Corporate Travel – Extracting Value in a Recovering Market
Chris Reynolds (CIPS)
Nick Hurrell
CIPS, Manchester and North West Construction, 16 November 2010
Introductions and Agenda
• Corporate travel trends : 2010 – 2011
• Value: Smarter Buying
Travel management companies
Technologies
• Where to next ?
2010...The market is growing
• Business Travel Growth ‘Steady but strong’A 12% increase in air travel transactions exceeds 2008 levels for the first time
• BA back in the BlackBefore tax profit of £158 million during the first half of this financial year
• Ryanair profits leap17% increase in half year net profit to €452m
• Capacity cuts boost Aer Lingus profits35% increase in profits in July, August and September.
• Virgin Trains increases Market shareManchester‐London: 69% to 85%
• UK Hotel occupancy rates growingLondon 87%, Regions 75%
The Market Outlook ‐ Air
3.6%
6.3%
10.6%
1.9%
8.1%
1.0%
1.6%
13.2%
2.5%
-0.2%
-5% 0% 5% 10% 15%
Europe
NorthAmerica
ASPAC
MiddleEast
Global
CapacityTraffic
Source: IATA
Airfares: likely outcome ‐ 2011
2.0%
2.5%
4.0%
3.0%
4.5%
5.5%
5.0%
5.5%
2.5%
6.5%
0% 2% 4% 6% 8%
Europe
NorthAmerica
ASPAC
MiddleEast
Africa
EconomyBusiness
Source: Advito
Airline Consolidation
• Global Alliances– Star Alliance
– One World
– Sky Team
• BA/Iberia– IAG ‘Interested’ in 12 carriers
• Continental/United
• North West/Delta
• American: Largest US to 4th in a year
Average Daily Hotel Rates 2010
Africa+7.5%
Europe‐3.2%Nth America
‐1.6%
Sth America+4.5%
M. East‐2.6%
ASPAC‐3.0%
Source: Advito
Predicted Hotel Rates 2011
Africa+4.0%
Europe+2.5%Nth America
+3.5%
Sth America+6.0%
M. East+4.5%
ASPAC+5.0%
Source: Advito
“Unbundling”
• 2011 ancillary revenues forecast at $22b– Ryanair alone: £600m in 2009 !
• Little transparency of cost– No like for like comparison at point of sale
– Swallowed up in expenses
• Latest charges– Blankets/Pillows on flights
– Mileage multipliers
– Credit Card surcharge on hotel bills
Value: Smarter Buying
A Managed Travel Programme.....
Key Drivers:
• Transparency of spend
• Safety and Security of employees
• Pooling of volumes
• Traveller Confidence
Value: Smarter Buying
• Airlines:– Contract or Best deal on the day?
• Hotels:– Contract is a ceiling only
– Negotiate on the extras
– Manage your meetings spend
• Rail:– Book online and in advance
Value: Travel Management Companies
Too big a focus on agency fees– Accounts for only 2.5% ‐ 5% of spend
Travel Management Companies
Travel Management Companies
• Should offer online and telephone booking
• Separate pricing for online and offline booking
• Global TMC, smaller agent or specialist?
• Choice of payment method
Travel Management Companies
• Mandate or encourage ?
• Compliance to booking process and preferred suppliers
• Reduce leakage
• Consistent data
Travel Management Companies
• Multi channel sources
• Capture last minute reductions
• Strong relationships with their suppliers
Travel Management Companies
• Online and real time data
• Understand data sources
• Ability to hand off to 3rd parties (traveller tracking, expense management, etc)
Travel Management Companies
• The right person is vital– Thought Leadership– Culture fit– Confidence
• Should provide travel alternatives
• Offer additional products only when they are right for you
• Can be outsourced
Where to next?
New Aircraft = More unbundling
Flexible Cabins:Personalised Service...Unbundled pricing
Rail ‐more prominent
• Other Operators will use High Speed 1 (Channel Tunnel)
• High Speed 2 likely
• Airlines / Rail will market together
• Increasing Road Congestion and Environmental issues
Technology (again...)
• “On the go” booking
• Video Conferencing?
• Social Networking – No longer for the under 30’s...
Thank You...Questions ?
Contact 3SIXTY Global at:
chris.reynolds@3sixty‐global.comor:
enquiries@3sixty‐global.com
Tel: +44 (0) 8456 808 360