes:

CWT asked travel managers to select their top five travel management priorities for 2013 and rank them in order of importance. The responses were weighted to take into account how often each priority was ranked 1st, 2nd, 3rd, 4th or 5th. The “Respondents” column shows the proportion of travel managers who included the priority in their top five.

“Driving air and ground transportation savings” was identified as a priority by fewer travel managers than “improving traveler compliance” (61% compared to 64%) but ranked higher overall because it figured higher in travel managers’ top five.

Source: CWT Travel Management InstituteBased on a survey of 706 travel managers worldwide (November 2012)

1

2

3

4

5

6

7

8

9

10

11

Driving air and ground transportation savings

Improving traveler compliance

Optimizing hotel spend

Optimizing online adoption

Optimizing the travel policy

Enhancing the traveler experience

Further consolidating the travel program

Developing key performance indicators

Addressing safety and security needs

Tackling meetings and events

Making the program more environmentally friendly

61%

64%

59%

55%

49%

43%

33%

34%

25%

16%

8%

2013Ranking Priority

p

Respondents

Figure 1Travel managers’ priorities for 2013

6

Travel management in 2013: an A-Z of trends to watchTo help travel managers tackle their priorities, CWT has produced an “A-Z” of trends impacting the travel program. (See Figure 3 on Page 7.) These can be grouped into a number of broader developments.

To start with, technology is firmly in the spotlight, playing an ever-important role in keeping travelers happy, safe and productive while helping companies to drive compliance and manage their programs more effectively. With Generation Y or the younger generation of travelers already surpassing other populations of business travelers in some countries, companies can no longer ignore the need for a social media strategy or the benefits of recent tools such as games techniques, corporate hotel review sites, and virtual/hybrid solutions for meetings and events. Meanwhile, airlines and airports are embracing the future with new virtual travel agents. Online booking tool adoption will continue to rise, especially in Eastern countries. But companies will not lose sight of the human element, looking at ways to increase traveler well-being and fulfill their duty of care to employees.

Despite a foggy economic outlook, companies can expect slight growth in travel in the more developed business travel markets contrasted with faster growth in developing countries. Brazil, India and China will play a starring role, with business travel spend increasing at around twice the pace of the world average (12.6 percent, 21.5 percent and 14.7 percent forecast growth respectively, compared with 8.1 percent globally).1 However, even in the fastest-growing markets, inflation in travel prices is expected to be modest overall at around a few percentage points across most travel categories.

A number of developments in the supplier landscape are also worth watching. As airlines continue to take a cautious approach to capacity increases, packed planes will remain the norm, underlining the importance of advance booking. New joint airline agreements, the growing presence of low-cost carriers and more extensive high-speed rail networks will offer opportunities for companies worldwide, particularly in travel programs focusing on optimizing the trade-offs between air and high-speed rail. When considering different supplier proposals, travel managers will increasingly consider the total cost of spend, including ancillary fees that now represent an estimated 5-10 percent of companies’ total travel budgets. To do so, more companies will focus on more effective expense management.

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

66%

59%

53%

51%

49%

47%

32%

27%

22%

7%

7%

Asia Pacific Europe, Middle Eastand Africa

Latin America North America

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

64%

62%

59%

60%

51%

35%

34%

31%

23%

15%

13%

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

82%

59%

57%

50%

50%

48%

32%

32%

25%

14%

2%

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

65%

57%

60%

54%

53%

51%

35%

32%

28%

18%

6%

Sample size: 59 travel managers 287 travel managers 44 travel managers 253 travel managers

Global

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

75%

56%

57%

56%

46%

41%

35%

38%

17%

21%

2%

63 travel managers

Priority Respondents Priority Respondents Priority Respondents Priority Respondents Priority Respondents

Note: Regional results include country/regional travel managers.


Figure 22013 priorities by travel managers’ scope of responsibility

1 GBTA Foundation, GBTA BTI Outlook Annual Global Report and Forecast, Prospects for Global Business Travel 2012-2016 (July 2012)


Regulatory changes will have a varied impact. For example in China (“Zh�ng Guó” in transliteration), new rules allowing international airlines to ticket via foreign global distribution systems will be slow to take effect, partly due to lengthy approval procedures. On the other hand, relaxed visa regulations in some countries should bring good news for the impacted passport holders. Meanwhile, the European Union’s controversial new carbon emission trading system will likely see higher airline costs passed on in fuel surcharges. On this “green” theme, more companies will be tracking their carbon footprints in their key performance indicators.

Finally, all eyes will be on the growing debate surrounding “unmanaged” business travel or “open booking,” which some industry observers are advocating as an alternative to travel booked through travel counselors and online booking tools. Lacking sufficient proof of real cost savings and traveler satisfaction, this form of “travel management 2.0” seems to be weighed down by disadvantages. However, much awaited further research should be published by the Global Business Travel Association, as well as by the CWT Travel Management Institute later this year…

Figure 3Business travel trends in 2013

Source: CWT Travel Management Institute

8

2013 priorities and planned measures

Global annual surveyCWT conducts an annual online survey of travel managers to benchmark their priorities and the measures they plan to implement over the year to come.

This year, the sample more than doubled to 706 travel managers, up from 290 last year. Further, the scope of the survey was extended to include companies with mid-sized national programs (representing at least US$2 million of travel spend) in addition to those with the largest international programs (more than US$100 million of travel spend over at least 2 regions).

2013 prioritiesIn 2013, the overall ranking of priorities remains fairly stable compared to 2012. As can be expected, travel managers intend to focus most on areas representing the greatest savings opportunities rather than those linked more to the traveler experience.

What is more surprising perhaps is that the ranking of priorities is identical for companies with major global programs and those with mid-sized national programs that may not have reached the same levels of maturity. Also worth highlighting are a number of regional variations:

Driving air and ground savings is the top priority overall but an especially high priority for travel managers in Latin America, 82 percent of whom ranked this area in their top five.

Improving traveler compliance is the top priority for travel managers with global responsibilities, 75 percent of whom ranked the area in their top five, as well as respondents in Asia Pacific (66 percent) and North America (65 percent).

Optimizing hotel spend is highly ranked by all categories of travel managers (53-60 percent, depending on the region).

Optimizing online adoption is accorded more importance by travel managers in Europe, the Middle East and Africa, and travel managers with global responsibilities (ranked by both as the number three priority).

Optimizing the travel policy is a priority for 49 percent of respondents overall, although the percentage per region varies quite considerably—from 32 percent in Latin America to 53 percent in North America.

Enhancing the traveler experience is a top five priority for more travel managers in North America and Latin America (51 percent and 50 percent respectively) than in Europe, the Middle East and Africa (34 percent).

Further consolidating the travel program is a high priority for more global travel managers (46 percent) than the overall sample (33 percent).

Developing key performance indicators is ranked higher by travel managers in Latin America (in 4th position, compared to 8th overall).

Addressing safety and security needs is a stronger focus for Asia Pacific (32 percent of respondents, ranking 7th) than the overall sample (25 percent, ranking 9th).

Tackling meetings and events is cited more often by global travel managers than the overall sample (21 percent and 16 percent respectively).

Making the program more environmentally friendly is almost always the lowest-ranking priority for the different categories of travel managers.


Figure 4 Travel managers’ priorities for 2013

1

2

3

4

5

6

7

8

9

10

11

Driving air and ground transportation savings

Improving traveler compliance

Optimizing hotel spend

Optimizing online adoption


Enhancing the traveler experience

Further consolidating the travel program

Developing key performance indicators

Addressing safety and security needs

Tackling meetings and events

Making the program more environmentally friendly

61%

64%

59%

55%

49%

43%

33%

34%

25%

16%

8%

Sample size: 706 travel managers

2013Ranking Priority

Total sample

Respondents

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

66%

59%

53%

51%

49%

47%

32%

27%

22%

7%

7%

Asia Pacific Europe, Middle Eastand Africa

Latin America North America

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

64%

62%

59%

60%

51%

35%

34%

31%

23%

15%

13%

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

82%

59%

57%

50%

50%

48%

32%

32%

25%

14%

2%

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

65%

57%

60%

54%

53%

51%

35%

32%

28%

18%

6%

Sample size: 59 travel managers 287 travel managers 44 travel managers 253 travel managers

Global

Air & ground

Compliance

Hotel

Online adoption

Travel policy

Traveler experience

Consolidation

KPIs

Safety & security

Meetings & events

Environment

75%

56%

57%

56%

46%

41%

35%

38%

17%

21%

2%

63 travel managers

Priority Respondents Priority Respondents Priority Respondents Priority Respondents Priority Respondents

Breakdown by travel managers’ scope of responsibility


Surveyed companies by sector

Industrial manufacturing3%

Aerospace,defense, oil, gas

& construction27%

Banking, consulting& insurance

18% Consumer products, food & retail16%

IT & telecommunications15%

Chemicals, pharmaceuticals& healthcare8%

Other7%

Media, hotels, restaurants & transportation6%

Notes:

CWT asked travel managers to select their top five travel management priorities for 2013 and rank them in order of importance. The responses were weighted to take into account how often each priority was ranked 1st, 2nd, 3rd, 4th or 5th. The “Respondents” column shows the proportion of travel managers who included the priority in their top five.

“Driving air and ground transportation savings” was identified as a priority by fewer travel managers than “improving traveler compliance” (61% compared to 64%) but ranked higher overall because it figured higher in travel managers’ top five.

Regional results include country/regional travel managers.

10

Asia Pacific

In Asia Pacific, the number one priority for travel managers is improving traveler compliance, with driving air and ground savings falling to 2nd place. Optimizing hotel spend remains the third priority, while optimizing the travel policy comes further up the rankings (4th rather than 5th), swapping places with optimizing online adoption. Another area that is given more importance is addressing safety and security needs, which ranks 7th in Asia Pacific, compared to 9th in the total sample. In contrast, developing key performance indicators ranks slightly lower (9th vs. 8th). (See Figure 4 on Page 9.)

Compared with other regions, travel managers in Asia Pacific intend to place more focus on:

Communicating/providing training on the travel policy and empowering travel counselors to enforce rules (to improve compliance)

Tightening air and ground travel policy while finding the right balance between negotiated and restricted fares, as well as exploring low-cost carrier opportunities (to drive air savings)

Mandating preferred booking channels and consolidating hotel spend on fewer properties to leverage larger volumes in negotiations (to optimize hotel spend)

Increasing the scope of online booking tool (OBT) implementation and mandating OBT usage (to optimize online adoption)

And less focus on:

Negotiating fuel surcharges and ancillary fees (to drive air and ground savings)

Globalizing volumes and contracts (to further consolidate the travel program)

Average ticket price in economy classDomesticContinentalIntercontinental

Average ticket price in business classContinentalIntercontinental

Intercontinental flights booked in business class

Flights booked at least 14 days in advance

DomesticContinentalIntercontinental

US$283US$503US$1,242

US$1,775US$4,667

34%

21%41%57%

Average ticket price in economy class

Average ticket price in business class

Intercontinental flights booked in business class 34%


Source: CWT Travel Management InstituteBased on tickets booked by CWT clients (Q3 2012)

Figure 5Asia Pacific key indicators (air)


Figure 6Top priorities and planned measures for travel managers in Asia Pacific

Improvingtravelercompliance

Communicate and provide training on travel policy

Actively remind employees of policy

Engage management throughout the organization

Track and communicate compliance levels

Empower travel counselors to enforce compliance

72%

67%

59%

56%

49%

Driving airand groundtransportationsavings

Find the right balance between negotiated and restricted fare usage

Tighten air policy (class of travel, use of connecting flights, advance booking, etc.)

Work with airline alliances

Negotiate point-of-origin pricing

Concentrate volume on a limited number of suppliers

57%

51%

43%

40%

40%

Optimizinghotel spend

Consolidate hotel spend on fewer properties to leverage larger volumes in negotiations

Mandate preferred booking channels

Mandate the use of preferred hotels

Consolidate multiple sources of hotel data


Address advance purchase behavior

Standardize the policy regionally or globally

Aim for best-in-class travel policy guidelines

61%

58%

58%

52%

57%

50%

37%

Optimizingonline adoption

Enhance communication/training

Track and communicate online booking tool (OBT) usage

Increase scope of OBT implementation

Mandate OBT usage

76%

69%

45%

45%

Priority2013Ranking Planned measures Respondents*

1

2

3

4

5

Source: CWT Travel Management InstituteBased on a survey of 59 travel managers in Asia Pacific (November 2012)

* Percentage of respondents who selected the planned measure having cited the corresponding priority in their top five

12

In Europe, the Middle East and Africa, driving air and ground transportation savings and improving traveler compliance remain the top two priorities for travel managers. Compared to the total sample, optimizing online adoption comes higher in the ranking, switching places with optimizing hotel spend (ranking 3rd and 4th respectively). Optimizing the travel policy remains in 5th place, while enhancing the traveler experience ranks slightly lower (7th vs. 6th in the total sample). (See Figure 4 on Page 9.)

Compared with other regions, travel managers in Europe, the Middle East and Africa intend to place more focus on:

Tightening air and rail policy (to drive air and ground transportation savings)

Addressing advance purchase behavior (to optimize the travel policy)

And less focus on:

Negotiating point-of-origin pricing (to drive air and ground transportation savings)

Implementing an expense management tool (to improve traveler compliance)

Implementing social media tools/apps (to improve the traveler experience)

Europe,






US$447US$577US$1,617

US$1,689US$6,523

39%

36%46%64%






Figure 7Europe, Middle East and Africa key indicators (air)


Figure 8Top priorities and planned measures for travel managers in Europe, Middle East and Africa





71%

56%

47%


Tighten air policy

Find the right balance between negotiated and restricted fare usage


40%

40%

38%

Optimizing thetravel policy






Negotiate amenities (e.g., Internet, breakfast and parking)


61%

38%

30%

54%

39%

39%

Optimizingonlineadoption



Encourage travel counselors to steer travelers to the OBT

58%

44%

40%

1

2

3

4

5


Source: CWT Travel Management InstituteBased on a survey of 287 travel managers in Europe, Middle East and Africa (November 2012)

Middle East and Africa


14

Driving air and ground transportation savings also remains the top priority when looking at the survey results for Latin America. Optimizing hotel spend and improving traveler compliance switch places, ranking 2nd and 3rd respectively. However, optimizing online adoption and the travel policy drop to 7th and 8th place as travel managers in this region make a higher priority of developing key performance indicators and enhancing the traveler experience (in 4th and 5th place).(See Figure 4 on Page 9.)

Compared with other regions, travel managers in Latin America intend to place more focus on:

Implementing advance booking rules and tightening rental car policy (to drive air and ground savings)

Introducing mandates on preferred hotels (to optimize hotel spend)

Tracking changed/cancelled bookings and related costs (as key performance indicators)

Offering traveler profile management tools (to enhance the traveler experience)

And less focus on:

Introducing measures to optimize the rail program, in view of the limited offering in this region (to drive ground savings)

Implementing social media tools (to enhance the traveler experience)

Latin America






US$269US$824US$1,403

US$1,857US$4,581

25%

22%36%55%






Figure 9Latin America key indicators (air)


Figure 10Top priorities and planned measures for travel managers in Latin America





72%

64%

60%




Implement advance booking rules

58%

47%

42%

Developing KPIs

Modified/cancelled booking and related costs

Missed air savings (vs. lowest logical airfares)

Average ticket price evolution and benchmarking





77%

46%

41%

77%

50%

50%

Enhancing thetraveler experience

Offer mobile services

Offer traveler profile management tool

55%

41%

1

2

3

4

5


Source: CWT Travel Management InstituteBased on a survey of 44 travel managers in Latin America (November 2012)


16

In North America, travel managers’ top priority is improving traveler compliance, which pushes driving air and ground transportation savings to 2nd place. Their 3rd, 4th and 5th priorities match the results of the total sample: optimizing hotel spend, online adoption and the travel policy. (See Figure 4 on Page 9.)

Compared with other regions, travel managers in North America intend to place more focus on:

Negotiating multi-year contracts and implementing flexible, dynamic negotiations with suppliers throughout the year (to drive air savings)

Extending the geographical scope of the travel program and standardizing processes (to further consolidate the travel program)

Leveraging technology (to tackle meetings and events)

And less focus on:

Finding the right balance between negotiated and restricted fare usage (to optimize air and ground savings)

Implementing advance booking rules (to optimize hotel spend)

Defining criteria for using travel alternatives (to optimize the travel policy)

North America






US$562US$761US$1,567

US$2,410US$6,055

37%

47%56%66%






Figure 11North America key indicators (air)


Figure 12Top priorities and planned measures for travel managers in North America



Negotiate multi-year contracts and implement flexible, dynamic negotiations withsuppliers throughout year

Tighten the air policy (class of travel, connecting flights, advance booking, etc.)

46%

46%

42%









Request last-room availability (LRA) agreements from hoteliers

52%

50%

47%

49%

47%

45%

41%




Encourage travel counselors to steer travelers to the OBT

71%

60%

44%





Track and communicate compliance levels

76%

64%

58%

58%

Enhancing the travelerexperience

Offer mobile services 62%

1

2

3

4

5

6


Source: CWT Travel Management InstituteBased on a survey of 253 travel managers in North America (November 2012)


18

Like travel managers in North America and Asia Pacific, global travel managers make improving traveler compliance their top priority for 2013, followed by driving air and ground transportation savings. Online adoption and hotel spend are their next main areas of focus, followed by consolidation, which comes higher in their list of priorities compared to the total sample (5th vs. 7th). (See Figure 4 on Page 9.)

Compared with country/regional travel managers, global travel managers intend to place more focus on:

Implementing traveler messaging tools (to improve compliance)

Negotiating point-of-origin pricing and introducing more mandates (to drive air transportation savings)

Globalizing volumes and contracts, and consolidating sourcing (to further consolidate the travel program)

Implementing a wider range of measures (to support all priorities)

And less focus on:

Tightening the travel policy (to optimize air and ground savings)

Tracking changed/cancelled bookings and the related costs (to drive air savings)

Global travel managers


Figure 13Top priorities and planned measures for global travel managers




Negotiate multi-year contracts and implement flexible, dynamic negotiations with suppliers throughout year

Negotiate point-of-origin pricing

69%

63%

46%

46%





51%

49%

49%

Review and update online booking tool (OBT) configuration/settings periodically


Track and communicate OBT usage

Enhance OBT features

75%

72%

64%

64%

Improvingtraveler compliance


Track & communicate compliance levels

Actively remind employee of policy

Communicate & provide trainings on travel policy

Implement traveler messaging tool (CWT Program Messenger)


1

2

3

4


79%

75%

66%

53%

53%

Source: CWT Travel Management InstituteBased on a survey of 63 global travel managers (November 2012)


20

The following table shows the cross-over between travel managers’ priorities and key market trends for 2013.Survey results and commentary are included in the A-Z of trends, as described on Pages 21-72.

A

B

C

D

E

F

G

H

I

J

K

L

M

P

O

N

Q

R

S

T

U

V

W

X Y

Z

- Ancillary fees

- Brazil, India and China

- Carbon emission trading

- Duty of care

- Expense management

- Foggy economic outlook

- Game techniques

- Hotel reviews

- Inflation

- Joint agreements

- KPIs

- Low-cost carriers

- Meetings and events

- Packed planes

- Online usage

- New virtual agents

- Quick quiz

- Rail travel

- Social media

- Technology

- Unmanaged travel programs

- Visa regulations

- Well-being

- Gen X&Y

- Zhōng Guó (China)

Air

& gr

ound

Onl

ine

adop

tion

Envi

ronm

ent

Safe

ty &

sec

urity

Mee

tings

& e

vent

s

Con

solid

atio

n

Hot

el

Trav

eler

exp

erie

nce

Com

plia

nce

Trav

el p

olic

y

KPIs

Page

Prio

ritie

s

21

24

30

32

34

35

37

39

41

44

47

49

52

54

55

56

57

58

61

62

64

67

69

70

72

Trends

Figure 14Travel managers’ priorities and key industry trends at a glance


2013 business travel trends from A to Z


CWT estimates that ancillary fees account for 5-10 percent of the corporate air budget2 and can add up to 33 percent to the cost of a hotel stay.3 Car rental “extras” on top of daily or weekly rates can also be significant. More travel managers are therefore looking beyond fares and rates to effectively manage the total cost of travel.

How to tackle ancillary spend?Three main areas are likely to capture more attention:

Clarifying the policy on ancillary fees. In a previous CWT survey4 only 35 percent of surveyed travel managers said their travel policy included a special section on ancillary fees. At the very least, companies need to let travelers know which fees are reimbursable, but they can also distinguish between different traveler categories (e.g., by allowing frequent travelers to claim reimbursement for airport lounge access). These policy items should be supported by regular communications to travelers.

Tracking ancillary spend. CWT’s survey of travel managers’ priorities reveals that nearly one in two global travel managers (46 percent) intend to monitor ancillary spend. But how? Until more ancillary fees are booked through global distribution systems (see Page 23), expense reports and credit card figures will remain the best sources of data on ancillary spend. Travel management companies can provide support with tracking, spend estimates and data analysis, enabling clients to monitor program performance on both the traveler and airline sides.

Negotiating ancillary fees with suppliers. Forty-four percent of all surveyed travel managers intend to negotiate hotel amenities to optimize spend, while 34 percent of global travel managers plan to negotiate fuel surcharges and other ancillary fees to drive savings in air and ground transportation. Companies can ask suppliers to provide information on ancillary fees so they can more accurately compare competing offers, and this can lead to better discounts or even waived fees and improved conditions for travelers. For example, some CWT clients with large spend volumes have successfully negotiated frequent flyer perks (e.g., lounge access and priority boarding) for all their travelers.

2 CWT Travel Management Institute, Mastering the Maze: A Practical Guide to Air and Ground Savings (2012)3 CWT Travel Management Institute, Room for Savings: Optimizing Hotel Spend (2009) 4 See Footnote 25 Bjorn Hanson, Divisional Dean of New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, Trend Analysis Report (August 2012)

A major source of revenues for suppliersThis focus on ancillary fees is particular important given that suppliers seem in no hurry to reintegrate them into basic prices. Some airlines have introduced fare bundles that include selected ancillary services. (One of the latest examples is American Airlines, which in December 2012 launched optional “Choice Essential” and “Choice Plus” packages offering one free checked bag and waived ticket change fees along with other services.) Generally speaking, however, ancillary fees continue to be a major source of revenues for suppliers:

The U.S. hotel industry is expected to record a 3.5 percent year-on-year increase in 2012 revenues from amenity fees (e.g., Internet, telephone, business center access and resort fees), reaching an estimated US$1.95 billion according to a forecast by New York University.5 The report suggests the increase comes less from new types of fees than higher charges for the same services and increased volume.

ncillary fees on top of fares and rates will be watched closely by travel managers in all areas of the travel program and leveraged in negotiations.A

Air & ground Compliance Hotel Travel policy KPIs

22

Global airline ancillary revenues are also increasing but holding quite steady as a proportion of all revenues, at 5.4 percent in 2012 vs. 5.6 percent in 2011 according to a forecast by global distribution system provider Amadeus.6 Globally, ancillary fees are expected to bring in US$36.1 billion in 2012, with the strongest revenue increases in Latin America and the Caribbean; the Middle East and Africa; and Asia Pacific.

Airlines continue to evolve their offering by adding new ancillary services, with recent announcements including onboard Wi-Fi on some U.S. carriers’ international flights, and a “no-show fee” reportedly in the works for Southwest’s restricted tickets.

Two “classic” fees (checked bags and cancellation fees) still represent airlines’ largest ancillary revenues. Amadeus reports for example, that these two charges represented 65 percent of total ancillary revenue at Delta Air Lines and 52 percent at American Airlines in 2011.

Fuel surcharges appear to be a new source of revenue for many airlines, having become disconnected from actual fuel costs. According to CWT transaction data, fuel surcharges have risen on all kinds of flights, especially intercontinental, since first quarter 2012, even when oil prices have dropped or stabilized. The trend is particularly marked on domestic routes, as shown in Figure 15. As yet, few companies consider fuel surcharges a negotiable item, but they may want to bring them to the negotiating table with airlines. Their travel management company can help in tracking fuel surcharges and ancillary fees in general.

Figure 15Fuel surcharges appear somewhat disconnected to oil price trends

Notes: This chart encompasses all classes of service for network carriers based in every region of the world. 12 carriers were included in 2011 and 19 in 2012.

Values have been recalculated using flat exchange rates to eliminate artificial price variations.

Source: CWT, based on Amadeus and U.S. Energy Information Administration data

6 Amadeus/IdeaWorks, Amadeus Worldwide Estimate of Ancillary Revenue for 2012 (August 2012)


Airline ancillary fee distribution: still a work in progress

Two problems typically faced in the corporate air travel program are knowing how ancillary fees compare between airlines and impact the cost of travel, and how to track traveler spend on ancillary fees when they are paid as separate expenses rather than included in the fare.

For the moment, airlines do not systematically make ancillary fees and packages available in global distribution systems (GDSs). The issue is not so much that the technology is unavailable but that the industry needs to agree on standards, and in particular, airlines need to provide the content without discrimination across all distribution channels.

A number of initiatives look promising although the desired changes will not happen overnight:

More airlines will be equipped technologically to enable e-ticketing of ancillary services via an “electronic miscellaneous document” (EMD). This system, developed under the leadership of the International Air Transport Association (IATA), enables ancillary fee data to be included in IATA’s billing and settlement system. IATA’s objective is for all commercial carriers to be EMD-capable by the end of 2013. However, to be useful to corporate buyers, this system must be adopted for airline sales through GDSs. Carriers are only just starting to use the capability. (See below.)

Airlines have begun to provide more ancillary products through GDSs. For example, in 2012, Delta Air Lines reached agreements to sell Economy Comfort (extra legroom) through the Amadeus and Travelport GDSs, while US Airways began selling ChoiceSeats (preferred seating assignments) through Sabre, initially without enabling EMDs. Air France adopted Amadeus’s solution to distribute its SeatPlus seating on long-haul flights and enable travel counselors to use EMD for tracking and fulfillment.

U.S. airlines may be required by law to display ancillary fees through all sales channels if the U.S. Department of Transportation includes this measure in new rules expected in May 2013. Its controversial “Enhancing Airline Passenger Protections III” regulation has already been postponed several times.

IATA is pushing ahead with a New Distribution Capability (NDC) aimed at providing airlines with identical capabilities across all sales channels and greater consistency for clients. Basically, the system would involve GDSs accessing content directly from participating airlines through shared application programming interface (API) technology. Although this technology already exists—it is used, for example, to access content from some low-cost airlines—the aim is to implement a more powerful and efficient industry-wide standard that would support product differentiation and customization (e.g., optional service packages). Participation is optional, but airlines and GDSs must choose to cooperate for IATA to achieve its aims.

24

Global business travel spending is expected to grow by 8.1 percent7 in 2013, at just over twice the forecast rate of economic growth (3.6 percent).8 However, business travel spending will grow at two speeds: slower overall in developed countries (mostly well under 5 percent), and much faster (double-digit growth) in some developing countries. Three countries in particular stand out: India (21.5 percent forecast growth), China (14.7 percent) and Brazil (12.6 percent). Some of their key features are described here.


8 International Monetary Fund, World Economic Outlook (October 2012)

razil, India and China will continue driving growth in business travel spend, at around twice the world average.B

Air & ground Hotel Online adoption

Figure 16Forecast global business travel spending (US$ billions)

United States

China

Japan

Germany

United Kingdom

France

Italy

Korea

Brazil

Canada

India

Australia

Russia

Spain

Netherlands

254.9

194.8

66.2

50.8

40.2

35.7

32.9

31.1

30.1

22.5

22.4

21.7

22.1

17.9

18.5

266.7

223.6

67.4

52.5

41.3

36.1

32.5

34.7

33.9

23.1

27.2

22.7

23.8

17.6

18.9

+4.6%

+14.7%

+1.8%

+3.3%

+2.8%

+1.1%

-1.2%

+11.8%

+12.6%

+2.3%

+21.5%

+4.6%

+7.8%

-1.6%

+2.2%

2012 2013 % change

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Source: GBTA Foundation, GBTA BTI Outlook ( July 2012, September 2012, October 2012, January 2013)


Brazil’s economy is forecast to grow by 4 percent in 2013, resuming faster growth after slower performance in 2012 and 2011 (1.5 percent and 2.7 percent respectively, compared to 7.5 percent in 2010, according to the International Monetary Fund).

The country boasts a highly dynamic airline industry, with many recent mergers and changes in global alliance membership:

Avianca-TACA merged in 2009 and entered Star Alliance in 2012

GOL announced the decision to drop the Webjet brand name in 2012 after receiving final approval for its merger with the carrier

Azul and Trip announced their intended merger in 2012

TAM, newly merged with LAN, announced it would leave Star Alliance (without confirming it would join LAN in oneworld)

Capacity and traffic are set to grow in 2013 especially in the domestic market, despite a slowdown in the second half of 2012. New entrants will continue to expand rapidly although perhaps taking less market share away from newly-merged leaders TAM and GOL than in previous years.

Figure 17Market share in Brazil’s domestic aviation market

5% 5% 9% 5% 35% 40%

Pass

ared

oAv

ianca

TRIP

Azul

Web

jet

GOL

TAM

1%

Source: ANAC – National Civil Aviation Agency of Brazil (October 2012)

Brazil

Projected business travel spend in 2013: US$ 33.9 billion (+12.6 percent vs. 2012)

The world’s 6th largest economy

Population: 199 million

16 cities with more than 1 million inhabitants

24 percent of the population aged under 15

6.5 percent estimated unemployment (2013)Sources: International Monetary Fund, World Economic Outlook (October 2012), Central Intelligence Agency, World Factbook (January 2013), Brazilian Institute of Geography and Statistics (2012), Population Reference Bureau, World Population Data Sheet (2012)

26

There is no strong distinction between low-cost carriers and network carriers in Brazil.

Hotels are experiencing an upward trend in occupancy despite a slowdown in 2012. Brazil reportedly has the most rooms under construction (3,831) in the Central/South America region.9 About 50 percent of available hotels are independent.

A high proportion of travel content is unavailable in global distribution systems, although airlines are progressively reintroducing content. (In 2005, the country’s two largest carriers, TAM and GOL, pulled all of their domestic content out of GDSs, in effect removing 90 percent of Brazil’s inventory.)

Online adoption among Brazilian companies is being driven by online booking tools specifically developed for the market, given the fragmentation of content.

Credit cards are widely accepted for travel in Brazil, which is not the case of all Latin American countries.

A high-speed rail network is in the pipeline, with several routes planned: Campinas–Sao Paulo–Rio de Janeiro, Brasilia–Goiania, Belo Horizonte–Curitiba, and Ribeirao Preto–Uberlandia. The project is still in the planning stage, however, with no firm launch dates yet.

CWT forecasts low to high price increases for Brazilian business travel in 2013, depending on the category:

Air: +1.6 percent to +6.1 percent

Hotel: +13.1 percent to +14.8 percent

Car: +2.3 percent to +3.4 percent

9 STR Global, Global Development Pipeline Report (September 2012)


India’s GDP is expected to grow by 6 percent in 2013, compared to 4.9 percent (forecast) in 2012, 6.8 percent in 2011 and 10.1 percent in 2010.

Given this strong GDP growth, combined with a young population and expanding middle class, the country’s aviation market is likely to remain among the world’s fastest growing over the coming decades. However, carriers such as Kingfisher and Air India are struggling to maintain profitability in a predominately low-cost market. (Budget airlines account for more than 60 percent of domestic business.) One key issue is fuel prices being kept artificially high by government regulation.

Also worth noting:

India’s hotels are expanding faster than in any other Asia Pacific country, with 54,738 rooms10 in the pipeline.

Although India’s rail network is one of the world’s largest in the world, it currently has no high-speed lines. Several projects are under review for possible construction within the next few years.

The first section of Mumbai Metro, a new mass rapid transit system, is due to open in 2013. Running on a dedicated elevated rail corridor, the system will link the northern and southern parts of the city, as well as its suburbs.

Although drivers are not required to hold an Indian driving license, foreigners renting vehicles tend to prefer hiring a chauffeur to get round the country’s busy roads.

CWT forecasts varied price trends for Indian business travel in 2013:


Hotel: -3.6 percent to -5.1 percent

Figure 18Indian carriers’ share of the domestic market

Source: CWT

6% 7% 18% 19% 19% 28%

King

fishe

rJe

tlite

Go A

ir

Air I

ndia

Jet A

irway

s

Spice

Jet

Indi

go

3%

Sources: International Monetary Fund, World Economic Outlook (October 2012), Central Intelligence Agency, World Factbook (January 2013), Population Reference Bureau, World Population Data Sheet (2012), Office of the Registrar General and Census Commissioner, India (2011)

India

Projected business travel spend in 2013: US$27.2 billion (+21.5 percent vs. 2012) The world’s 10th largest economy Population: 1.20 billion 53 cities with more than 1 million inhabitants 31 percent of the population aged under 15 9.8 percent estimated unemployment (2011)



28

China’s economic growth is likely to accelerate again in 2013 at a forecast 8.2 percent, after slowing slightly over the last few years (from 10.4 percent in 2010 to 9.2 percent in 2011 and a forecast 7.8 percent in 2012).

In line with its booming economy, China’s aviation industry is growing rapidly. More than 90 percent of the domestic market is shared by four airlines (Figure 19). Three of these (China Airlines, China Eastern and China Southern, all members of SkyTeam) will fly as a regional alliance in January 2012. SkyTeam remains the largest alliance in China with 44 percent of the market, compared with Star Alliance’s 20 percent. Chinese low-cost carriers offer flights mainly on sub-routes with the exception of Spring Airlines, which operates primary domestic routes from its base at Shanghai Hongqiao International airport.

Chinese high-speed rail has been developing at a remarkable rate, providing an alternative to many air routes for business travelers. According to the International Union of Railways,11 China will have 742 miles of high-speed rail in operation and 5,612 miles under construction by 2012, making its network the world’s largest.

Figure 19Chinese airlines’ share of the domestic market

9% 11% 24% 25% 31%

Oth

ers

Hain

an A

irlin

es G

roup

Chin

a Ea

stern

Gro

up

Chin

a So

uthe

rn G

roup

Air C

hina

Gro

up

Source: CWT

China

Projected business travel spend in 2013: US$223.5 billion (+14.7 percent vs. 2012) The world’s 2nd largest economy Population: 1.34 billion (July 2012) 90 cities with more than 1 million inhabitants 16 percent of the population aged under 15 4 percent estimated unemployment (2013)

Sources: International Monetary Fund, World Economic Outlook (October 2012), Central Intelligence Agency, World Factbook (January 2013), Population Reference Bureau, World Population Data Sheet (2012)

11 Source: International Union of Railways, High-Speed Lines in the World (July 2012)


Also worth noting:

China has the world’s second largest pipeline of hotel rooms under development (214,971 rooms) after the United States (299,201 rooms).12

Most foreigners renting a car in China also hire a chauffeur since a Chinese driver’s license is required.

Online booking continues to rise.

Credit cards are widely accepted in the region.

Foreign global distribution systems (GDSs) are now authorized to sell non-Chinese airline content, following the government’s decision in October 2012 to relax regulation. (See Page 72.)

CWT forecasts low price increases for Chinese business travel in 2013:


Hotel: +0.3 percent to +1.2 percent



See Pages 41-43 on inflation in travel prices worldwide.

30

Much has been written about the European Union’s Emissions Trading Scheme (EU ETS) and whether or not airlines from outside the region should participate, but what does it mean in practice? What impact can travel managers expect to air travel costs in 2013?

What the EU ETS is and why it was introducedIn a nutshell:

The European Commission describes the EU ETS as “a cornerstone of the European Union’s policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively.”

It is a “cap and trade” system that works by fixing an annual allowance for the total emissions emitted by companies in specific industries, and requiring any companies exceeding this limit to buy surplus credits from those emitting less.

Companies can trade credits or “bank” them for use at a later date, but the main aim is to encourage businesses to reduce their carbon footprints by associating them with a financial cost.

From 2013, there will be a single EU-wide cap on emissions and the system of free allowances will gradually be replaced by auctions.

In January 2012, the scheme opened up to aviation, or more specifically, all airlines operating domestic or international flights arriving at or departing from EU airports. After a good deal of controversy, however, the European Commission announced in November 2012 that “as a gesture of goodwill” it would defer application of the scheme to flights into and out of Europe until after the fall, pending new proposals by the International Civil Aviation Organization (ICAO). Meanwhile, the EU ETS will continue to apply to flights in and between 30 European countries (the 27 EU Member States plus Iceland, Liechtenstein and Norway).

Why it is controversial: unfair and illegal or a step in the right direction?The EU ETS has met with strong reactions from airlines, industry groups and governments:

Opponents argue that the European Commission has unilaterally imposed an extraterritorial tax and that the rules discriminate against certain airlines (e.g., those operating more carbon-intensive shorter routes, older fleets or flights with lower passenger occupancy levels). Reportedly, a group of 29 countries lobbied the European Union in 2012 to suspend the EU ETS, including China, India, Russia and the United States—with an underlying threat of trade war and retaliatory measures such as reviewing bilateral air agreements, suspending discussions on EU airlines’ operating or landing rights, and imposing additional charges on EU airlines. The Obama Administration even introduced the “European Union Emissions Trading Scheme Prohibition Act of 2011” to prevent U.S. airlines from participating in the scheme.

On the other hand, the European Commission maintains that its action does not constitute a tax, which would be in breach of the EU-U.S. Air Transport Agreement, and that it is compatible with international law, as confirmed by the European Court of Justice in a case brought by some U.S. airlines and trade associations. Moreover, it is “committed to finding a comprehensive and non-discriminatory multilateral agreement within the ICAO, and the EU legislation is designed to be amended in the light of such an agreement.” The European Commission insists that it will reinstate the rules for foreign airlines if “suitable progress” is not made at the ICAO’s fall General Assembly.

arbon emission trading: non-European carriers will be exempt from the controversial EU Emissions Trading Scheme until the fall, pending a global agreement

through the International Civil Aviation Organization.C

Air & ground


Some airlines have acknowledged support for the EU ETS. For example, U.K.-based Flybe has stated that “a well-designed emissions trading scheme rewards airlines who have invested in new aircraft and incentivizes those who haven’t,” while “it is unfair and discriminatory that long-haul airlines, who are the biggest polluters, would not have to pay the cost of their emissions.” The company notes that limiting the scope to intra-EU flights captures only 20 percent of EU carbon emissions from aviation, or 0.5 percent of total EU emissions.

What kind of international agreement is likelyThe International Air Transport Association has said that the European Commission’s decision to “stop the clock” on the implementation of the EU ETS to flights to and from non-EU countries represents “a significant step in the right direction and creates an opportunity for the international community.” For the moment, there is little visibility on the kind of solution that could be proposed if member countries reach an agreement.

The impact on air travel: higher fuel surcharges?The immediate impact of the EU ETS will be limited to airlines operating intra-European flights, at least until the fall. But what will that impact be?

The actual costs to airlines will be unknown until the first accounting period (January to December 2012) is closed. By March 31, 2013, airlines must surrender the correct number of allowances (1 per ton of CO2), including any bought to cover surplus emissions. Failure to do so will generate a fine of €100 (approximately US$133) per allowance. Crucially, it is estimated that only about 60 percent of airlines’ emissions will be covered by free allowances, meaning that costs will rise, varying with airlines’ fuel efficiency and carbon trading conditions.

Over the past year or so, a number of airlines have stated that the extra costs associated with the system will run into billions of dollars for the industry, and that these costs will be passed on to travelers as higher fuel surcharges. In 2012, for example, the announced increases linked to EU ETS have ranged from less than €3 (US$4) to more than €10 (US$13) for European and long-haul flights.

32

Western companies have long been aware of their duty of care to employees but increasingly they are addressing how this responsibility extends to their business travelers. More and more, their concerns go beyond understanding and respecting complex regulation in different countries to implementing voluntary duty of care initiatives as an integral part of corporate social responsibility.

Awareness driven by diverse national lawsLegally speaking, duty of care covers the employer’s responsibility to ensure the safety and well-being of employees, although the precise definitions and applications vary significantly between countries. A few highlights of different legislation13 illustrate this diversity:

The United Kingdom’s Corporate Manslaughter Act of 2007 makes the country’s regulation one of the most stringent worldwide. Companies operating there can be prosecuted for negligence even if specific decision-makers are not identified. Moreover, they can be held liable for an employee’s death abroad if due to the negligence of management in the U.K.

Under Australia’s Workplace Health and Safety laws, companies or individual supervisors can be prosecuted for negligence if reasonable employee protection measures have not been taken.

France’s Labor Code is another particularly strict law that can lead to criminal penalties. Employees are considered to be at work at all times during a trip, meaning that any injuries incurred by business travelers are work-related in the eyes of the law.

The Netherlands requires Dutch employers to provide travelers with advance written information on possible risks linked to foreign assignments.

United States laws on duty of care vary between states. In general, Workers’ Compensation laws, which require companies to pay indemnities to employees injured during work, do not apply outside U.S. territory, although some states make an exception for employees on foreign business travel.

So far, duty of care regulation has been introduced mainly by the most developed countries and clearly drives companies’ awareness of their responsibilities to employees. According to a study carried out by International SOS,14 unsurprisingly, awareness of the legal and moral responsibilities is greatest in regions that impose strict regulation.

However, the situation is changing in countries like China, where global companies are influencing local standards and helping to raise awareness of corporate social responsibility issues. This is reflected in the CWT survey of travel management priorities, which shows that 32 percent of travel managers in Asia Pacific will prioritize safety and security in 2013, compared to only 25 percent of all respondents on the total sample.

uty of care to employees: awareness of the business responsibilities will rise worldwide, although marked regional differences are likely to remain.D

Safety & security

13 See the International SOS white paper, Duty of Care of Employers for Protecting International Assignees, their Dependents, and International Business Travelers (2009) and iJet’s Duty of Care: Are you covered? (March 2012)

14 International SOS, Duty of Care and Travel Risk Management Global Benchmarking Study (2011)


Addressing duty of care risks in business travelSo what are the areas involved in ensuring duty of care for travelers? These can range from preventing and dealing with foreseeable “mundane” accidents in a company’s offices, to keeping travelers safe in the event of unexpected and huge-scale natural disasters. The risks associated with travelers’ health, safety and well-being are numerous, including administrative problems (e.g., lack of visa); inadequate information on local destinations; illness or death while traveling; loss or theft of personal items; lack of personal data security; cultural and linguistic isolation; accidents in transportation, accommodation and visited offices; contact with violence or crime; and exposure to infectious diseases, unstable geopolitical contexts or natural disasters.

When assessing these risks, it can be useful for travel managers to focus on key elements identified by iJet International, which include:

Adequate, tailored insurance

Clearly written and communicated corporate travel policies

Limited out-of-policy bookings (those not going through the travel management company, which do not benefit from trav-eler tracking and other services)

Up-to-date destination intelligence

Information on airline safety

Limited numbers of employees on any given flight

Carefully selected preferred hotels

Well-managed use of ground transportation (self-drive vs. other options)

Availability of hotlines

Benchmarking of standards of care in their industries

According to the CWT survey, the most popular planned measures for tackling safety and security are providing destination information to travelers, and implementing traveler tracking and real-time notifications. (Notably, 82 percent of the global travel managers who prioritize safety and security plan to implement tracking/notifications, and 73 percent destination information.) The next most popular measures are providing a 24/7 security hotline, implementing a disaster/crisis response plan, and providing medical assistance and security services (identified by at least 32 percent of all respondents each time).

Given that companies can be held to account by local and/or foreign laws, it is advisable for them to apply the highest possible standards of duty of care in all the countries in which they operate.

34

Travel managers juggle a wide range of data from many different sources to serve both day-to-day tactics and long-term strategy. However, getting accurate, comprehensive and workable data often remains a challenge. As companies are focusing more on managing the total cost of travel (including hotel amenity fees, additional airline costs, car rental extra fees, meals and so on), they are naturally turning their attention to expense management. The economic downturn has been another key driver for companies to master this area.

Sizeable benefitsWith improvements in expense management, companies can consolidate all-important data and increase control over spend while accessing a number of other benefits:

Increased compliance. A strong travel and expenses policy and enhanced reporting capabilities can improve visibility and reduce system abuses or outright fraud. This helps companies to meet regulatory requirements for accountability while supporting strategic objectives. As an example, online expense claim tools can show out-of-policy spend items and send a reminder to travelers while flagging non-compliance to auditors. In CWT’s survey of travel management priorities, 12 percent of travel managers intend to implement an expense management tool to improve traveler compliance.

Reduced expense management costs. Direct savings are possible when improvements are made in areas such as policy, reporting and negotiations with expense management providers. In addition, indirect savings can be achieved by implementing more efficient processes, both in terms of the technological systems used and the way expense management teams are organized. For example, an automated expense management system can reduce the cost of processing expense claims by more than 30-40 percent, according to industry experts.

Enhanced traveler experience. Filing expense management reports can be a heavy administrative task that lowers productivity and can be a source of stress for employees. Companies can therefore enhance the traveler experience by improving expense management tools and processes, ensuring that the system in place is user-friendly and efficient. As a general rule, the more automated and integrated the system, the greater the time savings for everyone involved. Among the features worth considering are electronic reports (including scanned receipts), mobile apps for on-the-go expense claims, easy-to-use expense categories, currency conversion, pre-populated claims forms (integrating data from online booking tools and corporate payment cards), automated compliance checks, integration with finance systems and automatic reimbursement.

More detailed information on expense management can be found in an in-depth report by the CWT Travel Management Institute, Business Traveler Services: Finding the Right Fit (2011).

xpense management: companies will increasingly focus on this area to improve data consolidation and the user experience.E

Air & ground Hotel Traveler experience


Policy

Expensemanagement Processes

System

Filing of expense claims and invoices

Processing and reconciliation of expense claims

Approval and reimbursement of expense claims

VAT reclaim and reimbursement

Auditing

Authorized expenses and amounts

Employee’s roles, cost centers and hierarchy in the expense approval process

Web-based software, hosted software

or manual spreadsheets

Figure 20Three main areas are involved in expense management


oggy economic outlook: the European debt crisis, U.S. policy on taxes/public spending and downgraded global growth forecasts are among the factors

producing economic uncertainty for 2013.FWhat impact will the economy have on business travel in 2013? As the GBTA Foundation put it in their 2012 annual forecast,15

“navigating the current path of the global economy can be likened to driving a foggy road […] with alternating patches of clear driving and clouded vision.” However it would appear likely that GDP growth will pick up slightly in 2013, led by developing economies. In companies, the mood will be “business travel as usual“ but at the more cautious end of the scale.

Growth in GDP and business travel spend despite downgraded forecastsVarious sources predict a slight improvement in 2013 leading up to faster growth in 2014, “when the [economic] mist will clear.” At the time of publication, the latest forecast by the International Monetary Fund dating from October 2012 pointed to 3.6 percent growth in 2013, compared to 3.3 percent in 2012. Results were downgraded from the previous forecast largely due to uncertain conditions, not only for the most advanced economies but leading emerging markets such as China, India, Russia and Brazil.

Figure 21Forecast GDP growth

* Includes China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam

Source: CWT Travel Management InstituteBased on data from the International Monetary Fund, World Economic Outlook (October 2012)


KPIs

36

Among the sources of uncertainty are the euro area crisis and U.S. policy on taxes and public spending now that the immediate “fiscal cliff” scenario has been averted. (This would have meant sweeping tax hikes combined with spending cuts to reduce the public deficit, leading to a possible mild recession. However, President Obama introduced a law extending tax relief measures on January 1, 2013.) Austerity policies, high unemployment and weak consumer confidence are likely to continue in developed economies. On the other hand, high employment growth and solid consumption should continue to drive many emerging and developing markets, even if growth is likely to be slower than pre-crisis levels.

Against this backdrop, the business travel market should continue growing at a faster pace than the economy, according to forecasts made by the GBTA Foundation.

Figure 22Year-on-year forecast growth in global business travel spend (%)(2013 vs. 2012)

Global

0 5 10 15 20 25 %

France

Australia

U.S.

Russia

Brazil

China

India

1.1%

8.1%

Canada 2.3%

Japan 1.8%

4.6%

4.6%

7.8%

12.6%

14.7%

21.5%

Source: CWT Travel Management Institute Based on data from the GBTA Foundation, GBTA BTI Outlook (July 2012, September 2012, October 2012 and January 2013)

CWT expects this context to produce modest inflation in travel prices across all regions—typically of just a few percent, as discussed on Pages 41-43.


Which works best: the carrot or the stick? While many companies successfully use sanctions against “rogue” employees to address compliance issues (e.g., non-reimbursement of out-of-policy expenses), more and more are looking at positive ways to reinforce the desired traveler behavior while educating and engaging travelers in a managed travel program. In particular, game techniques are becoming more popular as travel managers turn to both tried-and-tested and newer methods to boost compliance—one of their top concerns.

Compliance: a top priorityIn the CWT survey, compliance was cited as a top five priority by 64 percent of all respondents, making this the most common focus for 2013. (It ranks 2nd overall, since driving savings in air and ground transportation tended to rank higher in the top five.)

To address compliance, travel managers intend to focus largely on communications tactics such as actively reminding employees of the travel policy (72 percent), communicating and providing training (55 percent), and tracking and communicating compliance levels (54 percent). Travel managers clearly understand the importance of communication to travelers, who mostly want to do the right thing but often are unfamiliar with the policy or think they can find better deals on their own. Although only 8 percent of travel managers plan to motivate travelers through game techniques, this can be seen as a quite significant figure considering that the approach is still quite new.

Encouraging friendly competitionOver the last few years, game techniques have crept into many fields as a way to motivate people to act in certain ways or perform better. Some cultures are more inclined to participate in such initiatives (China, Brazil, Russia, the United Kingdom and the United States, according to the Newzoo 2011 National Gamers Survey).

In business travel, a well-known example is the frequent flyer “miles” awarded by airlines that can be redeemed to reward loyal travelers. Within business travel programs, some companies are instituting similar points systems to reward bookings that respect a given budget or other compliant behavior such as:

Booking in advance

Taking restricted airfares and/or lowest logical fares

Booking hotel rooms at the same time as flights

Choosing preferred hotels

Using the corporate online booking tool

Other companies are encouraging friendly competition between travelers or business units by communicating their performance on compliance metrics. For this, they may use traveler-centric travel management tools such as the traveler scorecard produced byCWT Solutions Group (Figure 23).

ame techniques will become popular as a way to reinforce compliance with the travel program.G

Compliance

38

Figure 23Traveler-centric tools such as a traveler scorecard can motivate employees to comply with the travel policy through friendly competition

Source: CWT Solutions Group

Objective: provide travelers with visibility on their travel spend and buying behavior, with the related savings or losses for the company

Benefits: traveler ownership of the savings/loss impact drives the desired behavior in non-mandated program environments, stimulated by friendly competition between individual travelers or business units


Increasingly, social reviews are holding sway among business travelers when booking accommodations. According to a Google/IPSOS survey,16 one in three business travelers already post reviews online of properties they stay at, while 57 percent enjoy reading about other travelers’ experience. Rather than ignore the influence of social media, savvy travel managers are integrating them into the travel program.

Relevant information from trusted colleaguesIn practical terms, the travel management company provides a client with a dedicated platform for its travelers to share reviews on preferred hotels. Reviews can only be made by travelers who have stayed at the properties in question: after a business trip, travelers receive an automatic email alert asking them to comment on their experience. Travelers who are selecting a hotel for an upcoming trip can see the relevant reviews from trusted colleagues, in addition to up-to-date details about the properties in the hotel program.

When managed as part of the corporate travel program through a dedicated platform provided by the travel management company, hotel reviews can bring significant benefits:

Increased compliance, since the reviews focus on preferred hotels

Greater negotiating power with hoteliers thanks to feedback from travelers, which can be integrated into performance dashboards

An enhanced traveler experience, since travelers can more easily choose hotels to suit their preferences, having access to trusted information on the location, quality of amenities, etc.

In the CWT survey, more than 50 percent of travel managers said they plan to mandate the use of preferred hotels in 2013, making this the most popular measure for driving hotel spend optimization. Corporate hotel review sites can be an attractive solution for them, as well as for travel managers in a non-mandated environment, since these tools channel travelers toward preferred hotels (unlike commercial review sites that can motivate travelers to book outside the program).

otel reviews by corporate travelers will improve the travel experience and boost negotiations with hoteliers.H

Compliance Hotel Traveler experience

16 Google and IPSOS OTX Media, Travelers’ Road to Decision (July 2011)

40

Case study: new hotel review feature visited by more than 900 travelers in the first six months of implementationL’Oréal Group was one of the first CWT clients to implement CWT Hotel Intel, a dedicated platform that enables travelers to find information on preferred hotels and share their feedback with colleagues inside their company.

After the first six months in operation, more than 900 travelers had visited the platform, generating more than 750 reviews. Further, 90 percent of those travelers recommended the hotels they had visited to their colleagues.

Apart from providing travelers with a user-friendly interface to L’Oréal’s global hotel program, the company wanted to gather feedback on different properties. This was for two reasons: to improve traveler satisfaction and to increase L’Oréal’s negotiating power with hoteliers. The company is using the information it has gathered to help build its 2013 hotel program.

Corinne Delbreil, travel, meetings and events manager for L’Oréal Global Procurement, has shared her feedback on the tool itself:

“We are extremely happy with the tool. It is smart, innovative and perfectly adapted to our environment. It’s very easy to use and the feedback based on actual bookings has been very constructive and valuable.”

Her colleague Marion Carroy, Social Media Manager at L’Oréal’s Global Innovation department added, “CWT Hotel Intel has really changed the way we prepare our business trips. The site is really pleasant to navigate and in a few clicks we know what our L’Oréal colleagues have recommended, if the hotel is available and what our company has negotiated for us.”

L’Oréal includes more than 550 hotels in the review tool, enabling travelers to search for approved accommodation by city and office location. The hotels appear on a map with the approved rate, amenities included, ranking, reviews and photos. Users can access the tool via the corporate intranet, customizing the display by language and currency.

Figure 24Example of information displayed to travelers in CWT Hotel Intel


CWT’s 2013 Travel Price Forecast predicts moderate price inflation across all travel categories and in every region of the world, led by Asia Pacific and Latin America. A number of likely developments are pinpointed to help travel managers with the year’s budgeting.

Here are some of the main highlights:

Asia Pacific: economic growth should stabilize, bringing modest price increasesThis region has experienced strong economic growth over the past several years, driving prices upward. In 2013, growth is expected to stabilize with modest price increases overall but wide variations between countries.

Air ticket prices should increase by about 2.5 percent in the region during 2013, largely due to the number of low-cost carriers entering the market and keeping prices lower than typically seen in this part of the world.

Average daily hotel rates will likely increase by about 3.5 percent in 2013. Singapore will lead the way with an 8 percent increase amid strong travel demand and lagging supply. Meanwhile, prices in Hong Kong will also increase more than the regional average as clients shift to lower-category properties.

Car rental rates will likely experience the highest inflation of anywhere in the world, with a 5.9 percent increase in 2013. Rates in Australia and New Zealand will rise quite sharply due to increased demand and more tightly managed fleets.

Meetings and events spending is likely to increase by about 6 percent. Group sizes are expected to decrease by around 3.8 percent as organizations attempt to mitigate rising supplier prices by holding smaller, shorter meetings.

Europe, Middle East and Africa: continued economic uncertainty will limit price increasesWhile Europe is facing continued economic uncertainty, most Middle Eastern and African economies are faring reasonably well. The region should therefore experience moderate travel price increases overall in 2013, although economic volatility could prompt significant changes at any point.

Airfares will likely climb 2.5 percent during 2013, as carriers have been diligent in controlling capacity and yielding high load factors despite economic concerns.

Average daily hotel rates will likely increase 1.3 percent overall during 2013, with differences between cities. A decrease in post-Olympic demand for rooms in London will bring rates down there. Meanwhile, increased interest in mid-range properties is expected throughout France as brands invest in upgrading those offerings.

Car rental rates may increase 1.2 percent in 2013. Recent consolidation in the region, combined with aggressive growth plans of low-cost providers, is creating increased competition that should hold down prices.

High-speed rail prices will likely increase by 4.3 percent as this mode of transportation continues to offer a competitive alternative to air travel in key markets. Notably, increases of up to 9 percent are expected in premium-class carriages, where corporate travelers typically ride to access free Wi-Fi and other amenities.

Meetings and events spending will increase less than in other regions, with an expected 1 percent rise in costs per attendee per day. As a result, there will be less pressure on organizations in the region to reduce group sizes to offset higher prices and spend is likely to increase by about 3 percent.

nflation may hit travel prices modestly overall, with increases of well under 5 percent in most categories and regions.I

Air & ground Hotel KPIs Meetings & events

42

Latin America: still a focal point with the highest global hotel inflation This region continues to experience economic growth overall, although significant disparities between counties will create varied travel pricing next year.

Air ticket prices are likely to increase by 1.3 percent overall, with two main pricing trends. Countries with healthy economies like Brazil and Chile should experience solid price inflation, while countries with weaker economies like Argentina, Colombia, Mexico and Peru can expect moderate decreases to only slight growth.

Average daily hotel rates will likely rise by about 6.3 percent. Brazil will see the largest increase in hotel rates, and in fact, is the only nation in CWT’s entire 48-country forecast expected to see double-digit price increases in 2013.

Car rental rates will likely increase by 1.4 percent, primarily due to U.S.-based brands expanding operations in the region to meet increasing demand. However, Brazil-based Localiza is a major player that will offer an added element of competition to international suppliers in its home market.

Increases in meetings and events spending per attendee and per day will be the highest in the world, at an average of 11 percent. Meanwhile, group size will decrease by about 7 percent as buyers seek to offset higher supplier costs.

North America: no major rate increases as economies improve slowly and steadilyWhile the economies of the United States and Canada are experiencing slow and steady improvement, no major growth is expected for the foreseeable future. This will help contain travel price increases for most categories of spend.

Air ticket prices may increase by 2.8 percent. Carriers in both countries will remain disciplined about controlling capacity to ensure that demand outpaces supply, enabling price increases.

Average daily hotel rates will likely increase by 3.2 percent throughout the year. As always, increases will vary by market, with the top business destinations able to command much higher prices. Western Canada will experience particularly high increases based on an influx of foreign demand for the area’s energy and mining resources.

Car rental rates may well decrease by 1.1 percent. For yet another year, car rental firms in North America will struggle to raise prices as the market remains highly competitive with only a few existing suppliers available to battle for corporate business.

Meetings and events spending should continue to grow, with an average 4.8 percent increase expected in the cost per attendee per day, along with an average 6 percent increase in group size. At the end of 2012, advance bookings for 2013 were already strong, with booking windows increasing by 5 percent as organizations showed more confidence in the future.

(See the full report, available online, for more details.)


Figure 25CWT’s global price forecast for 2013 at a glance

NORTH AMERICA

HOTEL

+2.2% to +4.4%

+2.4% to +3.9%

+2.8% to +3.8%

AIR

H22012

+0.9% to +1.7%

H12013

+1.8% to +2.8%

H22013

H22012

H12013H2

2013

H22012

H12013H2

2013

+2.7% to +3.9%

CARRENTAL

-1.3% to -1.0%

-1.2% to -0.9%

-1.2% to -1.0%

MEETINGS &EVENTS

+4.3% to+5.3%

+4.0% to+8.0%

GroupSize

Cost perattendeeper day

LATIN AMERICA

HOTEL

+4.4% to +6.8%

+5.4% to +6.9%

+5.7% to +7.2%

AIR

H22012 -1.5% to +0.4%

H12013 -0.4% to +2.1%

H22013

H22012

H12013H2

2013

H22012

H12013H2

2013

+0.5% to +2.8%

CARRENTAL

+0.7% to +2.3%

+0.9% to +1.9%

+0.8% to +2.0%

MEETINGS &EVENTS

+9.8% to+12.2%

-5.0% to-9.0%

GroupSize


ASIA PACIFIC

HOTEL

+2.3% to +3.6%

+3.4% to +4.4%

+2.9% to +3.4%

AIR

H22012

+1.9% to +2.9%

H12013

+2.2% to +3.2%

H22013

H22012

H12013H2

2013

H22012

H12013H2

2013

+1.8% to +2.6%

CARRENTAL

+5.5% to +6.1%

+5.4% to +6.1%

+5.7% to +6.2%

MEETINGS &EVENTS

+5.0% to+7.0%

-3.1% to-4.5%

GroupSize


EUROPE, MIDDLE EAST& AFRICA

HOTEL

+0.3% to +2.3%

+0.1% to +2.2%

+0.3% to +2.4%

AIR

H22012

+1.6% to +2.1%

H12013

+2.3% to +2.8%

H22013

H22012

H12013H2

2013

H22012

H12013H2

2013

H22012

H12013H2

2013

+2.3% to +2.8%

CARRENTAL

+0.6% to +1.4%

+0.8% to +1.5%

+0.9% to +1.7%

RAIL

+3.8% to +4.7%

+4.1% to +4.2%

+4.2% to +4.6%

MEETINGS &EVENTS

+0.0% to+2.0%

GroupSize


+2.5% to+3.5%

Source: CWT, 2013 CWT Travel Price Forecast (July 2012)

44

Membership of the three main global airline alliances—oneworld, SkyTeam and Star Alliance—has been growing year by year, and 2013 will be no exception. Three major airlines (EVA Air, Malaysia Airlines and SriLankan Airlines) are expected to join during the period, while 13 others will celebrate their first full year of membership after joining in 2012. A further two airlines are awaiting confirmation of membership in 2014. (See Figure 26.)

Figure 26At least 18 major airlines have joined a global alliance or applied for membership since the start of 2012


Year-end 2012

Bold: denotes new members in 2012Additional members PendingFounders

2013-141997 1999 2000

AeromexicoAir FranceDelta Air LinesKorean Air

Aerolineas Argentinas AeroloftAir EuropaAlitaliaChina Airlines

China EasternChina SouthernCzech AirlinesKenya AirwaysKLM

Middle East Airlines Saudia TAROMVietnam AirlinesXiamen Airlines

Garuda Indonesia

Malaysia AirlinesSriLankan Airlines Qatar Airways

EVA Air

American AirlinesBritish AirwaysCanadian AirlinesCathay PacificQantas

Adria AirwaysAegan AirlinesAir ChinaAir New ZealandANAAsiana AirlinesAustrianAviancaBrussels Airlines

Copa Airlines Croatia AirlinesEGYPTAIREthiopian AirlinesLACSA LOT Polish AirlinesShenzhen Airlines Singapore AirlinesSouth Africa Airways

SWISSTACATAM AirlinesTAP PortugalTurkish AirlinesUS Airways

airberlin FinnairIberia ExpressJapan Airlines

LANMexicanaNIKI OpenSkies Royal JordanianS7 Airlines

Air CanadaLufthansaScandinavian AirlinesThaï Airways InternationalUnited Airlines

oint agreements are in the air, with airline alliances examining ways to extend membership to low-cost and “hybrid” carriers.J

Air & ground Travel policy Consolidation

More flexible alliance rulesWithin each alliance, key members form tight partnerships—usually requiring antitrust immunity—to increase their global reach and boost their attractiveness for customers. Up until now, alliance rules have prevented the formation of such partnerships with outside airlines, which has discouraged some non-members from joining, particularly in the Middle East. Other criteria and the costs associated with alliance membership have also presented a barrier for some airlines, especially for low-cost carriers. However, this situation is changing:

Qatar Airways’ pending membership of oneworld (in 2014) is likely to lead to a reshuffling among airlines seeking a strong Middle Eastern hub. oneworld’s Qantas, for example, has aligned with Emirates Airlines, while Skyteam’s Air France-KLM has signed a codeshare agreement with Abu Dhabi-based Etihad Airways. These agreements are particularly symbolic in that they involve non-alliance members (Etihad and Emirates), showing a new flexibility on the part of alliances.


Figure 27Low-cost carriers account for more than half of non-alliance capacity

Source: CWT Travel Mangement Institute Based on CAPA – Centre for Aviation data (2012)

24% 17% 12% 25% 23%

+oneworld affiliates

Low-cost carriers Other

Alaska AirlinesEl AlEmiratesEtihad AirwaysGulf AirHainan AirlinesIcelandairVirgin Atlantic AirwaysEtc.

AirAsia XeasyJetGolIndiGoJetBlue AirwaysLion AirRyanairSouthwest AirlinesSpiceJetWestJetEtc.

Alliance members Unaligned airlines

Following oneworld’s decision to admit airberlin in 2012, SkyTeam is planning to test a new “hybrid partnership platform” in 2013 aimed at creating close cooperation with low-cost or hybrid carriers17 without the costs or requirements of full membership. A key focus will be the use of a common IT platform providing an interface with full-service airlines. With this platform, the alliance hopes to attract the many low-cost or hybrid carriers in Brazil and India especially, but there is considerable scope worldwide. According to the CAPA Centre for Aviation, low-cost carriers account for more than half of non-alliance airline capacity, or nearly a quarter of all global airline capacity.

A number of other developments are noteworthy:

As seen in Figure 26, airlines based in the high-growth Asia Pacific or Latin America regions feature heavily among the new alliance members (confirmed or pending), with some potential shifting between alliances. For example, following its merger with Chile’s LAN Airlines, Brazil-based TAM Airlines is expected to leave Star Alliance in 2013 to join oneworld or become independent.

U.S.-based Delta Air Lines is seeking antitrust approval to take a 49 percent in Virgin Atlantic. If approved, the joint venture would strengthen Delta’s offering for premium passengers and could open the door to Virgin joining SkyTeam.

Star Alliance’s US Airways has reportedly been in talks with oneworld’s American Airlines, although this has not been confirmed by the carriers.

Alliances in the travel programAgainst this dynamic backdrop, nearly two-thirds (63 percent) of global travel managers intend to work more with airline alliances as an opportunity to further drive air and ground savings. More generally, alliances and joint ventures will also be of interest to the 49 percent of all survey participants who said they would make a priority of globalizing spend volumes and contracts to further consolidate their programs. In addition to hard-dollar savings, alliances can offer a variety of soft benefits, as shown in Figure 28.

17 Airlines positioned in between low-cost airlines and full-service network carriers

46

Figure 28Potential pros and cons of working with airline alliances


Harmonized classes, published fares and targets, including both nonstop and connecting flights, depending on the participating carriers

Increased program coverage (new routes)

Possibility of combining fares from two partner airlines

Better connections between participating carriers, schedules and frequencies

Easier management of requests for proposals through a single contact and simplified offerings

Reduced competition, with airlines in a more dominant position

Higher fares due to reduced competition

Increased volume commitments required from clients

Potential advantages Potential disadvantages

The benefits will vary depending on the airlines involved and their fit with a company’s travel program. Travel managers therefore need to ask the right questions, such as:

Does the alliance network match our travel footprint?

Would our program use at least three of the partner airlines?

Do we have large enough volumes to attract them?

Can we save money compared to contracting with airlines individually?

Can we add incremental volumes to negotiate higher discounts?

CWT also recommends maintaining competitive pressure, working with primary and secondary preferred airline groups to ensure the best possible coverage while maximizing volume discounts. Likewise, it is important to communicate the right information to travelers so they are kept informed of the company’s choice of preferred carriers and the benefits of alliance deals.

More information can be found in an in-depth report by the CWT Travel Management Institute, Mastering the Maze, A Practical Guide to Air and Ground Savings (2012), available on carlsonwagonlit.com.


According to the CWT survey of travel management priorities, 15 percent of travel managers prioritizing key performance indicators intend to track carbon emissions in 2013, while 8 percent will prioritize making the travel program more environmentally friendly, an area that has consistently ranked bottom of the list of travel managers’ priorities over the past few years. One reason may be that the economic slowdown has naturally led to lower carbon emissions than expected and therefore less pressure to make improvements, but this situation will not last. Tighter regulation, combined with demand from stakeholders, will encourage more companies to track their carbon footprint from all areas of activity, including travel.

How corporate carbon emissions are classifiedAt the corporate level, carbon emissions are divided into three “scopes,“ according to the Greenhouse Gas Protocol, the emissions accounting tool most widely used by government and business leaders:

Scope 1: direct emissions from sources owned or controlled by the reporting organization

Scope 2: indirect emissions from the consumption of purchased energy and therefore a consequence of the organization’s activity but produced by another entity

Scope 3: other indirect emissions from operations, including transportation in vehicles owned or controlled by third parties

Most emissions from business travel are therefore considered in Scope 3, although fully-owned car fleets would tend to come under Scope 1.

ey performance indicators: more companies will track their carbon footprints (including emissions from travel) to comply with stricter reporting regulation.K

KPIs Environment

The corporate carbon footprint and travelA company’s carbon footprint actually refers to how much greenhouse gas it has emitted, carbon being the most common of six greenhouse gases. The process of measuring a carbon footprint involves collecting operational data and multiplying each source of emissions by an accepted emissions factor to generate a carbon dioxide equivalent (CO2e).

In the business travel program, carbon emissions are typically calculated per passenger kilometer or per hotel room night after factoring in various criteria. Per kilometer, car transportation produces more carbon than air, and short-haul flights more than long-haul flights. Rail is the most carbon-efficient solution of all.

48

Regulatory vs. voluntary measuresMany governments have passed regulation requiring specific types of companies to report on their direct and energy-related emissions (Scopes 1 and 2). For example:

In the United States, the Environmental Protection Agency introduced a rule in 2009 requiring facilities emitting more than 25,000 metric tons of greenhouse gasses per year to provide annual reporting. The first reports (for the year 2010) were published in January 2012.

In the United Kingdom, new regulation due to come into effect in April 2013 will require all companies listed on the London Stock Exchange to report on Scope 1 and 2 emissions. The rule may be extended to all large companies from 2016 after review in 2015.

In France, a new law (“Grenelle II”) introduced in 2012 requires all companies with more than 500 employees to disclose their emissions.

The European Union has also introduced a controversial emissions trading scheme, which is mandatory for certain industries, including aviation. (See Pages 30-31.)

In parallel, specific laws require the transportation sector, including travel agencies, to disclose the carbon footprint of their services to customers. For example, this kind of regulation will take effect in France from the second half of 2013 and a European initiative is likely to follow. Companies that obtain this information will have a head start in undertaking wider Scope 3 carbon reporting if they are not doing so already.

While regulation is clearly important for leading the way, companies are increasingly undertaking voluntary carbon reporting to demonstrate corporate social responsibility to their stakeholders. According to the Carbon Disclosure Project’s Global 500 Climate Change Report 2012, business travel is the most commonly tracked Scope 3 category among Fortune 500 companies.


Low-cost carriers (LCCs) have been expanding faster than traditional airlines, judging by their growing share of total capacity in nearly all regions of the world. LCCs now account for 26.1 percent of global capacity, or a 1.8 percentage point increase in share since 2011.

Budget airlines are among the world’s fastest growing carriers, with some notable examples:

U.S.-based Southwest Airlines remains the world’s largest LCC.

Ryanair has entered the top 10, beating China Southern and US Airways.

easyJet has also moved up several places to its position just outside the top 20.

Indonesia’s Lion Air has emerged as one of the largest LCCs in southeast Asia.

India’s IndiGo has more than doubled its capacity over the past two years.

A growing share of corporate air spendLCCs will be used increasingly by business travelers in 2013, according to the CWT survey. Notably, 34 percent of global travel managers and travel managers in Asia Pacific intend to extend their programs to budget airlines to optimize air transportation savings. Worldwide, LCCs already represent approximately 20 percent of all domestic trips taken by CWT clients.

ow-cost carriers will gain more ground in the travel program as new entrants open up opportunities, especially in Asia Pacific and Latin America.L

Travel policy

North America Asia Pacific Europe, Middle Eastand Africa

Latin America

30.1%

+0.4 pts +5 pts +0.7 pts -0.2 pts

24.1% 36.6% 31.6%

Sources: CWT Travel Management InstituteBased on data from CAPA – Centre for Aviation, OAG and UBM Aviation

Figure 29LCCs’ share of capacity in 2012 and year-on-year growth

Air & ground

50

However, companies that integrate LCCs into their programs need to take into account numerous challenges, such as less frequent flight schedules, flights often from secondary airports, and the costs and risks related to booking outside of the GDSs. Specific markets can also present problems, such as the need for Singaporean travelers to communicate one-time PINs to authenticate payment by credit card.

CWT advises travel managers to carefully weigh the benefits of choosing LCCs:

Be opportunistic and invite offers from LCCs if they are willing to bid for business.

Consider the total cost of travel, including ancillary fees and travel to aiports.

Factor in booking behavior, since the lowest budget fares tend to be available well in advance.

Consider the practical implications for travelers, such as the convenience of schedules and total travel times (including airport transfers and connecting flights).

Who’s who and what’s new? LCC developments worldwideLow-cost carriers are continuing to shake up markets around the world, with new brands springing up (often as subsidiaries of network airlines) and existing brands launching new domestic and international routes. Various low-cost and hybrid carriers have also announced joint agreements. Here are some of the main recent developments:

Asia Pacific

China’s Junayeo Airlines launched routes to Japan in 2012, joining Spring Airlines as the only Chinese LCCs to fly internationally.

Japan launched three new LCCs in 2012, each as a joint venture with established airlines: AirAsia Japan (with All Nippon Airways and Malaysia’s AirAsia), Jetstar Japan (Japan Airlines and Qantas) and Peach Aviation (ANA). These budget airlines appear to be stimulating demand for domestic travel, while the impact on corporate travel is not yet clear.

In 2012, Singapore Airlines’ subsidiary Scoot became the region’s third low-cost long-haul carrier, joining Australia-headquartered Jetstar and Malaysia’s AirAsia X. Scoot also announced a memorandum of understanding with Tiger Airways to serve join itineraries between Thailand, Vietnam, Malaysia and Australia.

South Korea’s hybrid airlines such as Air Busan and Jin Air have grown to around a third of domestic market share.

Thai Airways’ hybrid subsidiary Nok Air has announced it will launch international service in 2013 alongside its domestic service. However, the Thai group, which also owns regional hybrid Thai Smile, has dropped plans to launch an ultralow-cost carrier.

Virgin Australia has bought a 60 percent stake in the Australian operations of Tiger Airways.

Europe, Middle East and Africa

U.K.-based Easyjet said it would unveil new technology in 2013 aimed at facilitating corporate bookings through travel management companies, and announced a 0.5 percent increase in its share of the European business market to 6 percent in November 2012.

New Spanish LCC Iberia Express has launched flights out of Madrid.


Lufthansa is merging its point-to-point German and European services from its Frankfurt and Munich hubs with subsidiary Germanwings to form a new airline brand in January 2013.

Russia has been attracting increasing attention from international LCCs, around a dozen of which already offer flights to destinations in the country.

Ryanair has become Italy’s largest airline, overtaking Alitalia in 2011.

Norwegian looks set to become Europe’s first network budget airline (i.e., operating a hub and spoke system rather than point-to-point flights only).

Latin America

In Colombia, VivaColombia made its debut in May 2012. JetBlue also began flights to the country from Fort Lauderdale in the United States, taking the first steps in plans to expand in the country and throughout Latin America.

Brazil’s GOL has announced it would relaunch U.S. flights, serving Miama and Orlanda via Santo Domingo in the Dominican Republic.

Leading Mexican LCC Interjet has ceded some of its domestic share to focus on international growth. Volaris, another budget carrier, has picked up much of the traffic, as part of its significant domestic growth.

North America

Southwest Airlines is seeking international expansion, campaigning to build a new international terminal at Houston’s Hobby Airport with a view to adding 25 flights abroad daily. The world’s largest LCC has already taken over AirTran’s flights to Mexico and Caribbean following its acquisition in 2010.

Air Canada has announced it will launch a low-cost international carrier in 2013.

Canada’s WestJet intends to target business travelers and offer new services to move up the value chain from a no-frills carrier to a lower-cost full-service airline.

52

According to the CWT survey of travel managers, leveraging meetings and events (M&E) technology will be a popular action in 2013, especially in Asia Pacific and North America, where more than 50 percent of survey respondents prioritizing M&E plan to implement this action. Increasingly, companies will not see technology as an either/or proposition (virtual meetings vs. face-to-face meetings) but integrate technology into live in-person events.

Hybrid vs. purely virtual meetingsHybrid meetings use technology to provide a new kind of experience to attendees, by:

Opening up access to a wider audience, linking at least one group of face-to-face participants with people in other locations

Enabling “live” or deferred participation

Boosting participant engagement though interactive features such as a moderated chat, online questions and answers, voting and feedback

Providing instant online access to content (videos, slides, speakers’ biographies, etc.)

They can therefore be seen as a way to provide more value (or a higher “return on event”) and reach a wider audience, while potentially reducing costs compared to more traditional events.

At the same time, companies will continue to set up purely virtual meetings in suitable situations, such as video meetings and conference calls for regular team updates. Here, the main benefits are savings in terms of travel costs and carbon emissions. According to the CWT survey, more than half of surveyed travel managers (53 percent) plan to increase their use of virtual meetings to reduce the environmental impact—although just as many (55 percent) will be considering environmentally friendly travel options.

eetings and events held both in person and online will be explored by more companies as a way to control costs while leveraging other features offered

by new technologies.MMeetings & events Environment

Hybrid meetings integrate technology with traditional event practices to create new types of attendee experiences and content delivery tools. They include any meeting or event with at least one group of face-to-face participants that digitally connects with participants in other locations.

Organizing hybrid events: a team effortHybrid meetings can provide cost savings that meet the needs of procurement departments, but they also require the creative talent of marketing departments, as well as the technology skills of IT. With several departments involved, ownership of hybrid meetings can be complex and effective teamwork is vital.

“A third-party full-service meetings and events agency can be a useful partner coordinating efforts between the different stakeholders not only for hybrid events but the entire strategic meetings management strategy.” Thierry Duguet, CWT Vice President Meetings & Events, EMEA


Reduce travel and meeting space costs Reduce the carbonfootprint of an eventby enabling virtualparticipationReach a wider or more geographically spread audience

Improve the user experience and adapt to new customer trends

Offer wider interaction with remote audiences

Convey the image of an innovative company

Figure 30Why go digital? Benefits of virtual and hybrid meetings

Venue sourcing only in growing demandCompanies are increasingly relying on their full-service meetings and events agencies to manage every aspect of their strategic meetings management strategy, from designing policy to managing day-to-day coordination of specific events.

In addition, many clients are starting their strategic meetings management strategies by asking for support with specific tasks, and in particular venue sourcing only. This covers areas such as:

Venue search and selection (hotels, unique spaces and other venues)

Negotiation of rates and packages

Contract management

Venue management

Management of deposits and billback

CWT expects focused strategic meetings management strategies, with venue sourcing as a first step, to be a growing trend in 2013.

Source: CWT Meetings & Events

54

Faster security controls, shorter queues at airport desks and instant customer service help anywhere in 2013? These are all possibilities, thanks to the growing numbers of virtual agents or “avatars” servicing customers of airlines and airports.

The future is now2012 saw a flurry of initial trials aimed at simplifying, speeding up and improving service at various points in the travel process:

At border control. People crossing the border between Mexico and the United States may have been surprised to see “Elvis”18 (officially “AVATAR” or Automated Virtual Agent for Truth Assessments in Real-Time). This virtual border guard sits in a kiosk and asks travelers questions while two cameras and a microphone check for signs of lying. If any anomalies are detected, a real border guard takes over. The kiosk also reads passports and checks fingerprints, like many of the fast-track passport control systems in place in airports around the world. Travelers wishing to use the system need to register in advance with the U.S. Customs and Border Protection’s “Trusted Traveler” program.

In airport halls. Numerous airports in the United States, United Kingdom and other countries have been testing life-size holographic virtual assistants, which provide answers to frequently asked questions on anything from security regulations to directions for taxi stands. Some of these avatars repeat information in a loop, while others are activated if a person steps into range. The most advanced, such as those at Dubai International, go beyond prerecorded messages to engage dynamically with travelers asking specific questions. As an alternative, Munich Airport has introduced an “InfoGate” service that allows travelers to talk with real customer service agents via videoconferencing.

Anywhere by mobile phone/the Internet. Travelers can now often get answers to their questions from virtual agents using SMS, instant web messaging and/or speech. Future services should integrate increasingly intuitive voice recognition software, hot on the heels of technology like Apple’s Siri, which responds to more natural speech (vs. older software that limits users to specific keywords or commands). Virtual assistance is already offered by many airlines, such as Alaska Airlines, Iberia and Vueling.

Novelty factorAccording to initial feedback, one reason these avatars can be efficient in airports particularly is the sheer novelty factor that grabs users attention and gets information across. With new developments constantly popping up, perhaps even the weariest road warriors will be pleasantly surprised.

ew virtual agents or avatars will assist travelers with booking, checking and other questions.N

Traveler experience

18 Nickname reported by CNN (August 15, 2012)


It is well known that online booking tools reduce transaction costs while offering travelers a fast, convenient way to make travel arrangements. OBTs can also play a key role in policy compliance when configured in the right way. Companies that have introduced online booking, however, face the ongoing challenge of getting the most out of their OBTs—by extending implementation to more countries and/or by increasing the proportion of bookings made when an OBT is already available.

Scope for higher adoptionWhile not all bookings can be handled efficiently online, most travel

managers believe they could drive adoption rates higher among their travelers. This is reflected in the CWT survey of travel management priorities, in which 55 percent of all respondents said they would make a priority of optimizing online adoption. The results show very little variation between regions, confirming that online adoption is a top priority worldwide.

To boost online adoption, the most popular measures overall will be enhancing communication/training, tracking and communicating OBT usage, and encouraging travel counselors to steer travelers toward their OBT depending on the type of booking. Global travel managers will be looking in particular at reviewing their OBT configuration and updating the settings periodically, as well as enhancing OBT features. Travel managers in Asia Pacific, on the other hand, will place more emphasis than other respondents on mandating OBT usage. Other planned measures include increasing the scope of OBT implementation and deploying best-in-market OBTs.

In terms of what has already been achieved, online adoption still varies significantly between regions although the gaps are gradually closing, according to CWT data. Levels reached in Asia Pacific, and especially China, are fast approaching those in North America, the most mature market. Meanwhile Latin American adoption is catching up with Europe.

In 2013, improvements are expected to be particularly marked in the East, thanks to a combination of market developments and user readiness. Based on client performance in 2012 and projects in the pipeline for 2013, CWT forecasts a strong increase in online adoption in China, India and Eastern European countries.

A shifting supplier landscapeOne development that will be interesting to watch is the strategy taken by different OBT providers, some of which have recently shifted from a regional to a global focus. It remains the case that the best OBT for a particular company depends on where that company is based, as well as whether its implementation strategy is local/regional or global. Given the complexity of this market, companies continue to rely on advice from travel management companies to select the best tools for their needs.

nline adoption will continue its growth momentum across regions.O

Online adoptionCompliance

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Just when it seemed that planes could not get any fuller…

Airlines have been taking a cautious approach to capacity increases over the past few years and this trend should continue in 2013 given the weak global economy. Globally, expected capacity increases should be slightly lower than gains in traffic (+3.4 percent capacity vs. +3.7 percent traffic in 2013, compared with +3.0 percent capacity vs. +3.2 percent traffic in 2012).

Regional variationsThe global figures hide some notable differences between regions:

In Latin America, expected capacity growth (+5.1 percent) will lag behind traffic growth (+6.4 percent), reversing the trend in 2012.

In North America, capacity growth is likely to grow only slightly (+0.7 percent) but still faster than traffic (+0.4 percent), easing conditions slightly for passengers after 0.8 percent capacity cuts in 2012.

In Europe, the Middle East and Africa, capacity is forecast to grow at almost the same rate as traffic, with the strongest gains in the Middle East (+2.1 percent capacity vs. +2.2 percent traffic in Europe, +6.2 percent capacity and traffic in Africa, and +12.1 percent capacity vs. +12.3 percent traffic in the Middle East).

In Asia Pacific, capacity should continue to grow faster than traffic for the third consecutive year (+5.0 percent capacity vs. +4.4 percent traffic in 2013).

acked planes will be the norm as airlines adjust capacity cautiously to meet traffic growth.P

Air & ground Compliance Travel policy

Figure 31Forecast year-on-year evolution of air traffic and capacity

Global

Traffic Capacity

2012F 2013F

3.2 3.0

North America

Traffic Capacity

0.20.4-0.8

0.7

Africa

Traffic Capacity

6.9 7.9

6.26.2

Middle East

Traffic Capacity

15.5

12.4

12.3 12.1

Europe

Traffic Capacity

2.8 2.62.2 2.1

Latin America

Traffic Capacity

6.58.1

6.4 5.1

Asia Pacific

Traffic Capacity

2.3 3.04.4 5.03.7 3.4

In this tight capacity environment, the most popular measure planned by travel managers to improve their policies is promoting advance purchasing (55 percent of respondents), which is an effective way to ensure seat availability at the best prices. Further, 38 percent of travel managers intend to work on finding the right balance between the use of negotiated fares and restricted fares to drive air and ground savings.

Sources: CWT Travel Management InstituteBased on data from IATA, Financial Forecast (December 2012)


uick quiz: test your knowledge of global program performance on intercontinental flights.Q

At last count, intercontinental flights accounted for 12 percent of all tickets booked by CWT corporate clients but 48 percent of total spend. Test your knowledge of global program performance on these flights with three questions:

1. In which region do companies pay the lowest average ticket price on intercontinental flights?

2. Worldwide, roughly what percentage of intercontinental flights are booked at least 14 days in advance by business travelers?

3. In which region do business travelers book the highest proportion of business class tickets on intercontinental flights?

1. Companies in Asia Pacific pay the lowest average ticket price (ATP) on intercontinental flights at US$1,242, compared to the highest ATP in Europe, Middle East and Africa at US$1,617.

2. About two-thirds (63 percent) of intercontinental flights are booked at least 14 days in advance by business travelers. Compared with this global average, performance is slightly stronger in Europe, the Middle East and Africa (64 percent), as well as North America (66 percent), but weaker in Asia Pacific (57 percent) and Latin America (55 percent).

3. In Europe, the Middle East and Africa, business class tickets account for 39 percent of intercontinental flights taken by business travelers, compared with 25 percent in Latin America.

Answers

KPIs

Source: CWT global transaction data

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High-speed rail developments tend to be good news for the travel program for a whole host of reasons, from the most obvious (convenient, reliable travel between city centers) to the wider reaching (such as increasing price competition on key business routes and providing a lower-carbon alternative to air).

New services in 2013Companies can benefit from several new lines or services opened recently or due to come into service this year:

In China, the world’s longest high-speed line (1,428 miles or 2,298 kilometers of track) opened in December 2012, now connecting 28 cities from Beijing to Guanzhou, the capital of Guangdong Province. The country has already opened more than 5,780 miles (9,302 kilometers) of high-speed track since the start of its high-speed project in 2007, which includes four East–West lines, four North–South lines and a connection to Hong Kong. Its network is not only the world’s most extensive but also the fastest growing. (See Figures 32-33.) More than 74,500 miles (120,000 kilometers) of track should be in service by 2020.

In France and Germany, direct connections between Frankfurt and Marseille via Strasboug, Mulhouse and Lyon have been launched by SNCF and Deutsche Bahn respectively. Deutsche Bahn has also announced plans for direct links from London to Frankfurt via Brussels and Cologne, as well as to Amsterdam via Rotterdam.

In Italy, Nuovo Trasporto Viaggiatori, Europe’s first private operator of domestic trains partly owned by France’s SNCF has launched service, intending to serve nine cities and 12 stations on two main axes (Turin–Salerno and Rome–Venice) when fully rolled out.

In Spain, a high-speed rail link from Barcelona to the French border should open in 2013, as the last leg of the Madrid–Lleida–Barcelona–France line.

In Turkey, the Ankara–Istanbul line is expected to open by the end of September 2013, as part of a wider project connecting Ankara with Istanbul, Izmir and Bursa, as well as reaching Antalya, Erzincan, Kayseri and Sivas, by 2023.

Latest projects in the pipelineMeanwhile, numerous high-speed rail projects are under construction or discussion around the world expanding current networks or bringing high speed to new countries. Among the latest announcements:

In India, the Railways Ministry has announced that work could start on the country’s first high-speed line (Pune–Mumbai–Ahmedabad) by November 2013, while several other high-speed corridors have received initial planning approval.

In Morocco, construction has begun on a high-speed rail system that will connect Tangier to Rabat, Casablanca and Marrakech.

ail travel will be faster and more convenient for business travelers as the global high-speed network expands further.R

Air & ground Traveler experience Environment

*Includes Belgium, Netherlands, South Korea, Switzerland, Taiwan, Turkey, United Kingdom and United States

China37%

Italy5%

Spain12%

Other*11%

France11%

Germany8%

Japan16%

Current share of world network

Figure 32China has the world’s largest high-speed rail network

Source: International Union of Railways, High-Speed Lines in the World (July 2012)


In Saudi Arabia, the “Haramain” Medina–Mecca project has moved into the second phase of construction and is now scheduled for completion in 2014. Jeddah and King Abdul Aziz International Airport will also be served.

In Thailand, the government intends to open international bidding in early 2013 for the first phase of a high-speed rail project linking Bangkok to Pattaya, Pitscanulok, Nakhon Ratchasima and Hua Hin. Completion of the four routes is scheduled for 2018.

In the United States, the Central Valley segment (Merced–Fresno) of the Californian high-speed line may start construction in 2013 after the likely awarding of contracts mid year. Meanwhile, the state of Arkansas will begin studying the possibility of a high-speed rail between Memphis, Little Rock and Texarkana.

High-speed rail in the travel programRail neatly fits in with travel managers’ number one priority in 2013, driving air and ground savings. According to the CWT survey, 15 percent of the travel managers who identified this area as a priority intend to manage the trade-offs between air and rail. In addition, 55 percent of the travel managers who will prioritize making the travel program more environmentally friendly intend to promote environmentally friendly travel options such as rail.

Figure 33China also has the fastest growing high-speed rail network

46% 18% 8% 8% 5% 5% 10%

China Spain Turkey France Germany Japan Other*

*Includes Morocco, Saudi Arabia, South Korea and Switzerland

High-speed rail under construction

Source: CWT Travel Management InstituteBased on data from the International Union of Railways, High Speed Lines in the World (July 2012)

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Six reasons to consider high-speed rail

Convenience: shorter or similar door-to-door journeys than by air for some short-haul routes and a productive on-board working environment

Punctuality: better performance than air, which is more impacted by rush-hour congestion and many forms of adverse weather

Competitive prices: often significantly cheaper than air, especially when booked in advance

Safety: better performance than air travel although the difference is slight, according to European Transport Safety Council statistics

“Greenness”: much lower carbon emissions than comparable road or air trips

Improved distribution: rail content increasingly available through the major online booking tools and global distribution systems

Three tips for managing the trade-offs between air and rail

Identify the main routes where rail may be an alternative to air. Rail is typically worth considering for routes under 600-800 km, which can be covered in about three hours by high-speed rail.

Calculate your current volume of air traffic on these routes and the potential savings offered by switching to rail.

Optimize the rail class policy. Ticket prices can be at least 40-60 percent lower in standard class than in first.

Source: CWT Travel Management Institute, Mastering the Maze: A Practical Guide to Air and Ground Savings (2012)


Among the travel managers who consider improving the traveler experience a top five priority for 2013, 62 percent intend to implement a social media strategy. This measure is the second most popular for this priority, after offering mobile services (65 percent)

At a regional level, the scores are lower, although travel managers in Asia Pacific appear to be adopting social media at a quicker pace (32 percent, compared to 28 percent in North America, 22 percent in Europe, Middle East and Africa, and 14 percent in Latin America).

These regional differences are largely in line with a study of social engagement conducted by GlobalWebIndex, a U.K.-based company that researches online consumer behavior. Their Social Engagement Benchmark Score Report, released in October 2012, measures social engagement in terms of 12 key behaviors categorized as participation (using a social network, using a micro blog, posting on a forum and commenting on a story), content creation (uploading a photo, uploading a video, writing a blog and writing a news story) and brand engagement (liking a product or brand, reviewing a product or brand, retweeting brand content, and updating a video/photo to a branded page). According to this report, Asia Pacific countries such as China, Indonesia, India, Vietnam and the Philippines have the highest social engagement scores at around 80 percent, while European countries including Sweden, France and the United Kingdom score lowest at around 40 percent. Significant differences exist within regions, however. Notably, Japan ranks far below other countries in Asia Pacific, at the bottom of the global league table.

Which social media tools for business travel?Overall, the use of social media is still relatively new in business travel programs, although well entrenched in the leisure sector. As business travelers have now become familiar with social media tools for their personal trips, they tend to want to use them in a business context: for planning travel, finding information while on the road or sharing reviews upon their return. To limit unproductive or non-compliant behaviors, but also to improve travelers’ experience, travel managers need to understand the various social media tools and define clear social media guidelines in their travel policy. Dedicated tools and applications are gradually coming on to the market. For example, CWT now offers an online platform enabling employees from a client company to access information on preferred hotels and share reviews. (See Pages 39-40.) In addition to enhancing the traveler experience, social media tools can be invaluable for communicating with travelers during emergencies and ensuring their safety.

More widely in the travel industry, suppliers have jumped on the bandwagon and are implementing social media strategies to achieve a range of objectives, including personalizing the customer experience, communicating with travelers and offering innovative services. For example:

Qantas has used Facebook and Twitter to communicate with passengers during crises (e.g., when its fleet of aircraft was grounded by industrial action in 2011).

KLM’s “Meet & Seat” service enables travelers to connect and be seated with like-minded passengers who wish to share information from their LinkedIn or Facebook profiles. Aimed at business travelers in particular, this service has been extended from an initial three routes (between Amsterdam and New York, San Francisco and Sao Paulo) to 10 further routes (between Amsterdam and Atlanta, Buenos Aires, Cape Town, Houston, Johannesburg, Los Angeles, Mexico City, Nairobi, Rio de Janeiro and Toronto).

British Airways’ “Know Me” program involves staff with iPads using Web photos and information to recognize and greet VIP customers, armed with details on their preferences and any comments made on social networks.

ocial media strategies will be implemented by almost two-thirds of global travel managers as a key action to improve the traveler experience.S

Travel policy Traveler experience

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Business travelers are embracing new technology, whether in terms of smarter, more portable devices or the apps and services that go with them. Recent surveys offer interesting illustrations. For example:

70 percent of business travelers carry a smartphone,19 compared with much lower figures in the general population (e.g., 42 percent of U.S. mobile subscribers20).

68 percent of business travelers use their tablet more often than their laptop and similarly 69 percent would choose their tablet over their laptop if allowed only one device on the road.21

79 percent of smartphone-owning business travelers would use mobile check-in and check-out hotel services if available.22

Almost 94 percent of surveyed travelers in the U.S. want flight status information pushed to mobile devices before take-off.23

86 percent of business travelers expect Wi-Fi at the airport.24

A proliferation of new technology servicesSuppliers have been quick to adapt, with an ever-wider selection of mobile apps, web services and Wi-Fi offerings. The numerous announcements include:

50 percent of airlines worldwide now offer mobile check-in and this figure could rise to 90 percent by 2015. Similarly, 46 percent of airlines offer mobile boarding passes, rising to a possible 85 percent by 2015, while more than half of all airlines offer kiosk services, such as bag-tag printing (76 percent) and lost baggage services (51 percent).25

U.S. airlines intend to start rolling out Wi-Fi on international flights in 2013 after already offering the service on domestic flights.

The technology is now available for Wi-Fi services in the Channel Tunnel between France and the United Kingdom. Eurostar has announced it will introduce refurbished trains offering high-speed broadband in 2013 and 2014.

echnology will be the traveler’s best friend, with mobile/Wi-Fi connectivity and a growing range of business travel apps making travel smoother and more productive.T

Travel policy Traveler experience

19 SITA, 2012 Passenger Self-Service Survey (October 2012)20 comScore, Mobile Future in Focus (2012)21 Four Points by Sheraton survey (August 2012)22 Smith Micro survey (June 2012) reported by emarketer

23 FlightView survey (September 2012)24 Infographic by PC Housing, based on data from CWT, Computerworld and

FrequentFlyerService.com (May 2012)25 SITA, Airline IT Trends Survey (2012)

2010 2011 2012

41%50%

28%

Airlines providing mobile check-in

Figure 3450 percent of airlines now offer mobile check-in

Source: CWT Travel Management Institute Based on data from SITA, 2012 Passenger Self-Service Survey (October 2012)


New apps and solutions for the travel programOn the side of travel management companies, new services are also coming onto the market to help travel managers improve the traveler experience within travel programs. As an example, CWT has announced mobile and social services including:

CWT To Go, an award-winning free mobile app providing secure access to real-time travel information (itineraries, flight notifications and trip information) along with features such as calendar sync, click-to-call CWT and weather forecasts.

CWT Market, an “app of apps” offering a useful pre-selection of travel tools for business travelers.

CWT Hotel Intel, an innovative travel review site that allows business travelers to share hotel ratings and reviews within a secure, company-specific site.

In 2012, CWT also acquired WorldMate, the leading developer of mobile technology in travel, in line with its strategy to invest in innovation and offer mobile solutions as an integral part of its travel management offering.

Travel managers are taking this trend into account, acknowledging the benefits of new apps for travelers along with the need to steer them in the right direction and manage the risks of non-compliance with travel policy. In the survey on travel management priorities, 54 percent of travel managers expressed their intention to offer mobile services in 2013. While it is important to provide the right services, it is equally important to accompany changes with a clear policy and communications on which services are authorized by the program.

How do mobile boarding passes work? Mobile boarding passes are a great boon for travelers who wish to save time before arriving at the airport but may not have access to a printer or prefer to go paper-free. When checking in online, travelers can opt to have their boarding pass sent to a mobile device. The airline then sends a link by SMS to a QR (“quick response”) code that serves as a scannable boarding pass containing all the necessary personal information and flight details for the traveler to pass security checkpoints.

Since the link requires an Internet connection, travelers who may not have a Wi-Fi connection at the airport should access the QR code beforehand and save it as an image on their device.

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“Unmanaged travel,” “open booking” and “travel management 2.0” have crept into travel managers’ vocabulary as an alternative to travel booked through TMC counselors and corporate online booking tools. Although some industry observers are already advocating a switch to a less controlled environment, the vast majority of stakeholders are waiting for hard evidence of benefits. Some oppose outright what appears to be a step backward that ignores the value brought by specialized sourcing and other travel management services. Those who are tempted by the idea would do well to conduct a pilot before implementing full-scale changes.

What is unmanaged travel?Up until recently, the travel management industry used “unmanaged travel” to refer to travel booked outside a TMC-managed program. New terms have now appeared, recognizing that companies must manage travel however it is booked—not just for budgetary reasons but to ensure that travelers get the right levels of service, safety and security. More specifically, “open booking,” is a travel management strategy that allows business travelers to book through any channel (e.g., the websites of airlines, hotels and car rental providers, or consumer aggregator sites), while their companies capture booking data through alternative technology. “Travel management 2.0” acknowledges the impact of the Internet and social media on booking behavior, with the potential to transpose the best of customer-centric leisure travel apps and services into a business context—or create new ones.

Why would a company switch to open booking?The case for open booking rests on two attractive, but controversial claims: lower costs and increased traveler satisfaction. While much has been said on the topic, concrete evidence is still lacking and opinions remain divided in the business travel community. In particular, one survey that has sparked debate, GBTA/Concur’s Global Business Traveler Study 2012, found that “unmanaged travel” cost 3 percent less than travel “under guidelines.” Clearly, this flies in the face of conventional travel management wisdom and its broad vision of cost control that goes beyond travelers reasoning “But I found it cheaper on the web!” Moreover, the study’s conclusion was based on “guestimates” (“Approximately, how much did your last trip cost for all travel-related expenses? Your best estimate is fine.”) by a relatively small sample of respondents. In response, a pilot program led by a company, Sapient, and reported by TRX/BTN Group in Open booking: is it right for your travel program? (December 2012), found that travelers spent 15-20 percent more when booking outside their travel management company, based on actual spend data. Both GBTA and CWT intend to publish more in-depth research in 2013.

Similarly, the argument that travelers prefer a much less controlled booking environment has yet to be proven across all types of companies. While the idea may seem appealing at first, particularly when many travelers already make bookings out of policy, the reality may be less so in moments when the value of TMC support is most visible to travelers: especially when they require complex bookings, ticket changes/refunds or support during emergencies. Typically, the industry underlines the priceless service of tracking, contacting and looking after travelers in a crisis, which is key to duty of care. Indeed, according to CWT’s survey of travel management priorities for 2013, 82 percent of global travel managers focusing on traveler safety and security intend to implement traveler tracking and real-time notifications. But it is also worth remembering that as many as 55 percent of some companies’ day-to-day corporate bookings involve several international legs or asymmetrical outward and return journeys (vs. simple point-to-point bookings), while a significant amount of tickets involve exchanges or refunds (8.6 percent exchanges and 7.9 percent refunds), according to CWT global transaction data.

nmanaged travel programs may tempt some companies with a low-control culture, but the real risks to employee safety, access to appropriate content and

cost optimization must be taken into account.U

Compliance Travel policy


Who can benefit most from open booking?While hard evidence of benefits is still lacking, a number of factors may come into play:

The size and complexity of the travel program. Smaller companies may be more suited to open booking.

The traveler population. Tech-savvy, younger travelers and road warriors may be more at ease with an open approach than other employees.

Travel patterns. Any upfront savings on domestic airfares may be undermined by more expensive international bookings, compared to negotiated discounts.

Company culture. Open booking may be best suited to companies with a “light” culture of control (e.g., those who do not impose mandates on their travelers).

Potential advantages Potential disadvantages

Ability of travelers to choose cheaper prices if available through alternative providers and booking channels within a given budget.

Lower booking costs associated with global distribution systems, online booking tools and travel management companies.

A better fit for “Gen Y” travelers who expect a high degree of customization in line with the best of online consumer travel tools.

Flexibility for travelers to book how, what, when and with whichever supplier they prefer.

Weaker supplier negotiations and lower discounts, especially for international flights. Companies may lose the ability to guide travelers to preferred suppliers, diluting negotiated discounts on the total cost of travel (including upfront discounts and back-end rebates on fares, rates and ancillary fees).

Less control over data on both supplier and traveler performance. Without complete data, companies cannot effectively audit the availability of negotiated fare classes, travelers’ reasons for not booking the lowest fares, etc. Similarly, TMCs cannot provide companies with performance benchmarks, which are important for driving forward best practices.

Compromised traveler safety and security. Off-channel bookings may not be serviced by a TMC partner, who will therefore be unable to touch reservations or access information required to assist travelers. Also, travelers can go too far in their efforts to find cheap prices, picking options that do not meet acceptable minimum standards for safety and security.

Inability to use lodge cards to charge travel expenses directly to the relevant cost center. Travelers must therefore use individual payment cards, increasing the risk of fraud.

For the moment, the downsides of open booking appear to outweigh the upsides:


Figure 35Potential advantages and disadvantages of open booking

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How best to go about open booking?According to the TRX/BTN survey, close to 80 percent of travel managers have no plans to pilot open booking. However, 12 percent have already done so, 9 percent are planning to conduct a pilot in 2013 and 2 percent are considering how to make a pilot work. For companies considering open booking, CWT offers the following advice:

Define clear processes for gathering and distributing real-time information to ensure travelers’ safety.

Consider the value of TMC services in emergency situations and for day-to-day service with complex bookings.

Do not assume open booking will automatically generate savings. Consider the total cost of travel, not just ticket prices or rates, and weigh any cost reductions against negotiated value (including airline status upgrades, access to hotel amenities, car rental insurance, etc.).

Consider the impact on service levels, given the loss of SLA management.

Monitor the effects on employee productivity and satisfaction.

Address data privacy issues.

Evaluate the available tools for capturing data and the need for technology developments in-house.

Consider the challenges of implementing new processes and retraining travelers, as well as staff involved in travel bookings or travel management.

Start with a pilot before implementing wide-scale changes.

More information will be available in a report on open booking and managed travel by the CWT Travel Management Institute, due out in mid 2013. This in-depth research will feature surveys of travel managers and travelers, as well as interviews with experts and case studies, and is aimed at better understanding if and how open booking could be an acceptable solution for companies in the future.


Whether by changing the rules, introducing online applications or opening new consulates, many countries have introduced changes that will simplify or speed up red tape for travelers.

What’s new?Here are just some examples of the recent changes:

China now enables passport holders from 45 countries to benefit from a visa-free stay in Beijing and Shanghai for up to 72 hours, a move that will benefit travelers traveling through on stop-over flights as well as those on quick visits. (Previous rules concerned Shanghai only and limited visa-free stays to 48 hours for visits and 24 hours for flight transfers.) Among countries covered by the new rules are, for example, Australia, the United States and most European nations except Norway. Nationals of Brunei, Japan and Singapore can continue to enter the country visa-free for up to 15 days.

Russia has eased formalities for U.S. citizens by extending visa validity to three years, during which time business travelers and tourists multiple can make multiple entries and enjoy stays of up to six months. The new visa costs US$180. Applicants must still submit a letter from a Russia-based company and surrender their passport during processing, which is expected to take 20 business days. Travelers can also apply for an expedited 30-day visa, as before.

United Arab Emirates authorities have introduced a multiple-entry visa for business and leisure travelers, which will facilitate travel by nationals from many countries. Citizens of 32 countries will continue to enter UAE with no advance visa arrangements, obtaining at immigration a free 30-day visa, which can be extended for an additional 30 days at a charge. Citizens of the Gulf Cooperation Council (GCC) nations of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia do not require a visa. All other citizens must apply for a visa before traveling and can do so online through emirates.com. In addition, UAE imposes a departure tax which varies between airports and is payable in local currency (in cash if credit cards are not accepted).

The United States has admitted Taiwan to its Visa Waiver Program (VWP) as its 37th member. This development in December 2012 means that Taiwanese nationals can now stay in the United States for tourism or business reasons without a visa for up to 90 days, as long as they receive prior authorization through the Electronic System for Travel Authorization (ESTA).

The U.S. Department of Homeland Security has also announced its attention to establish a visa waiver working group with Brazil. In the meantime, the U.S. is taking steps to speed up visa processing with plans to open its 5th and 6th consulates in Brazil (Belo Horizonte and Porto Alegre). Its objective is to process 40 percent more visas and reduce its backlog. In the past, it has taken up to 100 days to schedule an appointment at one of the consulates for a visa, which costs US$140.

isa regulations will be relaxed in some countries but still require vigilance by business travelers to meet the different formalities.V

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The U.S. Electronic System for Travel Authorization: useful to know Required for all trips to or transit through the United States with the Visa Waiver Program

Valid for multiple trips for two years or until the traveler’s passport expires, whichever comes earlier

Applications must be made on the U.S. Government’s official web portal (https://esta.cbp.dhs.gov) at least 72 hours before departure

Applicants must have a return or onward ticket

Registration involves an administrative fee (US$14 in January 2013)

Visa checklist for travelersTo find out whether a visa is required for travel and select the right type, travelers need to consider four main criteria:

Citizenship

Country of destination

Countries entered en route (e.g., on stopover flights)

Frequency/duration of required entries

Travelers need to be vigilant and carefully review the passport and visa requirements on their itinerary. Before booking, they should check visa application processes and the availability of fast-track services if necessary to ensure that a visa can be obtained in time.

It can also be useful for travelers to renew their passports well before the expiry date, since immigration rules commonly require validity until at least six months after the date of entry.


Stress has been called the “global epidemic of the 21st century” and a major threat to well-being by the United Nations International Labor Organization, which estimates that 30 percent of the world’s employees suffer from work-related stress. At the same time, there has been a sea change in people’s expectations from work, with well-being and personal development playing a key role in job satisfaction alongside social status and income. As companies address these issues, they are increasingly aware of the potential stress caused by business travel and the need to design policies that balance traveler needs with cost savings.

Changing traveler expectationsThese days, travelers expect more adaptive travel policies than in the past. Tech-savvy younger employees and road warriors in particular may want features such as:

Higher comfort classes for frequent travelers (those taking more than a specific number of flights per month or year)

Communication that is tailored to specific traveler segments and more transparent for all travelers, for example, by demystifying policy exceptions for senior management

Tips and tricks for better traveling, such as how to avoid jetlag, maintain a work-out schedule, eat healthily or ensure personal security when on the road

User-friendly tools and processes for booking, trip management and expense filing

Toward more adaptive, traveler-centric policiesIn response, travel managers are moving away from a “one-size-fits-all” approach and making travel policies more traveler-centric. In addition to managing spend, ensuring safety and security, and limiting C02 emissions, they are increasingly seeking to:

Better understand the company’s traveler community by identifying different segments and their prevalence within the traveler population. The most commonly identified segments are frequent and VIP travelers, but travel managers may also take into account a whole range of other variables such as traveler, purpose of trip, trip duration, working hours, project timelines, culture, family environment and mobility.

Tailor services to the requirements of different traveler segments. This approach can impact every area of the travel program, from policy (e.g., authorized service classes and maximum trip duration) and trip preparation (e.g., destination information and fear-of-flying training) to assistance during travel (e.g., airport assistance and homecare services).

Empower travelers to make the right travel choices, by providing the right information and tools along with the flexibility to make responsible, user-friendly decisions.

Give travelers a voice, for example through internal surveys and social feedback that can lead to policy changes and improved conditions with suppliers. (See Page 61.)

This greater focus on traveler well-being will not only improve traveler satisfaction but also help companies to manage their duty of care to employees and the associated risks. (See Pages 32-33.)

ell-being: increased awareness of traveler stress may lead some companies to reinvent their travel policies to improve satisfaction and the work-life balance.W

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Opinions may differ as to when Generation Y starts and ends,26 but there is plenty agreement on the characteristics of this latest generation to enter into the workforce. As the numbers of Gen Y business travelers grow in 2013, travel managers (often Gen X-ers) would do well to consider their different habits and expectations.

A new breed of travelersOn the whole, Gen Y travelers…

Expect customized services. Generation Y has been raised on personalization, with everything from Facebook profiles to Pandora radio reflecting their individuality. As a result, they expect to be treated uniquely and may be resistant to standardized offers. They also expect their work environments to be filled with choices. This generation is famously less loyal to brands than to convenience.

Are tech-savvy. Generation Y quickly buys into new concepts and adopts new technology. Compared to older segments who show a strong preference to booking through travel counselors, these travelers are more at ease with online booking tools and mobile apps.

Are social. Growing up with social media, these travelers are used to giving and receiving immediate feedback and are much more likely to rely on their peers’ advice when making decisions. In an Embassy Suites Hotel survey of U.S. travelers,27 already in 2010 nearly half of all travelers aged between 21 and 34 said they consulted their Facebook friends before making work trip decisions—twice as many as older age groups.

Embrace change. Generation Y-ers are said to be more adaptable and used to a fast pace of change. These travelers may prefer novelty over comfort and will likely favor flexible, adaptive travel policies over more rigid ones.

Are more comfortable with travel. The CWT Traveler Stress Index28 indicates that younger generations find long-haul flights less stressful than their older colleagues, with a 15-point difference in stress levels between the youngest and the most senior age groups. Similarly, younger travelers consider stays in lower hotel categories less stressful (a 7-point difference).

Value work-life balance. More than any other generation, these travelers emphasize life first and would like companies to recognize the responsibilities and roles they play outside the office. For them, work—including business travel—needs to fit into their lives rather than the other way round.

Where now for the travel program?Ideally travel managers take into account the expectations of multiple generations when designing the travel program, communicating policy and looking at ways to drive compliance. CWT recommends:

Allowing customization where possible. For example, when introducing new tools or services, it can be useful to test them among some of the more tech-savvy travelers, who can customize them and provide feedback on what best suits their needs. This group of “super-users” can lead the way in identifying features to become part of a standard offering in the future.

Introducing mobile apps and services accompanied by clear guidelines. To boost compliance while enhancing the travel experience, travel managers need to communicate on which recommended tools are available for mobile use, and which actions are authorized. Mobile technology can be used to support the travel program in numerous ways, from providing targeted information (e.g., traveler itineraries and destination information) to locating and contacting travelers in emergencies.

Gen X-ers take note! Generation Y business travelers are by nature social, mobile and keen to manage their travel and expenses while on the go.X-Y

Travel policyCompliance Traveler experience

26 The definition used by CWT is the generation born between 1978 and 1994.

27 Embassy Suites Hotels’ second annual nationwide Business Travel Survey (2010)

28 Visit ww.cwt-solutions-group.com for more information.


Creating a policy or guidelines on social media and leverage social tools when they support the travel program. Social tools specifically designed for travel management are coming onto the market, helping to raise travelers’ awareness of preferred suppliers and promote compliant bookings. (See Pages 39-40.)

Exploring new communication styles and channels, using online, social and mobile tools where appropriate.

Understanding the needs of different populations of travelers within the company and ensuring that the travel program provides the best possible fit. For example, when choosing preferred hotels, CWT research29 has shown that a convenient location is by far the most important selection criteria for most travelers and a more important driver of satisfaction than the hotel category. Gen Y travelers may attach even less importance to comfort than practical features (location, Wi-Fi access, etc.).

29 CWT Travel Management Institute, Room for Savings: Optimizing Hotel Spend (2009)

* Note: Born between 1978 and 1994.Source: CWT global transaction data

Global 7327

0 20 40 60 80 100 %

23 77U.S.

26 74U.K.

26 74France

58 42India

45 55Brazil

Percentage of all business travelers

Gen Y*Older generation

Figure 36Generation Y already accounts for 27 percent of business travelers worldwide

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

7977757371696765636159575553514947454341393735333129271917 252321

India Brazil U.S.U.K.FranceGlobal

Percentage of all business travelers/ageGen Y

Age

Generation Y: a growing populationBy 2020, Gen Y should far outnumber any other generation in the U.S. workforce, accounting for more than 40 percent of employees, according to according to data from the U.S. Bureau of Labor Statistics.

Right now, the proportion of Gen Y-ers among the business travel population already reaches 45 percent in Brazil and 58 percent in India, according to CWT data on the age group born between 1978 and 1994. The figure is lower globally (27 percent) and in other countries (23 percent in the United States, and 26 percent in France and the United Kingdom).

72

On October 1, 2012, the Civil Aviation Administration of China (CAAC) changed regulation to enable international airlines to ticket via foreign global distribution systems (GDSs). This move represents a positive first step in deregulation, although major change is not expected any time soon for several reasons:

The new regulation only affects international travel on foreign carriers, which currently represents no more than 5 percent of total travel segments booked, according to CWT.

The participation of foreign GDSs in the market will be subject to approval by CAAC, which may take time.

Domestic travel will continue to be ticketed through TravelSky, the State-run monopoly computerized reservation system.

The Chinese Billing and Settlement Plan (BSP, the centralized system for facilitating the flow of data and funds between travel agencies and airlines) is expected to remain closed to foreign GDSs even after deregulation. This puts those GDSs at a disadvantage by requiring them to manage payments directly with each airline.

There will be no change in how travel agencies outside China book flights on Chinese airlines.

Travel managers must therefore be patient before seeing any impact.

Air & ground

h�ng Guó30 (China): foreign global distribution systems will be authorized to sell non-Chinese airline content, following the government’s decision to relax

regulation. The changes will take time to implement.Z

China: a highly regulated travel marketThe Chinese aviation market is one of the world’s fastest growing but also one of the most regulated and largely dominated by State-run carriers.

The high degree of regulation is similar in Japan, although this country allows numerous commercial GDSs and a travel industry in general that is not government-owned.

Meanwhile, India is both highly deregulated (following two waves of liberalization starting in the mid-1990s) and dominated by private airlines. In terms of distribution regulation, GDSs such as Abacus, Amadeus, Galileo and Sabre have all been allowed to enter the market.

30 “Zhong Guó” means “China” in Pinyin, the official system to transcribe Chinese characters into Latin script

CWT Travel Management Institute The CWT Travel Management Institute conducts in-depth research into effective travel management and meetings and events (M&E) practices to help clients worldwide derive the greatest value from their travel and M&E programs. Drawing on the global resources of Carlson Wagonlit Travel (CWT), the institute provides a regular flow of business intelligence and best practices, offering actionable insights into the eight key levers to effective travel identified by CWT.

To this end, the CWT Travel Management Institute publishes original research, white papers and case studies, as well as a global periodical CWT Vision. Research publications include: Mastering the Maze: a Practical Guide to Air and Ground Savings (2012), Business Traveler Services: Finding the Right Fit (2011), Meetings and Events: Where Savings Meet Success (2010), Room for Savings: Optimizing Hotel Spend (2009), Playing by the Rules: Optimizing Travel Policy and Compliance (2008), Global Horizons: Consolidating a Travel Program (2007) and Toward Excellence in Online Booking (2006).( )

All research published by the CWT Travel Management Institute

is available on

www.carlsonwagonlit.comnnnnnnnnnnnnnnnwww

Scan the QR code for direct access to our online section.

Copyright © 2013 CWT

Carlson Wagonlit Travel is committed to promoting environmental sustainability.This document was printed on FSC-certified paper from sustainably managed forests.

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