Corporate Travel – Extracting Value in a Recovering Market Chris Reynolds (CIPS) Nick Hurrell CIPS, Manchester and North West Construction, 16 November 2010
Introductions and Agenda • Corporate travel trends : 2010 – 2011 • Value: Smarter Buying Travel management companies Technologies • Where to next ?
2010...The market is growing • Business Travel Growth ‘Steady but strong’ A 12% increase in air travel transactions exceeds 2008 levels for the first time • BA back in the Black Before tax profit of £158 million during the first half of this financial year • Ryanair profits leap 17% increase in half year net profit to €452m • Capacity cuts boost Aer Lingus profits 35% increase in profits in July, August and September. • Virgin Trains increases Market share Manchester ‐ London: 69% to 85% • UK Hotel occupancy rates growing London 87%, Regions 75%
The Market Outlook ‐ Air 2.5% Global 8.1% Middle 13.2% 1.9% East Capacity 1.6% ASPAC 10.6% Traffic North 1.0% 6.3% America -0.2% Europe 3.6% -5% 0% 5% 10% 15% Source: IATA
Airfares: likely outcome ‐ 2011 2.5% Africa 4.5% Middle 5.5% 3.0% East Economy 5.0% ASPAC 4.0% Business North 5.5% 2.5% America 6.5% Europe 2.0% 0% 2% 4% 6% 8% Source: Advito
Airline Consolidation • Global Alliances – Star Alliance – One World – Sky Team • BA/Iberia – IAG ‘Interested’ in 12 carriers • Continental/United • North West/Delta • American: Largest US to 4 th in a year
Europe Nth America ‐ 3.2% ‐ 1.6% M. East ‐ 2.6% ASPAC ‐ 3.0% Africa +7.5% Sth America +4.5% Average Daily Hotel Rates 2010 Source: Advito
Europe Nth America +2.5% +3.5% M. East +4.5% ASPAC +5.0% Africa +4.0% Sth America +6.0% Predicted Hotel Rates 2011 Source: Advito
“Unbundling ” • 2011 ancillary revenues forecast at $22b – Ryanair alone: £600m in 2009 ! • Little transparency of cost – No like for like comparison at point of sale – Swallowed up in expenses • Latest charges – Blankets/Pillows on flights – Mileage multipliers – Credit Card surcharge on hotel bills
Value: Smarter Buying A Managed Travel Programme..... Key Drivers: • Transparency of spend • Safety and Security of employees • Pooling of volumes • Traveller Confidence
Value: Smarter Buying • Airlines: – Contract or Best deal on the day? • Hotels: – Contract is a ceiling only – Negotiate on the extras – Manage your meetings spend • Rail: – Book online and in advance
Value: Travel Management Companies Too big a focus on agency fees – Accounts for only 2.5% ‐ 5% of spend
Travel Management Companies
Travel Management Companies • Should offer online and telephone booking • Separate pricing for online and offline booking • Global TMC, smaller agent or specialist? • Choice of payment method
Travel Management Companies • Mandate or encourage ? • Compliance to booking process and preferred suppliers • Reduce leakage • Consistent data
Travel Management Companies • Multi channel sources • Capture last minute reductions • Strong relationships with their suppliers
Travel Management Companies • Online and real time data • Understand data sources • Ability to hand off to 3 rd parties (traveller tracking, expense management, etc)
Travel Management Companies The right person is • vital – Thought Leadership – Culture fit – Confidence Should provide travel • alternatives Offer additional • products only when they are right for you Can be outsourced •
Where to next?
New Aircraft = More unbundling Flexible Cabins: Personalised Service...Unbundled pricing
Rail ‐ more prominent • Other Operators will use High Speed 1 (Channel Tunnel) • High Speed 2 likely • Airlines / Rail will market together • Increasing Road Congestion and Environmental issues
Technology (again...) • “On the go” booking • Video Conferencing? • Social Networking – No longer for the under 30’s...
Thank You... Questions ? Contact 3SIXTY Global at: chris.reynolds@3sixty ‐ global.com or: enquiries@3sixty ‐ global.com Tel: +44 (0) 8456 808 360
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