Corporations reassess travel programs as economic challenges become reality in 2009.
Corporate travel managers worldwide are feeling the pain of the economic slowdown. Many travel managers are reassessing their travel program to account for this new equation, according to the Wire’s February survey of corporate travel managers. However, on the bright side, the uncertainty from Q4 2008 has resulted in new savings opportunities in Q1 2009. Among those surveyed, nearly 84 percent have already implemented changes to their travel programs since Q4 2008 or are looking into the opportunities right now.
Other results show traveler compliance is also a strong focus, with more than 76 percent of the surveyed travel managers looking at stronger mandates. Policy adjustments that address new travel market realities are next at just over 71 percent and preferred contract re-negotiation a strong third, with more than 64 percent of travel managers looking for additional savings as airline, hotel and ground transportation markets continue to shake out.
Indeed, market volatility contributed to a protracted contract season for corporate travel professionals. Many travel managers were slow to finalize agreements. Starwood Hotels reported in January that only 70 percent of corporate contracts were finalized at that time despite the fact that negotiations traditionally begin in early fall. Analysts encourage corporate travel managers to look at Q4 hotel activity as a basis for renegotiating contracts for 2009 or going after additional value-added benefits even if annual contracts have been finalized.
However, the airline industry was tagged as the market segment most difficult to pin down at over 61 percent. While fuel costs and capacity threatened to raise ticket prices at an historic pace in 2009, dampened demand in both the business and leisure markets has countered these increases. Travel managers have also seen some relief though, with fuel surcharges, especially on transatlantic routes, starting to come down. Most analysts now predict modest rate increases on most domestic routes in North America of 2 percent to 5 percent. Travel managers can look for rate increases of -1 percent to 4 percent on international routes originating in North America.
As travel budgets continue to undergo immense scrutiny and cuts, demand management initiatives and travel alternatives have become two more areas of significant focus in 2009.
Additional Resources:
Procurement.travel, January 29 News Brief
Smith Travel Research U.S. Regional Performance Recap ’08
Smith Travel Research Global Posts Year-End, Dec. ’08 Data
Advito 2009 Industry Forecast Update
Download:
AirPlus, The Wire, March 2009
Video:
Richard Crum, AirPlus US President comments on the survey results (MP4, 8.27 MB)
See also Video-streaming
Survey Methodology- For this issue of The Wire…from AirPlus- AirPlus International in cooperation with ProMedia.travel surveyed 143 travel management professionals in North American and Europe from February 9-20, 2009.
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March 5th, 2009 at 16:51 PM
Position: Financial Manager
Very interesting results. Our company is in the middle of reassessing our travel policy right now so it is helpful to be able to ‘benchmark’ against others.
March 7th, 2009 at 03:54 AM
Position: Publisher, www.TravelingMom.com
I could not find any corporate Traveling Moms at the conference I spoke at last night b/c the women I spoke with worked for major companies who have a travel freeze until further notice. As corporate moms with families at home, they were thrilled to use video conferencing.
March 10th, 2009 at 16:54 PM
Position: Consultant
I can see the impact of the results because some industries that rely on corporate travel to fuel their sales are now having to evaluate the way they were traveling in the past (first class, business class, carrier, etc.). Also, a lot of the commercial carriers have restructured their marketing and sales initiatives to mirror todays corporate traveler.