CWT Sees Only Moderate 2010 Growth After Sharp 2009 Falloff

Carlson Wagonlit Travel expects only a moderate increase in transactions in 2010 after major falls in 2009. It also believes long-term growth in business travel will not return to pre-recession levels, company president and CEO Doug Anderson said today.

CWT's total booking transactions in 2009 fell 9.3 percent while sales volume plummeted by a much more dramatic 22.8 percent to $21.4 billion, reflecting a significant decrease in average spend through such measures as policy downgrading.

In North America, transactions fell 9 percent and sales volume by 17.4 percent, while transactions in Europe, the Middle East and Africa were down slightly less than 10 percent and sales were down 27.1 percent. Anderson attributed the relatively brighter figures for North America to a bottoming out of the market in June and July 2009, followed by an improvement in the third and fourth quarters.

EMEA, on the other hand, has not yet turned the corner. "It is still bumping along the bottom," said Anderson. "There is no sign of an uptick. Some weeks are up 2 to 3 percent and other weeks are down 2 to 3 percent. We are not expecting any significant growth as we move through 2010. However, our global expectation is for moderate growth."

Anderson said there has been a very long-term trend that business travel grows 2 percent for every 1 percent increase in gross domestic product, but in the future he expects this ratio will be smaller. "Going forward, that correlation will change, perhaps to 1.5 or 1.75 to 1," he said. "It is as a result of more effective, more affordable alternatives to travel, especially for internal meetings and more routine client reviews."

CWT announced a strategy in October 2009 for managing clients' virtual meeting requirements. "We are helping our clients determine in their program whether it makes sense to find an alternative to travel," said Anderson. "We are helping them communicate that with their travelers through policy compliance, and we are also managing for those clients which have made an investment in TelePresence to drive a return on that."

With CWT being rewarded in part for helping clients not to travel, and last year's figures showing clients' travel costs fell faster than trip numbers, the definition of travel management companies succeeding through greater sales is arguably changing. "What I define as success is high levels of client retention based on high levels of service," Anderson said. "That also leads to a good level of client wins. If we get that right, the underlying financials will take care of themselves." CWT said its client retention level in 2009 was 96 percent and annualized new sales, excluding renewals, amounted to $1.86 billion.

Anderson claimed that CWT fared better than its competitors in 2009. "My sense is the market was down 25 to 30 percent in sales, so we believe we performed slightly better than the market," he said.

The CWT chief added that he expects a marginal increase in airfares in 2010, and clients are upgrading their policies once more. "We are seeing clients start to think more about traveler comfort than in the last year or two," said Anderson. "They are coming back into the middle or front of the aircraft."