Special Focus

Corporate Travel

Asia’s largest GDS Abacus takes a look at the long term affects on corporate travel of the downturn in 2009.

‘No pain no gain’ is generally a phrase used by those embarking on a new fitness regime, but could equally be applied to the recent experiences of the corporate travel segment where in 2009, after years of ambivalence towards corporate travel management, businesses were forced to wake up and adopt ‘boot camp’ style work-outs for their travel budgets. As a result of this enforced industry health kick, many organisations have adopted stricter corporate travel policies helping the segment to emerge in 2010 in better shape than ever before.

Robert Bailey, President & Chief Executive Officer of Abacus International explains, “The world-wide economic downturn of the last year prompted a remodelling of the corporate travel segment. Whilst this extreme make over was painful, our estimates suggesting that bookings in the segment shrank by as much as 20 – 30%, the hardships of the period have had long lasting benefits, not least of which has been increased efficiency.”

He continues ”This is particularly true in Asia where the adoption of travel management systems is a key trend not only helping to drive a return to healthy volumes of corporate bookings but is also ensuring that the segment will never be at risk of getting out of shape again.”

It is the positive steps taken by the segment to improve their form and function that is leading to growing confidence that corporate travel is not only about to experience an economic turn-around but that a paradigm shift may be on the cards, changing the way in which the segment operates for good

2009 the year when corporate travel stood still
But before we reflect on where we are going, lets us consider where we have been. The economic decline of the last year caused every company to stop and think about how they do business, but perhaps one of the first victims of the downturn was the ability for business executives to travel freely. A simple business trip was suddenly brought into question and increasing justifications were required to defend travel spend.

Many businesses took the knee jerk reaction of halting business travel altogether and for companies who continued to allow travel, procurement managers and travel budget holders came under serious pressure to reduce costs and find alternatives. According to American Express Business Travel, the majority of companies throughout Asia Pacific made formal or informal changes to their travel policies in the last nine months, with this trend potentially continuing as businesses try to recoup further savings and improve their bottom lines.

The search for a ‘technical’ solution
For some, technology rather than the abolition of travel was the answer. Increasing usage of teleconference tools was reported by accountancy firm Accenture, declaring a return of 300% - 500% on monthly operating costs of its 30 Cisco TelePresence suites worldwide thanks to significant travel avoidance.

Similarly, traditional meeting facility providers such as hotel chains, Marriot and Starwood saw travel avoidance as an alternative source of income, stating that they would install telepresence technology in their meeting rooms to boost their meeting businesses as the world economy becomes more interconnected. Both hotel chains are currently working with various telco companies to add telepresence rooms into the various hotel properties worldwide.

Face to face meetings still matter
Yet despite enthusiasm for alternatives to travel, cutting spend completely is clearly not the solution. Research conducted earlier this year for Hilton Worldwide by National University of Singapore Business School’s organisational behaviourist and psychologist Dr Richard Arvey made this point particularly well.

Dr Arvey found that despite the increasing presence of online alternatives to meeting face-to-face, there really was no alternative to personal contact, stating in his research summary “Given the existing data and research, it is clear that face-to-face meetings are used increasingly less frequently and that there are substitution effects via the use of computer aided communication devices. However, the data indicates that meetings do indeed matter, and that the use of such face-to-face meetings has a variety of valuable psychological as well as business outcomes. It is my belief, given these data, that eliminating face-to-face meetings as an option in communicating with employees would be a mistake.”

Despite this advice, cuts to business travel costs became a necessary evil in 2009 but as Brett Henry, Vice President Marketing, Abacus International explains, this may be a trend that has since run its course. “Speaking with procurement managers over the past few months across Asia, we have been hearing that they are not likely to cut spend any further as further cuts impact morale and business efficiency, and anyway, an office full of disgruntled employees complaining that they cannot get out to meet the customers simply doesn’t make for good business.”

Mr Henry continues “Instead, what procurement managers are doing is improving their monitoring of travel spend and controlling of costs. Going forward, this will not only mean looking at the unit cost of individual trips, but the total cost of travel to a business across a given period. That’s why increasingly; procurement managers are looking beyond online booking tools and seeking out tools that can provide them with a holistic picture of the travel process in their organisation.”