Trends in Corporate Travel Demand Management

Transcription

1 Trends in Corporate Travel Demand Management April th Street, NW Washington, DC Phone: ; Fax:

2 Contents Executive Summary...3 I. T&E Spend Targets...5 II. Long-Term Outlook: T&E versus Sales III. Planned Tactics for Achieving Savings IV. Deployment of Travel Alternatives V. Impact of Electronic Travel Alternatives on T & E VI. Firms With Carbon-Reduction Policies Take the Lead VII. Does Video Add Value? VIII. What s Next Methodology About the Authors Page 2

3 Table of Figures Figure 1.1: Travel Spend Targets for 2011 vs Figure 1.2: Percent of Respondents Targeting a Reduction in Travel Spend, Figure 1.3: T & E spend targets for 2011 by region...8 Figure 1.4: Travel Spend Targets in 2012 by Region...9 Figure 1.5: Targets for European travel programs with spend reduction goals Figure 1.6: Targeted increases in travel spend in Figure 1.7: Increased Travel Spend Targets by Company Size Figure 2.1: Expected Change in T & E to Sales Ratio 2010 vs Figure 2.2: T & E to Sales Ratio by Region Figure 2.3: Expectations for T & E Spend to Sales Revenue by Company Size Figure 2.4: Expectations for T & E Spend to Sales by Industry Figure 3.1: Tactics to Control Travel Spend Figure 3.2: Policy Enforcement by Region Figure 3.3: Planned Tactics to Control Spend by Company Size Figure 3.4: Planned Sourcing Initiatives to Control Travel Spend Figure 3.5: Evaluation and Inclusion of Discount Carriers/Lower Tier Hotel Brands in Travel Program Figure 3.6: Hotel Pricing Model by Region Figure 3.7: Hotel Pricing Model by Company Size Figure 3.8: Issues with Hotel Agreements Based on Dynamic Pricing Figure 4.1: Penetration of Various Electronic Travel Alternatives* Figure 4.2: Scope of Deployment of Electronic Alternatives in 2011 (n=158) Figure 4.3: Deployment of Conferencing Technology to 75% or more of Travelers (2009 vs. 2011) Figure 4.4: Pervasive Deployments of Electronic Alternatives by Industry Figure 4.5: Scope of Conferencing Deployments by Geography Figure 5.1: Companies with Travel Reductions Based on Initial Conferencing Tool Deployment Page 3

4 Figure 5.2: Communication & Training Provided During Conferencing Deployment Figure 5.3: Effect of Training on T & E Reduction Figure 5.4 Effect of Travel Policy to Encourage Adoption on Savings Figure 5.5: Travel Department s Role in Decision Making on Conferencing Technology Figure 5.6: Travel Department s Role in Managing/Tracking Travel Alternatives Usage Figure 6.1. Is Reducing Carbon Currently an Explicit Goal for Your Company s Travel Program? Figure 6.2 How Companies Informed and Trained Users Following Deployment of Travel Alternatives Figure 6.3: Tactics Used to Encourage Adoption of Travel Alternatives Figure 6.4: Companies That Reduced Travel Spend Following Travel Alternatives Deployment Figure 6.5: Expectation for Change in Relationship between T & E and Sales Revenue in the Next 2-3 Years...36 Figure 6.6: Role of Travel Department in Decision-making About Implementing Travel Alternatives Figure 6.7: Current Role of Travel Department in Managing/Tracking Use of Travel Alternatives Figure 6.8. Does Your Company Measure the Impact of Travel Alternatives on Travel Spend? Figure 6.9. Is Reducing Carbon Currently an Explicit Goal for Your Company s Travel Program? Figure 6.10 Carbon Reduction Included in Travel Program by Company Size Figure 7.1: Usefulness of Video-conferencing as a Replacement to Travel Figure 7.2: Quality of Video-conferencing 2009 vs Figure 7.3: External-Connectivity Issues Impact on Video Conferencing Usefulness Figure 8.1: Expected Change in Future Use of Conferencing to Replace Travel for Various Purposes Figure 8.2: Social Media Integration into Travel Program Figure 8.3 Companies That Provide Business Travel Applications for Travelers Mobile Devices Figure M.1. Respondent Profile by Company Size (Total Revenue) Figure M.2. Respondent Profile by Annual T&E (Respondent s Region) Figure M.3. Regional Representation Page 4

5 Executive Summary Following two consecutive years of double digit reductions in 2009 and 2010, corporate travel budgets are projected to rebound for a second year in 2012 according to a recent global survey of more than 200 corporate travel managers. The study, conducted by and the Association of Corporate Travel Executives (ACTE), found that 55% of global travel programs plan to increase their travel spend in 2012, continuing the momentum from 2011 when 73% increased their travel budgets. Yet even with the business environment improving, corporate travel managers remain under pressure to optimize their travel dollars and find savings, the study found. Travel managers are looking to a combination of demand management and sourcing tactics to control costs. The top four demand-management tactics that they will rely on more in 2012 are: Reducing non-preferred vendor usage Increasing adoption of self-booking tools Requiring advance purchase of travel reservations Encouraging use of electronic travel alternatives (The full report provides detailed analyses by geographic region and company size, of planned changes in corporate travel spend as well as demand management tactics.) The study found no let up in travel managers expectations for being able to negotiate lower prices with travel suppliers. More than half expect this tactic to achieve incremental savings for them in The study also examined the penetration of dynamic pricing in the hotel industry, a pricing model that offers corporations a discount off a floating, best-available rate. While this model has been adopted in some sectors in the business travel industry, travel managers in other sectors have been resistant. (See the full report for analysis of the expense categories on which travel managers are most likely to focus their negotiation efforts this year.) Electronic Travel Alternatives Electronic travel alternatives (e.g. web- and video-conferencing) remain one of the most popular sources looked to for future travel savings. The study examined this trend in depth in order to address a set of key issues faced by corporate decision makers: To what degree do conferencing tools actually reduce corporate T & E spend once deployed? Do some conferencing tools make more effective travel substitutes? If so, in what situations? Which best practices for managing conferencing deployments have the biggest impact on results? Overall, 36% of respondents saw a reduction in travel spend. This group reported a median reduction in travel spend of 10%. Nearly a third of them reported reducing travel spend by 20% or more. Page 5

6 The study identified key characteristics of the respondent companies that achieved maximum travel savings from conferencing technology. One of the most notable was that carbon-reduction goals are a part of their corporate travel strategy. The study found that these companies were more than twice as likely to achieve travel savings during the first year of their conferencing technology deployment. They out-performed in terms of measures such as total travel savings, internal travel savings and savings on executive travel. However, the study found that many companies failed to realize travel savings from conferencing deployments, with a key reason being the lack of coordination between IT and travel departments. Notably 51% of travel managers reported having no involvement in managing conferencing technology s use as a replacement for travel. (See the full report for the five best practices that had the biggest impact on travel savings achieved following web- and video-conferencing deployments.) The survey also solicited input on new tools that are being introduced into the business travel arena social networking and mobile travel apps. Less than 20% of companies have integrated social media as a communication medium for travelers into their travel programs, while a majority (52%) of companies is providing business travel applications for travelers personal mobile devices. The full report presents details of the study findings, including breakdowns by respondent organization size, geographic region, and industry. Page 6

7 Methodology The study was undertaken in partnership with the Association of Corporate Travel Executives (ACTE). ACTE is a global association with members representing both corporate travel buyers and suppliers. The survey was fielded to the travel buyer members only. Responses from vendors and travel consultants were omitted, as were responses from suppliers of electronic travel alternatives such as video-conferencing. Preliminary interviews were conducted with travel managers representing a broad cross-section of regions and industries. Survey data was gathered via an online instrument in November 2011 resulting in 201 qualified complete responses. Respondent Profile By its nature the ACTE membership represents mostly large global enterprises. Since smaller companies often do not have a dedicated travel function, responding companies size represented firms with larger sales revenues than a random sampling of corporate responses. Figure M.1. Respondent Profile by Company Size (Total Revenue) 12% 27% $10B or more in sales 29% 32% $1B to $10B in sales Less than $1bn in sales Don t know Page 7

8 Respondents were asked to provide the most recent annual T & E spend for the travel program in the region they would base their response on. Figure M.2. Respondent Profile by Annual T&E (Respondent s Region) 47% 11% 13% >$100mm regional travel spend $50-100mm regional travel spend 14% $25-50mm regional travel spend 15% $10-25mm regional travel spend <$10mm travel spend The survey was conducted globally with strong response from the US, Europe and Asia-Pacific: Figure M.3. Regional Representation 1% 4% 14% 25% 7% 49% United States or North America Canada Europe Middle East/Africa Asia-Pacific Latin America Page 8

9 About the Authors About ACTE The Association of Corporate Travel Executives (ACTE), founded in 1988, is a leading non profit organization that serves and advances the global business travel industry in 102 different countries. For more than 20 years, ACTE has continued to fulfill its vision of uniting travel executives around the world, providing them with up to date news, knowledge, beneficial research findings and networking opportunities. The education of ACTE members infiltrates to more than 12 million business travellers worldwide. From corporate buyers to agencies and suppliers, all sectors of the industry are granted equal membership. ACTE has representatives in Africa, Asia Pacific, Canada, Europe, Latin America, Mexico, Middle East and the United States. To join ACTE, or for more information, visit About is a global consulting, research and training firm, specializing in solving sales and marketing challenges. Our philosophy is based on the work of Dr. Philip Kotler of the Northwestern University Kellogg School of Management. Dr. Kotler is widely regarded as one of the world s leading strategic marketers. For more on, please go to Page 9