CWT Foresees Declines For '09

Carlson Wagonlit Travel expects "mid-single-digit declines" in net sales globally and a fall of "closer to 10 percent" in the United States in 2009, said president and CEO Doug Anderson today. For the United Kingdom, the decline is expected to be 3 percent to 4 percent.

Anderson said total sales for CWT jumped 7 percent in 2008 from $26 billion to $27.8 billion. The lowest growth was in the United States and France, both up 2 percent. High climbers were China and Brazil, up 25 percent and 24 percent, respectively, while Germany/Austria was up 11 percent and the United Kingdom up 7 percent. Anderson said new business sales were $2.4 billion worldwide last year, down from $3 billion in 2007 but still higher than $1.9 billion in 2006.

CWT clients have reduced their travel expenditure for 2009 by up to 50 percent in the most extreme cases, with 30 percent to 45 percent cuts not unusual in the banking sector, which accounts for a relatively small 8 percent of the travel management company's volume. "The reductions we have seen are pretty severe and being implemented really quickly," said Anderson. One buoyant source of business, however, is the public sector, which the CWT CEO said is up in both the United States and United Kingdom.

CWT intends to trim its workforce. However, said Anderson, "we have no plans to make massive headcount reductions in any region." Instead, CWT expects to cut back principally through not renewing temporary contracts.

One success story for CWT last year was hotel volume, which rose 9 percent, according to Anderson. The company expects average hotel rates globally to rise 2 percent to 3 percent in 2009. Anderson also thinks some U.S. domestic fares will drop despite U.S. carriers implementing capacity cuts of 10 percent last fall. "When those plans were made, they were expecting a higher travel profile than they are now experiencing," he said. "Fares on some city pairs are coming down." CWT UK managing director Andrew Waller said demand also is falling in the United Kingdom, with volumes through the billing and settlement plan down 30 percent in January.

The decline is explained in part by companies looking at technological alternatives to travel, such as videoconferencing. Anderson said CWT is conducting research among clients about whether it should move into the non-travel conferencing business. Options under consideration include offering management services for virtual conferencing, partnering with technology leaders or even CWT making its own investment in the technology.

Regarding more conventional technology, Anderson said CWT's priority for 2009 is "deploying core systems on a wider basis." In particular, CWT wants to introduce its Aqua mid-office processing system globally and to have 80 percent of transactions flowing through its Portrait profile system by year-end.