Like most corporate travel programs, the very largest are in
a period of growth, driven by corporate profitability and an ongoing pursuit of
incremental revenue. Coinciding with travel price inflation, such growth translates
to higher spending, which in turn prompts greater scrutiny of that spending. As
a result, big organizations are leaning on their travel management companies to
uncover savings opportunities and apply technology to further optimize their
Nearly all reported T&E and air volumes showed continued
spending growth in 2011, but at a pace slower than last year's. Among 64
companies spending at least $30 million in U.S. booked air volume—most of which
are represented here in the 2011 Business
Travel News Corporate Travel 100—total U.S. T&E last year jumped on
average by 19 percent over 2009 levels. This year, the average annual increase
is projected at about 6 percent. On a global level, T&E among surveyed
organizations soared 20 percent on average in 2010, and is projected to
increase this year by another 5 percent.
[To download a PDF of
the full 2011 Corporate Travel 100, please click here. To view the digital edition of the 2011 Corporate Travel 100, please click here.]
Similar trends are observed specifically for net booked air
volumes, both at the U.S. point of sale and globally. The exception is Europe,
where surveyed companies last year on average increased air volume by 22
percent but this year expect an average retreat of 3 percent.
Overall so far in 2011, "we have been up about 5
percent to 10 percent [in transaction volume] over 2010," said Mike
Janssen, BCD Travel Americas president. "Larger clients expect a slowdown
to happen in the fourth quarter. They are taking some actions now, but most are
continuing to spend but expect to put the brakes on a little heavier starting
in the fourth quarter this year. My expectation that the 5 to 10 percent growth
over last year is probably going to go to flat, maybe slightly below last year."
Pedro Paredes, American Express Global Business Travel vice
president of client solutions, this year has observed what he called a "re-evaluation"
of travel spending, a far cry from the severe across-the-board cuts from 2008
and 2009. "As [travel] prices are going up, the C-level is getting a
little concerned," he said. "Customers are asking, 'How can we
maximize T&E budgets?' They are looking for strategies to push the buck
further and optimize that spend."
According to Janssen, prioritizing optimization also has
meant clients are investing in strategic aspects of their programs. "When
you looked at things like technologies and consulting, that is not where the
money was being spent," said Janssen. "Now it is being spent in those
Technologies drawing interest among larger clients include
pre-trip auditing, policy compliance tools, streamlined exception processes and
other automation. The idea is to uncover savings after bookings but before
trips commence, by switching to lower fares or rates and/or moving travelers
from non-preferred suppliers to preferred ones.
"Clients are looking to get data in a more real-time
fashion that allows them to drive greater compliance to their program and
determine if the traveler should even go," Janssen said, noting both an
emphasis on business travel's return on investment—i.e. focusing on
revenue-generating trips and cutting other types—and attention to traveler
safety when trips are planned to high-risk destinations.
Consulting Strategies principal Mark Walton said program
management technologies meant to enforce policy and improve behavior "have
not been as readily available, especially on a multinational basis. But they
are getting better and used more. It's a newer area, and clients are starting
to look at this more carefully."
In terms of risk management, "the expectations today on
a global basis are very hard on a TMC," said BCD's Janssen. "We have
continued to evolve our travel risk services. It's a changing expectation on
what clients need from us: A to Z on emergency services. Large organizations
have changed their focus and want to make sure it's far more robust than it
used to be, and they are willing to pay for that if they see the
differentiation in service."
A recent GBTA Foundation/Egencia study found that the
largest corporate travel buyers are more likely than smaller ones to
proactively address emergencies. Conducted between April 20 and May 7 among 651
GBTA direct members and Egencia corporate customers and prospects, the study
included 104 responses representing organizations with an annual travel spend
of $50 million or above. Among those, 92 percent indicated they have emergency
plans in place. That compared to 73 percent of respondents representing
organizations annually spending between $10 million and $50 million on travel,
and 59 percent spending between $1 million and $10 million.
Global TMC Deals: The
Devil Is In The Details
While data backs up the notion that the larger an
organization's spending volume, the more likely it will have a single,
consolidated TMC—within the United States and/or around the world—trends in how
those organizations contract for TMCs and establish service configurations are
less clear. Few generalizations can be made, but it is apparent that agency
relationships—everything from initial RFPs through program implementation—are
becoming more complex.
"We see a lot more front-end homework done in
configuration, in assignment of people, in due diligence around who is going to
work on the account," said TCG Consulting managing director Albert Taras.
He added that service-level agreements, while "core" to an agency
deal, are changing to reflect a more sophisticated approach.
Walton agreed, noting how accountability has become a more
important consideration, from both a service perspective (often covered by an
SLA) and a savings perspective (often covered by a savings agreement). "Companies
are going to their TMCs with a charge to help them save," Walton said. "The
relationship has to be defined. Almost every company has a different definition
of what savings really is and what cost avoidance really is.
"TMCs are really trying to stress reward and penalty
versus just penalty," Walton continued. "Some companies are more
accepting of that on the savings side than on the service side. On the savings
side, these agreements are becoming more difficult to put together. It's harder
to achieve hard-dollar savings today."
TMC executives corroborated that SLAs have evolved and
become more detailed. "You'll still have the customer satisfaction metrics
on operations, but you will also find ways to make sure you are holding each
other accountable," said Amex's Paredes. "Especially if they are
outsourcing roles to you, the customer wants to make sure they are getting bang
for their buck, and they'll add metrics toward savings, online adoption and
specifics related to their business objectives over the short to medium term."
Said Janssen, "It's not just telephony statistics, but
online services and how that online reservation is going to be serviced when
there needs to be human interaction, how there is going to be in-country
service and how there is going to be compliance.
"Larger clients were globally consolidating their
programs before, but in a lot of respects they were doing that to get their
start and bring compliance policy and consistency around the globe,"
Janssen continued. "It has almost been a discovery period, a first phase.
Now you are seeing clients really take that global consolidation to not just
drive consistency but also look at regional and country cultural differences.
In the RFP process, you are getting a lot more questioning and detailed
specifics on regions and countries regarding capabilities and the foundation of
operations. More clients want to get out and kick the tires in those areas.
Before, they may have just taken for granted that what is there is what they
are going to need."
Such scrutiny may be contributing to divergent preferences
on global agency configurations, with some organizations favoring regional call
centers and others considering other set-ups. Janssen suggested that regional
call centers are "maybe less preferred than they were a couple of years
ago. Clients absolutely are still looking at that, but they want to make sure
that in-country capabilities and in-country knowledge exist, depending on where
those call centers are located. A regional call center that is very
homogenized, with no ability to get some of the fares and handle nuances and
language needs will not fit for a lot of people. Those regional call centers
have to be less homogenized than they used to be."
Paredes added that an organization's definitions of
efficiency and savings—which vary—may help steer them. "For some
customers, it's the lowest-cost solution possible," he said. "But for
others, maybe a regional call center solution is not necessarily the right one.
You can't have as much interaction with specific travelers before they travel
because that might require local language and local understanding to drive the
behavior. For customers looking more to drive that behavior rather than the
transaction fee cost, they may make different choices."
There also seems to be no clear trends on travel policy,
with anecdotal evidence pointing to a loosening in some areas but a tightening
in others. TCG Consulting's Taras, for example, said some of his clients "are
more serious about policies" as they move away from guidelines and toward "more
strict, defined, exceptions-based" policies.
Janssen, however, said he has seen "a tilt" in the
other direction. Companies "are realizing that by ensuring they are
putting some of the service aspects back into the policy and managing some of
the needs of the travelers, they are getting greater compliance from those
travelers, which allows them to drive buying behavior to keep costs down. They
are trying to maintain a moderately strict policy but interject some service
Among those companies surveyed by BTN, nearly three-quarters said business-class policies this year
are unchanged. Nearly all of the remainder said they had become more
restrictive while 3 percent of the total reported less restrictive policies.
Meanwhile, the authors of the GBTA Foundation/Egencia study
determined that "companies that spend more on travel are more likely to encourage
advance purchase [airline tickets] without requiring it. However, companies
that spend less on travel tend to set longer minimum advance purchase periods,
i.e. 14 and 21 days, compared to the average. This difference can be attributed
to more realistic policies by higher-spend companies, and more aggressive
targets at lower-spend companies."
Spotlight On Hotels
The GBTA/Egencia survey also found that companies spending
more than $50 million annually on T&E are "significantly less likely
to restrict hotels by cost per night" than smaller programs, and are "also
most likely not to restrict hotels at all."
Hotels had the lowest percentage of policy-compliant
bookings (72 percent on average, according to the BTN survey) among the various travel categories. The segment is
attracting particular attention as both published and corporate negotiated
Fifty percent of those polled by BTN said hotels generally exhibited a less receptive attitude this
year than last year regarding negotiating preferred pricing agreements.
Airlines were second, with 36 percent perceiving a less receptive attitude. "It's
likely a reaction to the fact that last year even large buyers in certain
markets saw significant rate increases," said TCG Consulting hotel
practice director Kim Maschoff. "Some hotels were saying, 'We actually don't
want all your volume, the market is buoyant enough for me to fill it with other
higher-rate business.' We also saw less willingness to give last-room
availability. Last year they included Internet and breakfast, and this year
they have reduced amenities or not offered any."
Maschoff added that the latest economic cycle has brought "indications
that there may have been less opportunity to negotiate on the airline side.
There definitely has been a transfer: 'Where can we focus to make an impact in
the travel budget?' Hotels started to pop up.
"For some CFOs, it's hard to understand total market
conditions," Maschoff continued. "You see consumer confidence going
down, GDP being downgraded and what is going on in the stock market. All the
pointers are that this should be a depressed market, but that's not what is
happening in the hotel market at the moment."
This 24th annual Business
Travel News Corporate Travel 100 ranking is based on 2010 air tickets
purchased for business travel at all U.S. points of sale. Most listed
organizations provided information for use both in their specific listings and
aggregate benchmarking data, some of which is highlighted here.
Respondent organizations completed an online questionnaire;
some provided additional information in interviews. For organizations that did
not participate, BTN used industry
sources, published reports and other intelligence to compile data. Each was
given an opportunity to improve the accuracy of BTN estimates.
Fourteen firms not included last year qualified for this
list, including first-time members Boston Consulting, Covidien, Danaher, L-3
Communications and Schneider Electric. Those falling off include such familiar
CT100 organizations as Alcatel-Lucent, Boston Scientific, Booz Allen Hamilton
Equation Research posted online and tabulated results.