ANALYSIS: October 22 2009
Industry forecasts suggest that next year is likely to be much the same as this year with some price rises but still a buyer's market for both air and hotels deals. But there is also evidence that the recession is fundamentally changing the industry
Three major industry reports thumped onto desks this week: one from the National Business Travel Association (NBTA), one from AirPlus International and one from Advito.
In that they all predicted moderate variations in prices next year, they send the same message that next year will, like 2009, be a buyer's market. The 2010 Industry Forecast by Advito, the consulting arm of BCD Travel, positively enthuses that buyers can prise "excellent" deals out of both airlines and hotels next year.
There is even a suggestion - which hoteliers may read with clenched teeth - that re-negotiating could bring impressive discounts.
But if 2010 is going to be roughly more of the same as 2009, the report from Advito and the AirPlus International Travel Management Study 2009, which delve deeper than the NBTA survey, more interestingly consider how the recession has changed business travel management.
Richard Crum, president and ceo of AirPlus, goes as far as to say that the economic crisis has "transformed the marketplace from when we launched the study back in 2005". He points to evidence that the tough climate is making companies "much more professional about their travel management".
This includes a more comprehensive use of travel policies. In particular the industry's big travel spenders using more professional tools and processes, including policy, negotiated agreements and analytical tools, to help them cut travel.
The implication here is that instead of blunt across the board cuts, they are more sharply targeted at trips which are "unjustifiable" or can be seen to produce little in the way of ROI.
AirPlus said firms were demanding that every penny spent be ruthlessly analysed and justified, supplying as examples the rise in the number of companies with travel policies covering all aspects of travel manmaagement from 57% in 2008 to 70% now.
A growing number, 58% from 50% also expected these policies to get tougher which suggests the increased scrutiny is not a passing fad. AirPlus also argues that the return of the negotiated deal, in part at least, means that improved compliance has increased a company's leverage with suppliers.
Buyers are also making greater use of special tools to study spend which has the fingerprints of procurement over it.
This professional approach is also highlighted by Advito which names strategic travel performance management as one of its eight key trends for 2010.
Corporations increasingly expect their travel department to provide strategic reporting, it said predicting that 2010 will be the year when "the travel industry increases its efforts to develop useful strategic KPIs that go beyond familiar pricing hallmarks".
The problem here, as Advito points out, is whether there are any KPIs around which can help measure progress towards a company's strategic goals.
|Mary Ellen George|
There are current studies - Advito mentions one of the two - which are trying to measure the ROI of business travel but it neither has, so far, produced anything which could be called an industry acknowledged standard measure. The search is still on.
But Advito said there are other realistic KPIs including "expense productivity" by which companies measure their travel spend in relation to increased corporate revenue. Some major travel spenders are already doing this to see if their budget is at the right level.
A second new KPI, Advito said, travel management service coverage. Here companies collected data from several sources, not just TMCS but also card companies, expense management systems and financial systems.
This gave them a better understanding of just how much of their travel spend was actively managed thus leading the way to possible savings. Advito stressed this was in its early stages and was "far from fully developed."
This may be the case but it does point to a very different, far more scientifically focused approach to travel management than was in place before the recession took hold. Whatever emerges at the end of it, whether the travellers come back in the same numbers or whether travel alternatives take a firm hold is too early to say.
But what does seem clear is that business travel management is undergoing fundamental changes which are unlikely to be reversed once the recovery is in full swing.