Business travel has always been one of the key drivers for company growth. As the second quarter gets underway, Melissa Gargagliano, head of EMEA commercial cards at Bank of America Merrill Lynch, assesses business travel behaviour and outlines the five trends that are continuing to shape the face of business travel.
1. Asia Pacific: It is no secret that business travel in Europe has been relatively steady and in some cases, even declining slightly. However this slow/negative rate of growth has been more than offset by the corresponding increase in business travel in Asia.
China, most notably, is seen as a significant contributing factor driving the increase in business travel in the region. As the Chinese government continues to invest in infrastructure projects, this has a positive effect in Western businesses entering the Chinese market, as well as Chinese firms developing global ambitions. An obvious outcome of this is the need for Chinese entrepreneurs and corporate employees to travel to meet their global counterparts.
2. Increasing adoption of virtual travel technology: Organisations big and small have embraced a wide range of virtual travel capabilities that enhance their business travel experience.
Mobile is not a trend anymore; it is an inherent tool that business travellers use as part of their end-to-end experience. Mobile check in, boarding passes and apps are now seen as integral aspects of the travel. On the payments and reconciliation side of things, companies are increasingly demanding the provision of enhanced data to facilitate easier reconciliation of business travel spend.
Traditional payment solutions such as corporate cards and lodge cards continue to dominate the payment methods, and companies are adapting single-use virtual payment solutions. These virtual payment solutions capture data required by the organisation (e.g, cost centre, department code, employee ID, project code, etc. over and above travel data) upfront, without having to rely on the TMC or the supplier to provide this data, and generate a unique 16-digit single-use card number associated with the booking so that organisations can uniquely identify the trip from the card number. In addition, virtual solutions such as Bank of America Merrill Lynch Travel Pro enable companies to book not just air, but also hotel, rail and car using virtual card solutions.
3. A multichannel approach: Companies, particularly in Europe are looking at the most effective way to travel, and are demanding their TMCs to support this strategy.
Increasingly, corporate travellers are relying on a combination of rail and car hire to get around the challenges associated with air travel, including pre-departure procedures and time, communication blackout periods in flight and landing at an airport, miles away from the city centre. Based on client feedback, we estimate that between 30 -35% of mainland European business travellers prefer alternative modes of travel, rather than relying just on air.
4. Not just scheduled air: Given the tight economic environment particularly in Europe, companies have tried to establish caps on business travel. However, face-to-face interaction is still the most preferred method of closing business deals, and companies are turning more than ever to low-cost carriers to facilitate such interactions, while driving down the costs associated with air travel.
5. Blurring of business and leisure: Rather than look at business travel as just a necessary activity in order to grow business, travellers are looking at it as an opportunity to disconnect from their frantic corporate lives.
We’re seeing a significant growth in travellers extending their business trips to include a small leisure component and look at this as a way of spending quality time with their loved ones. We’re seeing some clients encouraging their employees to travel over the weekend to take advantage of leisure fares (rather than business fares) while also using the opportunity to explore a new city and spend time with their family. This not only helps drive savings to the company, it also increases employee satisfaction.
Melissa Gargagliano is head of EMEA commercial cards at Bank of America Merrill Lynch