Wings Travel Management has reported a 15 per cent increase in business travel by its UK energy sector clients, but uncertainty around Brexit has caused slower growth in the corporate sector.
Since the beginning of 2018, Wings’ energy sector clients have made more trips, particularly to Iraq and the Gulf states, with a rise in oil prices reigniting investment in oil and gas exploration.
However, it’s not all good news across the board, according to the TMC.
Paul East, COO for the UK/Europe and Americas at Wings Travel Management, commented: “The uncertainty and status quo around decisions by the UK government concerning Brexit trade negotiations has definitely had a knock-on effect in terms of the level of growth we have seen from our UK corporate sector clients. We had forecast 7 to 10 per cent growth, but so far this year we have only experienced 3 to 5 per cent.”
Commenting on the upturn in energy sector travel, East said: “Safety is still a key factor for companies operating in Iraq, so our security sector clients are sending more employees there on contract placements of one or two months.”
The Travel Management Company: An agency which manages business travel for a company. says it has also seen a 10 per cent increase in travel to the Far East, particularly Singapore, Hong Kong, Japan and Vietnam as companies explore new business opportunities in a bid to prepare for an unfavourable Brexit trade deal.
Additionally, booking patterns in the financial services sector are shifting, with companies increasingly opening new offices in the Netherlands and Belgium while retaining a London base in post-Brexit preparations.
East continued: “Our larger financial clients are keeping their options open so that they have the infrastructure in place, as no one knows yet what the Brexit trade agreements will ultimately mean for UK plc. Large corporates have the means to take this approach, but for our SME clients, the situation is much more challenging.
“Currently it is almost impossible for SMEs to make long-term business plans, particularly in terms of export growth to European markets. It is therefore important for travel managers to consider potential opportunities and alternatives so that once the Brexit trade situation becomes clearer in six months’ time, they will be ready to take advantage of those opportunities.”
According to Wings, geopolitical instability is continuing to add to the complexities of business travel and may be deterring companies from moving into certain markets.
East said: “Diplomatic relations and economic sanctions are constantly in a state of flux, making it impossible to second guess what will happen next. We expected to see growth in travel to Iran, but now that the USA has introduced sanctions, that growth has stalled.
“Similarly, for destinations such as Russia and Cuba, one moment sanctions are lifted, the next they are in place. Under the Obama administration, Cuba was forecast to flourish, but the Trump administration has now re-instated sanction. Companies who go into these markets need to invest a great deal of time and money to make it commercially worthwhile. They are holding back due to ever-changing geopolitics from world leaders and this ultimately holds back business travel growth.”