Corporate travel transaction value for Flight Centre Travel
Group have recovered to pre-pandemic levels, and the travel management company
said they will stretch beyond that baseline in the year ahead.
In its earnings report for the 2022 fiscal year, which ended
June 30, the group reported that a combination of increased volumes and higher
travel pricing for its corporate business—which includes FCM and the
SME-focused Corporate Traveler—pushed it to the 100 percent total transaction value
recovery level in June, six months earlier than it had expected. Total
transaction value for customers that have been with the group throughout the
pandemic recovered to 78 percent of pre-pandemic levels in June, with new
customers signed since the pandemic's onset making up the difference, Flight
Centre's global CEO for corporate travel Chris Galanty said in an earnings call
on Thursday.
As of December 2021, pre-Covid-19 customers' total
transaction value had recovered only to 33 percent of 2019 levels, according to
the group.
The continued recovery even amid such challenges as
increased flight delays and cancellations and slower processing times for
passports "shows the resilience of the corporate sector," Galanty
said. "Despite all of this short-term friction, there has been a really
active return to travel."
By December, the group expects total transaction value will
exceed pre-pandemic levels by 10 percent. The projected total transaction value
for pre-pandemic customers in December is 73 percent of 2019 levels—a lower
percentage than June reflecting expected lower travel costs as the
supply-demand equation balances out. The balance is expected to be made up by
new customers, including some that have signed but have not begun trading with
the group.
By the end of the 2023 fiscal year in June, Flight Centre
projects total corporate transaction value will be 20 percent above
pre-Covid-19 levels, even with a market recovery to only about 70 percent of
pre-Covid-19 levels. That also takes into account current requests for proposal
in the final stages that the group expects to win, according to Galanty.
Flight Centre currently is being "invited to more RFPs
than ever in [its] history," which Galanty said stemmed from industry
consolidation leaving fewer choices of TMCs equipped to handle large corporate
accounts.
Total corporate transaction value in 2022 was evenly divided
among the Australia-New Zealand, Americas and Europe, Middle East and Africa
regions, each representing about 30 percent of total corporate transaction value.
The group expects the Americas and EMEA both will overtake Australia-New
Zealand "in the near-term" given the group's "small but growing
market share" in the larger regions.
Asia made up the balance of 2022 total transaction value,
including FCM's
new joint venture in Japan. Expectations for the 2023 fiscal year do not
anticipate major recovery in Asia, Galanty said.
"This isn't requiring for China to open up, or
Japan," he said. "We can't predict any of that stuff. This is just
accepting the world as it is today."
The group's corporate business also turned an A$13.5 million
(US$9.4 million) profit for the 2022 fiscal year due to a strong fourth quarter,
according to the group. The full group reported a loss of A$183.1 million
(US$127.8), an improvement of 46 percent compared with the previous fiscal
year's loss. The group saw a "modest profit' in the second half of the
year, which helped offset losses in the first half when global travel
restrictions were more prevalent.
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