2009 European Business Travel Barometer

Nov 20, 09 | 1:56 am

American Express Business Travel today announced the results of its 2009 European Barometer, during its 19th Espace Voyages Professionnels (EVP) in Paris, the leading business travel event in Europe. The Barometer highlights the impact the global economic crisis has had on business travel expenditure, revealing an 18% fall in budgets reported on average. Sixty-six percent of companies report a reduction (-31%) of their travel budgets, 23% have witnessed no change and a mere 11% have noted an increase (of +23%).

‘Faced with an unprecedented economic crisis, we are seeing a new normal emerge with corporate behaviour. We've seen travel policies tighten up, purchasing controls increase and employee travel driven by client retention needs where as a focus was on driving new business. Travel management companies (TMC) play a key role in helping companies maximize savings without sacrificing the tangible benefits of a robust travel and entertainment program', said David Herrick, Senior Vice President & General Manager, Business Travel EMEA.

Business travel prioritised for maintaining existing clients and key markets

The Barometer reveals a marked change in the reasons companies give for employee travel. During the past year organizations have placed greater importance on using T&E spend for maintaining existing clients. 

Ahead of trips for internal meetings (29%) and meetings with suppliers (8%), on average, 57% of European companies' travel budgets are dedicated to maintaining or acquiring clients and markets. This is a trend that affects small-to-medium sized enterprises (61%) more than companies with budgets exceeding €20M (47%).

Companies opt for 'best buy' strategies as the principal means of achieving immediate savings

Companies have introduced significant measures to reduce their spending.  'Best buy' strategies lead the way in terms of measures that have immediate effect, with restricted fares or advanced reservations also being cited.

Smaller companies with travel budgets of less than €5M tended to prefer the immediate effects of 'best buy' strategies, the use of the preferred TMC, and controlling seminar and conference expenditure. Where budgets exceed €20M, companies have combined more structural measures such as the renegotiation of supplier agreements, the increased use of preferred TMC with 'best buy' and the increase of restricted fares.

TOP 10 T&E Saving Practices

• Best buy strategies

• Use of preferred TMC

• Renegotiation of supplier agreements

• Use of alternatives to travel (video conferencing)

• Tightening of travel policy

• Advance reservations

• Increased use of Self Booking Tools and the Internet

• Greater use of preferred suppliers

• Use of restricted fares

• Control of MICE budget

European companies have tightened their purchasing control and travel policies

Supplier negotiations are becoming increasingly global, with the majority identifying air as the top category (81%) for international supplier agreements. The globalization of agreements, which had already seen an increase in 2008, is now at 94% for companies with budgets exceeding €20M. 89% of companies surveyed say that they now have a single travel policy and are including additional elements within the policy. Video conferencing is now an alternative to travel featuring among 70% of companies, and the inclusion of rules relating to incentive conferences or trade fairs, which is a cost item that has not been widely controlled to date.

Environmental policies have reduced in priority, with only 18% of businesses indicating that they have put provisions in place. 

Online usage has increased - the internet continues to gain ground as an important means of booking business travel (60% of companies said they use online tools, up from 57% in 2008). 

However, despite tighter controls, 55% of companies still give employees partial autonomy for the travel expenses they incur.

Multiple Sources of Reporting

Companies are placing greater emphasis on gathering and consolidating reporting data, with 61% reporting that they have all the business travel spend information compared to 37% in 2008.

Companies are increasingly using several sources to ensure accurate reporting.  The role of the TMC as a consolidator is acknowledged as being essential (77%), followed by corporate card providers, (41%), the internal financial system (41%) and travel suppliers such as carriers and hotels (12%).

Under use of TMC potential

Whilst 2009 has provided companies with a strong incentive to identify and activate all possible optimization routes and sources of saving, and the TMC is critical to this, only 24% have implemented an assessment to measure effectiveness (other than large corporations with budgets of over €20M).

This indicates a discrepancy between the increasing expectation of TMCs to deliver tangible cost savings and the fact that companies do not always measure their effectiveness.

Outlook for 2010

European companies are still adopting a wait-and-see attitude in view of the latest effects of the crisis. On average, only 20% anticipate an increase in their travel budget, 61% anticipate no change and 19% predict a reduction.

Forecasts and optimism vary geographically: there are countries that forecast an above-average budget increase, such as Germany (33% of companies), the Netherlands (28%) or Great Britain (23%). Businesses in Belgium or Spain expect an above-average decrease of 22% and 24% respectively, and France and the Scandinavian countries' expectations lie close to the European average.

David Herrick concludes, ‘Undoubtedly, the economic crisis has placed a significant strain on companies, who are having to think about their travel spend in a much smarter way and will continue to do so as we move into 2010.  TMCs will become increasingly relevant as companies redefine their business travel needs.'