Corporate Travel Extracting Value in a Recovering Market Chris - - PowerPoint PPT Presentation

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

3.6% 6.3% 10.6% 1.9% 8.1%

1.0% 1.6% 13.2% 2.5%

• 0.2%
• 5%

0% 5% 10% 15%

Europe North America ASPAC Middle East Global

Capacity Traffic

Source: IATA

Airfares: likely outcome ‐ 2011

2.0% 2.5% 4.0% 3.0% 4.5%

5.5% 5.0% 5.5% 2.5%

6.5% 0% 2% 4% 6% 8%

Europe North America ASPAC Middle East Africa

Economy Business

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 4th in a year

Average Daily Hotel Rates 2010

Africa +7.5% Europe ‐3.2% Nth America ‐1.6% Sth America +4.5%

• M. East

‐2.6% ASPAC ‐3.0%

Source: Advito

Predicted Hotel Rates 2011

Africa +4.0% Europe +2.5% Nth America +3.5% Sth America +6.0%

• M. East

+4.5% ASPAC +5.0%

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

• ffline 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 3rd 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

• r:

enquiries@3sixty‐global.com Tel: +44 (0) 8456 808 360