Outlook 2020: Eyes wide open

What does the year ahead hold for buyers? Despite uncertainty, BBT’s experts have a few pointers to upcoming developments

Brexit may or may not have happened between writing this article and the publication of this issue but either way, as we enter 2020, challenges surrounding exchange rates, borders and visas will escalate.

It’s not all bad news, however. In terms of the bigger picture, the International Monetary Fund forecast global GDP growth of 3.5 per cent for 2020, up from 3.2 per cent in 2019. But, as a caveat, the IMF said any growth will be “precarious, presuming stabilisation in currently stressed emerging market and developing economies, and progress toward resolving trade policy differences”.

The corporate travel sector is no stranger to uncertainty, but here our industry experts attempt to set the scene for those areas that, theoretically, remain in their remit.

Fares and rates
Prices, like helium balloons, always seem to go up no matter what is happening in the world, although things are moving only slowly north in the UK and Europe.

BCD Travel’s 2020 Industry Forecast reports that demand for air travel is still growing and fares will rise in most markets in 2020. Intercontinental fares from Europe are predicted to rise by 1 per cent.

Hotel rates in key cities will only experience modest increases, according to American Express GBT’s Hotel Monitor 2020. In Europe, “low growth, and uncertainties about Brexit and the general global economic outlook take their toll on demand” while hotel development in Europe is at a record high.

American Express Meetings & Events predicts meeting spend in Europe will increase by 2.1 per cent in 2020. The number of events is also expected to increase by 1-2 per cent, with client/customer advisory board meetings expected to grow most of all (1.8 per cent).

Car rental rates are expected to rise by 1 per cent globally, predicts the 2020 Global Travel Forecast from CWT and the GBTA.

Payments
Comedian Ken Cheng’s money joke – ”I’m not a fan of the new pound coin, but then again, I hate all change” – was named the best at the Edinburgh Fringe Festival in 2017. With contactless making huge strides, future generations may not even understand what he is talking about.

Yet 2020 might see a slowing of the adoption of contactless. The Strong Customer Authentication provisions of the Payment Services Directive 2 came into force in mid-September. Extra levels of authentication are required around card payments to reduce fraud and users of contactless card payments may now have to type in a PIN after every few transactions as a result. This payment friction is expected to increase in 2020.

We have a 10 per cent year-on-year target to reduce carbon emissions. That is a big reduction

Accommodation
In 2020, Airbnb is set to list on the stock market. Yet Airbnb faces new challenges from OTAs and traditional hotel chains, argues Patrick McDonagh, Clarity’s chief executive. “OTAs, such as Booking.com, are offering similar kinds of product, and corporates are more comfortable with those as a first port of call. We also know there is a trend in the hotel industry to differentiate with new offerings to audiences they may have lost to Airbnb.”

Travel manager Jef Robinson says he expects to see more accommodation options come into TMC online booking tools to address duty-of-care concerns. “We see that many travellers still book outside policy in order to arrange accommodation which may not meet security standards. By increasing the TMC OBT options, the industry should see additional compliance,” he says.

Sustainability
Greta Thunberg has focused attention on the environment, and corporates are showing signs of looking at sustainability more closely. “Sustainability went on the back burner for a while,” says Areka’s head of consulting Kate Watson. “I think it is absolutely on corporate radars now, along with traveller wellbeing, and they have those in their strategy plans for 2020.”

Video technology company Synamedia also has a big focus on sustainability for 2020. “With the need to reduce emissions by 2050 we are doing everything we can from a company perspective to make sure they working. Certainly with the recent news and Greta Thunberg’s press conference, that definitely puts it to the forefront of the programme,” says Nikki Rogan, global travel manager.

State of readiness

Kerrie Henshaw-Cox, global category lead at AstraZeneca, on how her company is preparing for Brexit

“We have a Brexit team. One of our key principles as a research and development company, as a producer and manufacturer and a transporter of drugs, is that we are getting ourselves into a ‘state of readiness’, whether that is managing stock or ordering patterns or considering transportation and what we can do with the freight and critical components of a drug. The state of readiness is a term we need to filter down into travel management. Can we be ready to advise our travellers? However, there are so many unknowns. What passports and what visas will we need, for example? We have asked our suppliers about their readiness too, including British Airways, who have their own Brexit team.”

Sustainability is also “really starting to drive decisions” says Kerrie Henshaw-Cox, global category lead at AstraZeneca. She says: “We currently report on lowest logical fare, but I see that changing to what your carbon emissions are for you or a business unit. Are they better or worse than last year? When you’re in a successful organisation, there is generally a trend towards growth. There is conflict there about being more sustainable and driving the business, but AstraZeneca now has an absolute focus and commitment to it.

“I spoke to one of the vice-presidents and he wants travellers to always think of alternatives to travel. We have a 10 per cent year-on-year target to reduce carbon emissions. That is a big reduction.”

‘Everyone is feeling budget pressure’

The universities sector also has its own specific issues for 2020, reckons Jayne Thorn, category manager, corporate services of the Southern Universities Purchasing Consortium (SUPC), which represents 135 universities, educational charities and further education colleges.

 

“Everyone is feeling budget pressure. All have been hit with pretty serious pension contribution increases, so it is an issue for everyone in the sector,” she says. “Non-EU student numbers are in limbo and there is increased competition for students. There are a couple of difficult years coming up.

 

“One of the biggest challenges for us is maverick spend. Every aspect of it – hotels, trains, air – all come with transaction fees whether on or offline,” says Thorn. “To some extent, academics with research budgets can still pose a challenge. They feel like it is their money. But this can be a positive; they are protective of it and treat it as their own.

 

“Buying travel is very emotive. We are all consumers, and so we’re all armchair experts. Academics know their spend is audited and grant bodies will check how that money is being spent. If not managed appropriately, it can put grants at risk.

 

“Our focus is in giving information to travel bookers, particularly those who say, ‘I can get it £2 cheaper booking directly with the airline.’ It is about educating bookers and end-users on what the transaction fee provides – flexibility and emergency help if there are tropical storms or terrorist

She adds: “We are going to have to stop travelling how we used to. That has to come from the top of the business. As I like to say: ‘If we always do what we have always done, we will always get what we have always got.’”

The year 2020 offers some significant challenges to travel buyers but also some great opportunities to innovate. This requires buyers to be brave and Henshaw-Cox’s words here should act as a spur for action – don’t do what you always have done.

Air travel
Every travel buyer seems to have NDC on their mind. IATA has set a target for a group of 21 “leaderboard  airlines – which includes British Airways and Lufthansa – to handle at least 20 per cent of their sales through an NDC connection by the end of 2020.

Synamedia’s Rogan says that as this deadline approaches, buyers need more clarity – on both pricing and how they can keep things under control. “The airlines may be offering things, such as lounge passes, that we might not want included. There is no guidance on how that is going to work,” she says. “Also there is the negative impact on the ease of the flow of the travel booking. Where bookings have been made on an NDC platform, to make a change you have to call various call centres.”

While NDC is at top of mind, others are thinking about other aspects of air travel. AstraZeneca, for example, is looking at being more dynamic with air. “We have air route deals in place for two years. We are looking at our use of route deals and we now have constant monitoring of what we are paying. If it was not the best deal, why not?” says Henshaw-Cox.

Technology
Reshopping tools have been all the rage this year but scepticism about the value they provide will increase in 2020, argues Areka’s Watson: “Corporates are becoming suspicious of reshopping because it is not particularly transparent and TMCs are making big profits. One of the questions we have is whether they are real savings or should they have found a cheaper fare to start with?”

But technology will continue to be of huge importance for travel managers in 2020 and is helping some organisations to change the way they operate. Henshaw-Cox says AstraZeneca is running a chatbot pilot aimed at saving 15-20 per cent of travel managers’ time, while travel buyer Jef Robinson predicts simplified “small meeting” technology will become more widely available in 2020, “allowing sourcing and booking without the usual full RFP and contract negotiation process”.

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