AirPlus Survey: U.S., European Travel Rising Despite Recession Fears - 2008-01-29

Travel buyers in the United States and Europe expect their trip volumes and costs to continue to rise, despite the signs of looming economic slowdown, according to the 2008 AirPlus International Travel Management Study of 1,000 buyers—100 in each of nine European countries and another 100 in the United States.

Fifty-eight percent of respondents said they expect the number of trips taken by their company to grow, up from 48 percent last year, while only 8 percent expect volumes to drop. Fifty-three percent also expect their travel costs to grow, while only 8 percent expect them to fall.

The sole country where there has been no rise in the number of buyers expecting travel volumes to grow is the United States. Instead, it has stayed flat at 61 percent, perhaps showing an earlier intimation of recession than exists across the Atlantic. Nevertheless, Richard Crum, president of AirPlus International in the United States, is surprised by the optimism expressed in the overall figures. "It didn't feel like there was a sense of companies preparing for a downturn," said Crum. "We might see growth in the first half of this year, but this could be followed by a sharp drop in volumes. Buyers need the right information so that when the time comes to cut costs, they understand better the return on investment they get from travel and don't just chop out 10 percent indiscriminately."

The study shows, as in previous years, a marked contrast between how travel is managed in the United States and Europe. One new question for 2008 is how much of their time respondents spend on managing travel. Only 14 percent spend more than three-quarters of their working week on travel, but the figure for the United States is double that at 28 percent. Switzerland is the lowest at 2 percent. The United States also has the largest number—69 percent—who believe procurement will increase its influence on travel management and the second-highest, at 71 percent, who believe finance will increase its influence.

Not surprisingly, the size of respondents' budgets also influences their answers. While 39 percent of those with large travel expenditures spend three-quarters or more of their time on travel, the figure falls to 14 percent for medium spenders and 5 percent for small spenders.

In many other respects, such as expectations of volume and price growth, the United States remains apart, but the gap is narrowing. "This trend will continue because similar travel management practices are being adopted throughout the world," said Crum, who also is president of the Association of Corporate Travel Executives.

One way in which U.S. travel buyers have moved in line with Europe is in identifying cost control as their number-one priority. This was the case last year for all nine European countries, but topping the list in the United States was monitoring travel policy and reporting. AirPlus believes that reflected a post-Sarbanes-Oxley preoccupation with compliance, an influence that has waned.

In terms of supplier negotiations, a recurrent theme for U.S. buyers is that supplier deals are declining in number but improving in magnitude for those who secure them. For example, the number of U.S. respondents with hotel deals has slipped from 80 percent to 74 percent, but the average discount for those deals has climbed from 18 percent to 24 percent. Likewise, the percentage of buyers with air deals has dropped from 67 percent to 52 percent, but the average discount is up from 15 percent to 17 percent.

Another new question this year is the different mechanisms company employees use to pay for travel while on the road. Although corporate payment cards are most popular at 59 percent, other methods continue to be used in significant numbers: private credit card (35 percent), cash (including debit card and cheque-25 percent), invoice/remittance (23 percent) and cash advance (10 percent).

Crum said private cards remain a popular option in Europe in particular. "A tremendous number of companies in Europe are still afraid to take on corporate liability for their corporate cards," he said. "When they opt for individual liability, it is harder to convince travelers to switch to the corporate card for the sake of the company."