More organizations
expect overall travel costs to increase in the coming 12 months than expect
greater trip volumes, according to an AirPlus International report based on a
late 2011 travel managers' survey. The company cited such upward cost pressures
as limited or reduced supplier capacity, more long-haul travel as organizations
globalize, fewer airline deals and lower discounts across all travel
categories.
As such, "cost
control remains by far the most important priority for travel managers,"
according to AirPlus. "It could be an expensive year, because in previous
studies expectations of trip and expenditure increases have always been nearly
identical."
The survey collected
responses from 1,701 travel managers in 20 countries. Fifty-three percent of
them expected their organizations' travelers to take about the same number of
trips this year as they did last year, while 35 percent expected an increase
and 11 percent expected a decline.
"In spite of the
intensifying doom and gloom of recent months, companies do not want to
sacrifice their travel," according to AirPlus senior vice president Volker
Huber. "Given the economic pressures every company is under, that confirms
to me the same message I am hearing from our clients: travel is no longer a
nice-to-have option. Instead, businesses consider travel an essential
investment if they want to grow in a world where new customers are often not
even based on the same continent, let alone in the same country."
Those more likely to
indicate rising trip volumes included travel managers in Brazil (58 percent), South
Africa (45 percent) and Singapore (41 percent). Those less likely included
travel managers in Europe (30 percent) and especially Spain (17 percent).
Meanwhile, 40 percent of
all respondents said they expected higher travel costs in the coming year, up
from 34 percent in an AirPlus survey conducted in the previous year. Thirteen
percent of respondents from the newer survey expected lower travel costs.
"The fact that this
year spending expectations outstrip those for trip volumes implies growing fears
of increased costs per trip," according to AirPlus, which noted that such
a divergence practically did not exist in surveys from three previous years.
"Countries with the biggest discrepancies between trip and spending growth
expectations include the United States (38 percent and 48 percent,
respectively), United Kingdom (29 percent and 44 percent), South Africa (45
percent and 57 percent) and Australia (40 percent and 51 percent)."
Trip costs are rising as
suppliers raise prices amid moderately or markedly higher corporate demand
(depending on the market), add new fees and surcharges (especially airlines)
and reduce negotiated discounts.
More Deals, Less Value
According to survey
results, more organizations than in the previous survey have secured negotiated
agreements with hotels (71 percent versus 69 percent), car rentals (up
marginally to 53 percent) and meetings and conventions suppliers (up marginally
to 39 percent).
Airlines are the
exception, as 54 percent of respondents said their companies have negotiated
deals, down from 59 percent a year earlier. The drop particularly is apparent
in the United States, where 37 percent said they have air deals, down from 54
percent. Overall, 42 percent of the smallest spenders (with annual travel
expenditures no higher than €500,000) had preferential agreements with
airlines, down from 49 percent in the previous year.
Analyzing discount
levels, AirPlus wrote that "there seems little doubt the travel
negotiating climate is becoming more challenging for the buyer." For
example, the average corporate airfare discount reflected in the new survey was
15 percent, "down from a consistent 18 percent to 19 percent for the past
three years," according to the study. "Airlines seem to be becoming
much more careful about their discounting, perhaps explaining in part why
travel managers foresee the cost of flying rising."
The average discount
secured from other travel suppliers by the survey base similarly dropped, to 16
percent from 18 percent the previous year for hotel rates and to 13 percent
from 14 percent for meetings and conventions. The average car rental rate
discount was stable at 15 percent.
Given stingier supplier
discounts and other upward pressures on travel costs—as well as pervasive
economic uncertainty—"it comes as no surprise that travel managers in
every country participating in the study continue to consider reducing costs as
their number one priority," according to AirPlus. Cost reduction received
an aggregate score of 1.7 out of 5 (on a scale where 1 is a "most
important" priority), well ahead of supporting travelers (2.9), optimizing
internal processes (3.2), introducing travel policy guidelines (3.5) and
reporting costs to management (3.5).
Other Findings
The AirPlus survey
collected responses on a variety of other travel management topics.
• Travel Policy - Eighty-two percent of respondents indicated their
organizations have a travel policy (including 67 percent who said that policy
covers their "entire travel program"), up from 76 percent a year
earlier."Nearly all companies
with policies say they monitor compliance (89 percent)," AirPlus wrote.
"Some countries are close to 100 percent, including the United States (98
percent) and Germany (97 percent). The main exception is China ... where only
60 percent of companies with a policy check compliance." Overall, 45
percent of respondents said they expect travel policies to become more strict
this year, while 4 percent expected them to be relaxed.
• Green Travel - Based on survey findings, AirPlus determined that
"adoption of green travel policies and CO2 offsetting appears to have
stalled." Twenty-three percent of respondents indicated that their
organizations' travel policies are "reflecting climate protection issues,"
up by one percentage point from a year earlier. Travel managers from Spain (8
percent) and the United States (9 percent) were least likely to indicate that
their companies link travel policy to environmental concerns. Twenty percent of
respondent organizations are financially contributing to offset travel-related
carbon emissions, up marginally from the previous two years.
• Travel Management's Role - On a scale of zero (no systematic travel
management) to 10 (optimal travel management), survey respondents on average
rated their organizations at 7.2, down marginally from 7.3 a year earlier.
"There was little variation according to expenditure volume, ranging from
7.1 for low spenders to 7.4 for high spenders," AirPlus reported, noting
that travel managers in China and Germany rated the state of travel management
in their companies at a relatively low 6.7.
Conducted by market
research firm 2hm, the AirPlus survey included responses from Australia,
Austria, Belgium, Brazil, China, Denmark, Finland, France, Germany, Italy,
Mexico, the Netherlands, Norway, Singapore, South Africa, Spain, Sweden,
Switzerland, the United Kingdom and the United States. All respondents are
described as travel managers, though 57 percent (and 34 percent of those at the
biggest spenders) officially are personal assistants or secretaries.