This year’s outlook is particularly uncertain, and people are unwilling to predict the unpredictable. Nevertheless, Bob Papworth finds some business travel experts willing to stick their necks out…
SADLY, WELSH ELECTRICAL ENGINEER Sir William Preece is no longer with us – hardly surprising, since he was born in 1834 – but in departing this world 99 years ago in 1913 he saved himself a great deal of embarrassment. For it was in 1878 that Sir William,
working as a consultant engineer with what was then known as the British Post Office, roundly declared: “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” Sir William neatly highlights for us the perils of making predictions. As the renowned economist JK Galbraith put it: “There are two classes of forecasters: those who don’t know, and those who don’t know they don’t know.” Hats off, therefore, to the good and great of the corporate travel industry who, almost to a man (and woman), freely and openly admit they have little or no idea what 2012 might hold for our industry. Take Anne Godfrey, chief executive of the Guild of Travel Management Companies (GTMC) for starters. “No- one – travel management company [TMC], buyer or supplier – really knows what will happen in 2012. The only thing we agree on is that we face an uncertain year,” she says. Nevertheless, heeding neither
the GTMC boss nor the lessons of history, there are still those prepared to stick their heads above the predictive parapet. HRG’s group commercial director Stewart Harvey is among them. Harvey identifies three key trends that, he believes, will become
?
increasingly important over the next 12 months and more. Companies, he says, are cutting back on short-haul travel, but spending freely on trips to Latin America and the Asia-Pacific region; and they are much more focused on pre-trip data and travel approval processes.
The third trend, which Harvey
also expects to gather momentum in 2012, will come as welcome news for GTMC members at large.
“If I go back five, maybe 10 years,
the average organisation looking to use a major travel management company was spending around
BBT's Mystery Buyer “On my 2012 wishlist, Ryanair agrees to talk to corporate travel managers about bulk-fare buying; the government agrees to re-open an investigation/enquiry into a third runway at Heathrow; Virgin Atlantic joins Star Alliance; as an industry we will be working on how to show ancillary fees on our online booking tools; hotels will offer more free wifi that really works; and the ITM will agree to lobby the government on a better deal for business travellers, including lower air passenger duty.”
£150 million a year on travel,” he says. “We are now seeing companies spending £20m to £25m looking for regional, multinational deals – companies with a smaller footprint and a smaller spend are increasingly trying to leverage what little they do spend.” It’s a development with which Graeme Milne, general manager of FCm-owned Corporate Traveller UK, can readily identify – although he
Forecast
Business travel TRAVEL AIR
THE WORLD’S AIRLINES are forecast to make a US$4.9 billion profit this year, $2bn less than in 2011. The International Air Transport
Association (IATA) suspects that much of 2011’s growth has come from residual confidence in a global economic turnaround. By the end of 2010, consumers were beginning to be convinced recovery was under way, but mounting uncertainties during the course of 2011 have dampened prospects for 2012. “It looks like we are headed for another year in the doldrums,” says Tony Tyler, IATA’s director-general and chief executive. “With business confidence declining, it is difficult to see any potential for significant profitable growth. “Relatively stronger economic
growth will help Asia-Pacific airlines to maintain their 2012 profits close to 2011 levels at US$2.3bn. The rest of the industry will see declining profitability. The worst hit is expected to be Europe, where the economic crisis means the industry is only expected to return a combined profit of US$300m. A long slow struggle lies ahead.” For British Airways, International Airlines Group boss Willie Walsh has warned: “The main challenge for 2012 will be to offset increased fuel costs as our hedges unwind, against a background of potentially weaker demand.”