Businesstravelbarometer2010 Eng

EUROPEAN BUSINESS TRAVEL BAROMETER 20th edition – November 2010

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EUROPEAN BUSINESS TRAVEL BAROMETER 2010

by Groupe Concomitance





The 20th American Express Business Travel Barometer is released at the end of an

uncertain year in economic terms, with GDP growth of around 1% forecast for the

European zone. In this context, the barometer indicates that European businesses'

T&E budgets are shrinking, although without showing as significant a decline as in

2009.

40% of businesses thus report budget cuts for 2010, compared to 66% in 2009.

Furthermore, the percentage of increasing budgets has almost tripled from 11% to

31%. The worldwide economic downturn is the primary cause of reduced expenditure,

in the face of internal measures to reduce travel costs.

Paradoxically, economic imperatives are also behind budget increases, not least the

need to develop new clients and markets and to retain business.

The majority of T&E expenditure is dedicated to maintaining and developing

business activity. This year, European companies devoted 63% of their T&E expenditure directly to

maintaining and developing business. Even so, intra-company business trips remained

the largest travel category for European businesses in 2010.

Businesses support ‘strengthening TMC usage’ as the primary means of making

savings.

Although the principal Levers of optimizing expenditure remain the same, their

hierarchy has altered during 2010. Businesses seem less opportunistic in their

attempts to reduce costs and find potential savings, irrespective of their expenditure

levels. As a consequence, three of the four primary Levers of optimizing T&E

expenditure cover negotiations and the strengthening of supplier relations, including

those with the TMC. Strengthening TMC use became the primary method of optimizing

expenditure in 2010, ahead of the ‘best buy’.

Businesses are strengthening and expanding monitoring processes, particularly

regarding their staff.

The trend towards generalization and expansion of travel expenditure control

measures, which began in 2008, is continuing on several levels:

• Travel Policies which reinforce each other and which are better implemented:

93% of the responding businesses reported currently having one sole travel

policy. Travel policy coverage has increased in virtually every area this year,

with a record 67% of businesses showing a travel policy compliance rate above

70%.

• Businesses have a more mature approach to the use of expenditure control and

monitoring procedures: 93% of businesses reported having implemented T&E

monitoring and control procedures.

• ‘Self booking tools’ (SBTs) are being used for more than just bookings: SBT

usage and performance both remained constant compared with 2009, and SBT

applications have been extended above and beyond the booking process itself

with the introduction of functions to manage travel orders and expense forms.





Greater monitoring of employee travel and expenditure

The barometer found that 97% of expenditure initiated by employees was subject to

authorization to a greater or lesser degree, and this year showed a trend towards

stringency with 25% of businesses reporting that all employee expenditure was subject

to prior approval.

At the same time, in order to comply with provisions on corporate social responsibility

relating to the safety of staff while on business trips, 74% of respondents reported

having implemented measures to remain in contact with their employees.

44% of businesses (up 20 percentage points on 2009) evaluated the performance of

their TMC. The four most important criteria this year were the quality of service, the

agency’s ability to demonstrate its economic performance, cost control and data

consolidation.

Businesses reported greater usage of TMC services across the entire value chain, with

2010 showing increased use for diagnosing and improving the purchasing process (up

14 percentage points on 2009) or for new elements such as workflow auditing and

analysis (36%), or for implementing geolocation solutions for travellers (22%).

New business challenges

Businesses as a whole are continuing to increase and combine their payment means

and methods. However, the barometer also notes a slight trend towards rationalization

of these means through more marked use of corporate cards, replacing internal cost

generating procedures such as expense form reimbursement.

As regards expenditure monitoring, businesses received more regular reports on their

expenditure in 2010. Even so, 60% had received data on all their travel expenditure,

which furthermore came from a variety of sources.

The rationalization of payment methods, data sourcing and reports is a major

challenge, particularly for establishing the total cost of a business trip.

Ultimately, businesses must develop and assess the efficiency of new alternatives to

physical travel, such as telepresence or video conferencing. 40% were unable to

measure the benefits of these solutions compared to face-to-face meetings, and thus

were equally unable to calculate returns on investment.





Prospects for 2011

Another strong trend this year is the importance of personal technology in the business

travel industry value chain. Around 50% of businesses reported that the use of mobile

telephones, smartphones and laptops for business travel would increase over the

coming months.

When asked in September 2010 about their expectations for the coming year,

European businesses took a relatively prudent view of 2011.

They suggested a slight recovery in T&E expenditure, with an increase of 3%. On

average, 34% expected their budget to rise, 65% thought it would remain constant and

11% foresaw a reduction. As for 2010, it was the large businesses that predicted a

greater than average percentage of budget increases: 61% rather than 31%. This

disparity are visible on a European country-wide level: Germany and the

Scandinavian countries take the lead with 50% of budgets increasing, compared with

less than 25% for countries such as Spain and France.

However, there is one point in common: businesses unanimously reported that this

budget growth would primarily be linked to the development of business and

commerce outside the European zone.

A prudent recovery for the business travel industry

Since the third quarter of 2010, the international economic situation has been

characterised by an increasing number of indicators suggesting that the pace of activity

in the global economy is beginning to revive, following a period of recession which

began in the last quarter of 2008. However, the IMF is projecting extremely sluggish

growth (1%) for the European GDP, with strong disparities within the eurozone: 2.1%

for Germany, 1.5% for Italy, 1.3% for the UK, 0.9% for Spain and 2.1% for France.

In line with this modest economic revival, the business travel sector remains highly

volatile and difficult to assess. Indeed, what proportion can be attributed to structural

causes such as the reduction of business T&E budgets, and what to events such as the

volcanic ash cloud which paralyzed the European airline industry for several days?

In the Airline sector, there have been signs of a post-recession rebound for the

international airline industry.

Following the serious impact of 2009, the Airline sector has recovered in 2010.

According to IATA, the International Air Transport Association which encompasses

230 companies worldwide, the sector’s cumulative net profit could reach 8.9 billion

dollars, as opposed to losses of 9.9 billion the previous year.

This recovery has been driven for the most part by China and India and to a lesser

extent by North America. However, European businesses continue to lag behind, at a

particular disadvantage due to the weak European economy.





In order to deal with an environment which remain unstable, airlines have focused on

two major approaches:

• They are continuing to reduce their fixed costs through links with other

international companies, the main objective being to rationalise flights by

implementing joint ventures or alliances (Air France and China Southern;

America Airlines, Iberia and British Airways; or Atlantic Plus-Plus, bringing

together United, Continental, Lufthansa & Air Canada). At the same time, they

are managing their seat capacity cautiously, in particular on certain routes with

a view to prioritizing hubs on intercity connections which had been abandoned

to low-cost airlines. Seat capacities on European flights have grown by around

10% - this has been driven largely by the Middle East and Asia, while

capacities for intra-European routes have only increased by 7%.

• They are developing a face value policy through moderate price increases in

business class (7% increase on long-haul flights and 4% increase for medium

distances) and in economy class (13% increase on long-haul flights and 13%

decrease for short-haul).

Businesses are also attempting to expand their additional sources of revenue by

implementing specific surcharges known as ‘ancillary charges’ on certain types of

services, such as additional luggage and preferential seating.

This trend will need close monitoring in 2011 as it could impact upon the development

of business expenditure. In fact, according to the World Airline Report, this revenue

should be worth around 18.4 billion euros in 2010, increasing exponentially.

In the hotel industry, markets this year have been affected to different extents by an

increase in the occupancy rate and a worldwide drop in average daily rates (ADR) of

around 3% in the first half of the year.

The figures vary according to destination and indeed city markets.

By way of example, in June 2010 the French market saw a 2.6% decline in the average

daily rate against a 4% growth in occupancy rate.

The daily rate is also falling in markets such as Denmark, Finland and Spain with

drops of 16%, 9% and 6% respectively.

It should be noted that in certain markets the price decline was ‘compensated for’ via a

realignment of the VAT rate. This is notably the case in the UK market which saw

VAT increase from 17.5% to 20%, against a 1% price increase and 4% growth in the

occupancy rate.

Conversely, certain countries such as Germany or Sweden saw price increases of 8%

and 9% during the first half of 2010.

This downward trend in prices is expected to reverse in the second half of 2010 in

response to increasing growth in demand.





In the railway market demand is continuing to increase, predominantly thanks to a

growth in leisure-related traffic.

In France, traffic has increased by 3.4%. It should also be noted that transfer of 1st

class bookings to 2nd

class has stabilised.

In the UK, demand has risen by 5.1% and is back at its 2008 level!

At the same time, the launch of new routes such as Madrid-Barcelona and Milan-

Rome has contributed to rail growth, as experienced in France on the Paris-Lyon and

Paris-Nantes routes, at the expense of air travel.

Finally, there has been a marked growth for international routes such as Paris-London

(14% increase) where Eurostar holds a market share of more than 80%, and for the

Thalys routes with an increase of 7.5%.

In the field of car rentals, global demand has remained constant this year, albeit with

a slight decrease in the number of days per rental. The sector has made no significant

changes compared with 2009. However, prices have increased by between 2% and 7%

depending on the market segment.

There are two principal reasons for this increase:

• The first is related to increasing fleet costs which have resulted in tighter

management of vehicle fleets.

• The second reason is the implementation of pricing policies identical to those

recorded in the aviation industry, with an increase in supplementary services

incurring charges (GPS, additional insurance, refuelling, ‘no show’ penalties

etc.)

Budget growth conceals substantial disparities

The Europe of business travel was still in a period of recession during 2010, although

the percentage of decreasing budgets is lower than for the previous year: 40% against

66% in 2009. Even so, it should be mentioned that there has been a slight

improvement for increasing budgets, almost tripling from 11% to 31%.

It must be acknowledged that there has been great disparity between different budget

sizes this year, with large businesses indeed seeming to have withstood the sluggish

economy more successfully.

There are various explanations for this:

• Businesses have offered three reasons for this reduction in expenditure: the

global economic downturn, a freeze on travel and expenditure optimization.

This hierarchy is generally respected, no matter the size of a business’s budget.

• Budget increases are mostly economic imperatives that are primarily due to:

new client/market development, business retention and competitive pressure. It

should be noted that for large accounts, competitive pressure has been named as

the most important factor in T&E budget increases during 2010.





This disparity can also be seen on a European level. In Germany and the UK, therefore,

the percentage of increasing budgets lies between 32% and 42%, whilst France and

Spain are still lagging behind with an increasing budget percentage only half the size –

between 15% and 18%.

63% of budgets are devoted to maintaining and developing business activity

In 2010, 63% of business budgets were dedicated to maintaining market shares,

gaining new clients and developing a relationship with suppliers – stable at 2009 levels.

Nevertheless, differences may be noted in behaviour among the businesses surveyed.

Whilst large businesses devote 70% of their budget to directly developing their

business activity, businesses with budgets of less than €5M dedicate only 60% of their

expenditure to this task. In fact, the key element is intra-company trips as they

represent more than 30% of European businesses’ total expenditure. This figure is due

to the effects of the economic recovery, and to the strong interdependence between the

different entities of certain (especially medium sized) organizations. Even so,

measures put in place to reduce travel expenses such as a freeze on travel or

expenditure optimization do not appear to have had a profound effect on the hierarchy

of expenditure motives.





For large accounts: Expenses related to intra-company transfers, to maintaining

existing clients and to developing new clients/markets occupy third, second and first

place respectively. It is primarily organizational elements which threaten to alter the

hierarchy of motives for business trips, with large businesses having further

streamlined the intra-company transfer process this year through the implementation of

alternative solutions to physical transfers.

T&E expenditure: cost or investment?

The concept of business travel expenditure being a contribution has been

growing steadily for a number of years. All the responding businesses showed

progress as compared with 2009 (up 2 percentage points for budgets of less than

€5M, 3 percentage points for those between €5M and €20M and 1 percentage

point for those above €20M).





It should be noted that this perception is more clear cut for large accounts. 29%

consider it an investment and 64% a necessary expense for the business.

Similar types of perception can also be found according to the market or culture.

Therefore, German and Scandinavian businesses feel than in 39% and 40% of cases,

their travel budget is a contribution to their development.

On a more global scale, it should be noted that this developing trend towards

considering travel as a real investment is hampered by the genuine difficulties which

the responding businesses encountered when trying to measure its real benefit.

Numerous studies show that businesses ultimately have very few indicators and means

to measure a trip’s return on investment.

To address the crisis, businesses are using different Levers for optimizing T&E

expenditure

Businesses as a whole have used the same optimization levers as in 2009, showing a

relatively unchanged hierarchy for the most important methods

However, taking the definitions used in 2009, it illustrates that structural methods are

clearly gaining ground over price-related levers.

The majority of businesses, whilst still considering purchase-price optimization to be

important, have made marked efforts this year to standardise their practices by turning

more to structural tools such as reinforcing TMC usage or renegotiating supplier

agreements. They have focused on the fundamentals by adopting strategies which are

more profitable in the medium or long term.





This shows that reinforcing TMC usage has become the primary expenditure

optimization tool in 2010, ahead of the ‘best buy’ which held first place in 2009.

Businesses preferred to maximise their supplier agreements rather than to carry out

‘isolated deals’ which could harm corporate contract profits.

As a consequence, three of the four primary levers of optimization cover negotiations

and the strengthening of preferred supplier relations, including those with the TMC.

Note that amongst the changes in hierarchy for expenditure optimization methods, the

use of online tools and ’travel alternatives’ has decreased. This change is due first of

all to greater business maturity in the use of online tools (down three places from

2009) and secondly (down four places from 2010), following a period of justified

infatuation, to difficulties in implementing and evaluating the performance of these

tools.

Finally, businesses have realised that changing travellers’ behaviour remains a longer

term method which will create more important savings, such as for example having

more consistent practices for advance bookings and the use of restricted tickets.

Overall, we have noticed a degree of homogeneity on a European level in the use of

the three major optimization (levers), namely reinforcing TMC partnerships, using

‘best buys’ and renegotiating with suppliers.

As in 2009, local conditions may have an effect on the choice and hierarchy of these

methods. This is the case in France, for example, where the preference for rail over

airways takes sixth position.





Travel Policies which reinforce each other and which are better implemented

We have noticed that considerations linked to travel policies are the focus of

businesses’ concerns. (The tightening of travel policies takes fifth position in the

optimization methods hierarchy).

The scope of travel coverage and the travel policy compliance rate are strong

indicators of the way in which businesses manage their expenditure.

93% of businesses surveyed this year reported ‘having a uniform travel policy which

applies to the entire organization and its subsidiaries where these exist’, an increase of

4 percentage points on 2009.

Travel policies include the principal T&E expenditure optimization methods that were

previously discussed.

There have been some developments this year, in particular for:

• Regulations on meetings, incentives, conferences and events (MICE), which

now feature in more than half of all travel policies, an increase of 5% on 2009.

For the record, this expenditure category represented 13% of the budget for the

businesses surveyed this year.

• Regulations on the use of ‘travel alternatives’ which feature in around two-

thirds of travel policies, a figure which has however declined slightly compared

with 2009.

• CO2 emission considerations - although these are increasing, they still seem to

be marking time, despite an increasing number of initiatives aimed at reducing

a business’s carbon footprint.

67% of businesses have travel policy compliance rates above 70%. These compliance

rates vary significantly according to the business's budget size, with more than 75% of

large accounts showing a rate higher than 70% whilst this figure drops to 55% for

businesses whose budgets are less than €5M.





This year, 93% of businesses reported having implemented control and monitoring

procedures for their travel policies, showing no change from 2009.

Businesses have now reached a level of maturity in the use of these control and

monitoring procedures. As regards the frequency of checks, systematization is always

required no matter the travel budget size. At the same time, systematic expenditure

monitoring remains by far the most popular method.

Economic conditions do not seem to have a significant influence on the choice of one

method over another, or on the frequency of checks.

Each company has now established its own experience curve for the subject. Moreover,

in the majority of cases, internal teams developed the process and methods (56%

finance department, 20% purchasing department) and are responsible for monitoring

(principally the finance department with 52% and the travel managers with 27%).

New ways of staying in touch with employees

Businesses have implemented regulations to cover employee safety and business trip

monitoring. 74% take measures to remain in contact with their employees.

For the record, regulations covering employee safety and monitoring are included in

the travel policy in 85% of cases, a 2% increase on 2009.

This high percentage is the result of measures implemented by businesses in direct

response to various political and military crises occurring in some parts of the world,

or more recently to the effects of the Icelandic volcano.

It is important to remember that businesses and their management are legally obliged

to protect their employees. Their scope of liability is enormous, extending from risk





prevention and the ability to safeguard the employee’s health to any possible care and

repatriation needs which may arise either in the workplace or while on business trips.

In this context, it becomes essential to use new technologies and mobility solutions to

remain in constant contact: we should point out that 61% of businesses have

implemented measures for remaining in constant with employees at all times.

Other markets, the United States in particular, display very similar figures to the

European market. 65% of businesses reported being able to monitor employees for

safety reasons. Generally speaking, the use of such technologies is growing rapidly.

Analysis tools deserve a mention at this point, both ‘pre-trip' (detailed territorial and

cartographic analysis graded according to thematic alert levels: geopolitical, socio-

economic, threat of terrorism, crime, internal transfers) and ‘post-trip’, where they

make geolocation possible, not only using the employee travel file number (dates and

destinations, flight numbers, hotel details, mobile telephone numbers) but also via the

employee’s mobile, computer or even in some cases a beacon.





Monitoring traveller expenditure

The barometer shows that regulations on the use of payment methods appear in 82% of

travel policies, and have been implemented more strongly this year.

From this perspective, expenditure by employees does not go unmonitored as 97% of

expenditure was subject to authorization to a greater or lesser degree and/or was

capped. The trend towards stringency is evident, as this year 25% of businesses

reported that all expenditure was subject to prior authorization.

It is also highly likely that the trend towards increased scrutiny of employee

expenditure was accentuated by the increasing use of surcharges (ancillary charges)

not included in the business contracts originally signed.

Apart from the fact that it is often difficult to identify additional charges when making

the booking, it is essential to implement a policy that covers how to deal with fees

incurred by the employee during the period following the booking, in particular during

the trip itself (luggage surcharges, food on board etc.)

By way of example, American Express has calculated that these supplementary airline

charges (ancillary revenue) represent a 3-5% increase for travel budgets.

It should be emphasised at this point that this concerns all expenses (some hotel

services such as parking, business centre and internet access; room service; mini bar;

car rental fees such as refuelling surcharges, GPS or additional driver surcharges),

without forgetting other types of expenditure which are not yet monitored such as on-

the-ground expenses (taxis, shuttles, parking etc.).

The task of handling employee expenses is therefore a major challenge for the creation

and monitoring of travel policies.





The use of online booking tools is stabilizing

Following several years of growth, the use of online self booking tools (SBTs) has

stabilised during 2010. As we have reported, it remains a method used by businesses

for optimizing their travel budgets.

Businesses have achieved real maturity, as in other areas of travel budget management.

In 78% of cases they reported having received help from TMCs, which this year

continue to play an essential role in choosing, configuring, implementing and

monitoring such booking tools. Businesses report that using SBTs, and flexibility in

setting agreements, has allowed them to monitor their costs and their travel policy

more effectively. The more widespread use of SBTs has thus contributed strongly to

increasing compliance rates for travel policies.

This year showed new signs of maturity, with functional coverage widening to include

the collection and payment of expense forms.

The implementation and use of this new functionality is an indication that businesses

are taking a greater interest in the management of internal administrative and

accounting costs associated with the reconciliation and payment of expense forms.

Finally, it should be pointed out that:

• SBT usage is still less important for businesses with budgets of less than €5M -

54% compared to 84% for budgets greater than €20M.

• There is great disparity between different European countries; for example,

36% of Spanish businesses reported using an SBT compared to 68% in

Germany.





As is the case for the entire travel chain, the SBT is not exempt from monitoring and

checks. 96% of businesses reported having implemented SBT measurement tools, a

slight increase on 2009.

During 2010, the different criteria used to measure efficiency remained generally

stable and various in numbers. The choice of indicators is essential, and it would be

reasonable to consider the increased use of other indicators beyond classic indicators

such as travel policy compliance rates or the percentage of SBT bookings compared

with bookings as a whole. This may include some traveller practices which require the

TMC to carry out specific actions on the travel records. They are then altered manually,

i.e. they cannot be dealt with entirely using an automatic process, creating additional

costs for businesses.

Greater evaluation of TMCs

Nearly half of all travel agencies were evaluated in 2010, an increase of 20 percentage

points on the previous year (24%). There is much to suggest that this development

should be analyzed from the perspective of increased TMC usage, now the primary

method of travel budget optimization.

Moreover, businesses are taking a relatively logical approach to their employment of

these criteria. They are focusing their efforts on cost control and travel policy

compliance by strengthening the control and monitoring analysis tools for their travel

policy. It is therefore not surprising that these two criteria for assessment have

declined this year (moving from second to third place and fourth to fifth place

respectively.)





Businesses have therefore focused on:

• The TMC’s ability to deliver a quality service by generalizing service level

agreements (SLAs)

• The TMC’s ability to demonstrate its economic performance, this year the

second criterion for TMC evaluation. The strength of proposals for optimizing

expenditure is now right at the heart of the debate, and seems to go beyond

monitoring proposed and generated savings.

• Data consolidation, an area where businesses expect TMCs to monitor budgets,

make the right tradeoffs and monitor supplier agreements, with the associated

challenges such as data integration.

TMCs are increasingly being called on for value added services

Businesses are calling on TMCs with increasing frequency for tasks outside of their

trade. (Diagnosis, improving the purchasing process, auditing and improving

‘workflows', online booking solutions, integrating travel policies into information

systems and implementing solutions for travel orders and expense forms, such as the

example of SBTs.)

This year, items related to reducing direct costs such as the ‘sourcing program’ (air,

hotel, MICE) or to travel policy optimization have declined slightly. Without a doubt,

this is linked to businesses’ purchasing efforts as mentioned at the beginning of the

barometer.

As a new development in line with the elements previously stated, businesses have

been employing solutions for improving traveller comfort and safety (such as 24-hour

assistance) during 2010, and geolocation solutions are emerging.

Finally, it was noted that businesses with smaller budgets chose to purchase the

following as a priority: 24-hour assistance, online booking solutions and solutions for

integrating travel policies into their information system. Large businesses additionally

opted to improve their direct costs, for example by improving purchasing processes or

‘hotel sourcing’, which (as we know) are a source important expenditure which is

difficult to control.





Multiple sources for T&E expenditure reporting

More than ever, issues relating to payment and reporting are interconnected. We have

cited the challenges associated with capturing ancillary charges and reconciling them

with expenditure.

As regards payment means and methods, there is a slight trend towards rationalizing

usage although there are still multiple methods of payment. The use of and ‘corporate’

cards and BTA accounts seems to be gradually increasing compared with practices

such as refunds on presentation of expense forms or employees’ personal card bills,

which have been in decline for three years. It is crucial to optimise the number of

payment methods in order to obtain an overview of expenditure, as the processes for

reconciling all expenditure are very different, and generate internal processing costs

which are important for the business.

Regarding expense monitoring, this year businesses have been receiving more regular

reporting on the categories of expenditure. Even so, as regards an overview of

expenditure, only 64% of businesses received reports on all of their T&E expenditure.

Beyond the depth of reporting, which needs to improve both on categories of

expenditure and their granularity (surcharges), the importance of information sources

must be stressed. In this regard, businesses reported that TMCs and payment cards

were the two principal sources where it was possible to establish expenditure reporting

(67% from TMCs, 39% from cards). For this reason, card data and travel are excellent

companions, as payment card data is an admirable complementary tool for identifying

expenses above and beyond a trip’s transport costs.





It is therefore strategic to receive complete and reliable reporting on all expenditure in

order to steer the purchasing policy and optimise travel costs, in particular in the

context of reinforcing T&E expenditure checks.

New measurement tools to implement

We noticed that the use of ‘travel alternatives’ were an important method for

optimizing businesses’ T&E expenditure, to which 66% of business travel policies

refer.

However, businesses seem to have difficulty assessing the effectiveness of ‘travel

alternatives’ for their travel practices, excepting inter-company trips. Indeed, 70%

consider a telepresence or video conferencing to be as or more efficient than face-to-

face meetings.

Businesses are not yet using these new technologies frequently or as a common

solution. A lack of experience in using these tools explains why businesses are unable

to appreciate their effects for professional travel. These observations are similar for

mature markets such as the North American market. The use of ‘travel alternatives’ is

also important for replacing internal meetings, such as in the European market. 27% of

North American businesses reported having indeed used a telepresence to replace this

type of business trip.

In addition, there is an absence of tools for measuring the benefits of travel alternatives

as compared with face-to-face contact.





This lack of measurement supports the trend observed at the beginning of the

barometer towards difficulties in measuring returns on investment for a business trip.

From this perspective, a generalised use of ‘travel alternatives’adds a level of

complexity to this analysis.

To deal with this, the TMC should suggest monitoring and analysis tools for each

proposed method of contact (face-to-face and remote), since physical travel and the

use of travel alternatives will not in fact necessarily be incompatible.

These tools will contribute to better preparation for meetings, and will also ensure

better monitoring of some projects. They promote efficiency and productivity in the

businesses that use them.

Prospects for 2011

According to IATA, the discrepancy between Asian companies and their European

counterparts will persist in 2011 amid a general slowdown in growth. IATA predicts

5.3 billion in cumulative profits, including 3 billion for Asian companies, and a 5%

increase in global traffic. European companies will remain on an even keel, displaying

a 3.4% traffic increase.

For airlines, prices are predicted to rise in 2011:

For the European market, price increases for economy class in the domestic short-haul

market are in the 4% to 9% range. For business class in the international long-haul

market, increases fall between 5% and 9%.

Price increases in the North American market are slightly lower than in Europe, at 2-

6% for domestic short-haul and 3-7% for long-haul in business class.





Price increases are more substantial in the Asian market, with figures between 3% and

8% for domestic short-haul and between 5% and 10% for long-haul in business class.

It should be noted that European airlines will continue to organise themselves to

consolidate their market by opting increasingly for alliance strategies, in an effort to

reduce fixed costs and improve seat-occupancy rates in areas where they are not yet

strongly represented.

Other factors, notably oil prices but also capacity reduction, will drive changes to the

current situation and will contribute more directly to increasing prices.

Joint ventures will result in the development of global agreements between businesses

and will allow some airlines to offer optimised coverage. It can be assumed that a

reduction in services for major hubs and routes will have the direct effect of increasing

prices.

For hotels, tariffs for European establishments will experience a moderate increase in

2011.

As is the case for air transport, the hotel industry has gradually been emerging from

the crisis during 2010. As well as improving the operational performance of hotel

groups, industry experts also predict that the hotel real estate market will experience

recovery. However, caution is called for in 2011, when tariffs will also see only

moderate increases, driven by demand and by higher occupancy rates for all business

destinations. European hotel tariffs should thus increase by 1-6%, whereas greater

increases are expected in China, Hong Kong and Singapore.





For the railway market, the opening up of the market to competition will allow

players to launch huge projects as a way of strengthening their presence on a national

level, as well as in neighbouring countries.

Examples include the Deutsche Bahn, which is strengthening its position in Poland,

the Netherlands, Denmark and soon in the UK, and also the SNCF, which is trying to

establish a significant presence in Germany.

This new competitive market will offer travellers a wide range of choices, both for

prices and for services offered.

Competition with airlines will again be the subject of tradeoffs on European routes,

where the decision will be less easy as journey times are still long.

Demand should continue to increase. Indeed, businesses will still continue to favour

this form of transport over short-haul flights.

The development of dematerialization services in France, Thalys' new loyalty program

and the ability to print Eurostar tickets from home all affect comfort, and will

influence passenger choices.

Riding on this success, prices in France are predicted to increase.

In the car rental market, the slight increase in prices in expected to continue,

principally as a result of maintaining vehicle fleets at their current levels and of an

additional revenue policy identical to 2010.

In this context, increases will range between 3% and 5% for 2011.

On the American continent, basic prices will remain fairly stable or will decrease

slightly, principally due to increasing ‘post recession’ competition levels. However,

rental prices are predicted to see a slight increase, as in Europe, driven by new

surcharges or taxes – such as the introduction of cancellation charges.





New emerging practices

The importance of new technologies, and notably personal tools for remaining in

contact with the business, was emphasised. This year, an average of 56% of businesses

reported making use of a mobile telephone, a smartphone or a laptop for business trips.

These new technologies are part of a broader context which addresses the challenges

of productivity, comfort and (as we have seen) employee safety.

The experience curves are still too recent to offer any conclusions, even if businesses

are making it clear that the use of all types of mobile tools will become a regular

practice. The development of mobile tools for business travellers will take place

according to four determining factors:

• Enabling the employee to remain in constant contact with his business and

TMC.

• Enabling the employee use his mobile to access all functionalities for remotely

managing his travel.

• Facilitate his travel and ensure his comfort using applications which are fun but

which also allow him to increase his efficiency (monitoring, geolocation,

mapping).

• Facilitate his work during the trip (room rental, video conference room etc.)





Slight increase in T&E expenditure, driven predominantly by large businesses

Despite the crisis, the European business travel market is predicted to increase by more

than 3% (3.2%) in 2011.

We should remain cautious, as businesses are generally taking a ‘wait-and-see’

approach over the next months, in particular those with budgets of less than €20M.

The International Monetary Fund predicts that the GDP for the European zone will

remain practically unchanged for 2011 (an increase of 0.8%). As for 2010, there is

important disparity between different countries within the zone (UK 1.2% increase,

0.2% increase for Germany, 0.4% increase for France and Italy, 0.7% increase for

Spain).

Although the economic situation is relatively similar to 2010, businesses are still more

optimistic for 2011.

34% of the businesses surveyed predicted that their budgets would increase, and 55%

foresaw no change.

The average expenditure increase totals 3% for 2011, with growth being led by large

groups (as in 2010) seeking to consolidate efforts at reducing administrative expenses

undertaken and to better mediate changes in their expenditure according to their

motives for travel.

It should be noted that the main reasons for budget increases in 2011 are associated

with developing activity outside the European zone.

Europe seems to be split in two in this regard, with Northern European regions such as

Germany, Scandinavia, Belgium and the UK more optimistic about recovery.





However, there is one point in common: Businesses unanimously reported that this

budget growth would primarily be linked to the development of business and

commerce outside the European zone.

The European business travel market will be driven by activity on an international

level, regardless of a business’s level of expenditure.





About the Barometer

It was prepared by Concomitance from a telephone survey conducted between the 5th and 29th September interviewing managers in charge of travel budgets (purchasing directors, travel managers, financial directors etc.) at 295 European businesses within 7 principal markets: Germany, Great Britain, France, Benelux, Spain, Italy and the Nordic countries. The budgets represented range from €400K to €50M.

About Concomitance

Created in 2001, Concomitance is a company specialised in market research,

consulting and human performance for marketing, and sales initiatives.

Concomitance is made up of a team of professionals who can intervene through the

full process across several sectors (telecoms, travel and transportation, financial

services, industry, retail etc.).

Since its creation, Concomitance has focused on converting sales and marketing

challenges into effective and efficient action plans, endorsed by all project

participants.

This factor is down to Concomitance’s roots. All of our consultants have an

operational experience, enabling us to develop and share recommendations in line with

the maturity levels of our client.

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Documents

north american market

reinforcing tmc usage

online booking solutions

businesses unanimously reported

expenditure optimization methods

ancillary charges

travel policies

travel alternatives