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SPEND PATTERNS


of the recession. AirPlus reports a 26 per cent increase in spend on its Company Account lodge card product in the UK in 2011 and a 23 per cent rise on its corporate card. Although the company is more cautious about growth for 2012, January figures were also encouragingly healthy, with spend up 19 per cent. Those high figures are a


compound of more bookings and a higher price paid per booking. Average air ticket price paid by AirPlus UK customers rose 4 per cent to £431 in 2011, compared to £414 in 2010. Across Europe, average ticket price paid by American Express European corporate clients grew even faster, up 9 per cent; while MasterCard Europe’s corporate card customers, comprising medium and large companies, rose 8 per cent. On a global basis, Diners Club saw average ticket price increase 4 per cent in 2011. Different card providers have


different theories about what has been pushing up ticket prices. MasterCard Worldwide’s Rene Stynen attributes roughly half the increase to inflation. However, he also thinks increased demand and reduced, or static, supply have played their part. “Airlines had a tough time in 2008-09, leading them to reduce capacity,” he says. “Since then, load factors have increased.”


THE LONG-HAUL GAME American Express’s Andrew Buckley also believes a growing proportion of flights to long-haul destinations is playing its part, as European business travellers increasingly focus on the high-growth BRIC markets and other fast-emerging countries. Amex has noticed a surge in bookings to Asia and Latin America, in particular. Longer flights are more testing


for travellers, therefore employers are more likely to allow their travellers to fly business class. This logic appears to be confirmed in additional figures from AirPlus, showing that 9 per cent of air payments it handled in 2011 were in business class, up from 7 per cent in 2010. It arrests a slide in business class tickets for the previous three


In association with


years, and is another explanation for the rise in ticket price. AirPlus UK managing director


Yael Klein points out that “customers are travelling further and therefore they are also travelling for longer, so there is a rise in room nights and more hotel spend”. The company’s average hotel spend figures for 2011 only partially bear out this assertion, up from £213 to £220. MasterCard reports a similar rise. Amex and Diners Club figures are somewhat higher, however, up 7 per cent and 8 per cent respectively. Perhaps one reason hotel bills


are not climbing more dramatically is that business travellers are spending less on extras such as breakfast, internet access or bar bills. That is the inference from another pair of statistics from Conferma,


Corporate card spend is usually a pretty reliable bellwether of economic success


the company which specialises in providing single-use virtual card numbers. Conferma is able to compare the room rate customers book with their final hotel bill, including those additional items. In 2010, the final bill was 30 per cent higher than the room rate, but in 2011 this figure shrank dramatically to 21.8 per cent. Conferma chief executive Simon


Barker believes several factors explain the decrease. One is a rise in inclusive rates for business travellers, where the agreed price includes some of those extras. Another is that 14 per cent of the payments handled by Conferma were in advance of the stay, which meant travellers could not add anything to the bill. Finally, Barker believes travellers are becoming more cautious about racking up extra charges, and their employers are imposing tighter control on hotel spend, which is why they have introduced a virtual card solution in the first place.


Yet if travel managers are gaining


control in one respect, figures from Citi suggest they are losing control in another. The average number of days Citi corporate cardholders booked flights in advance of departure reduced by six last year. Since the cost of an air ticket usually rises the closer it is purchased to departure, this trend will very likely have exerted an inflationary effect on travel bills. “I suspect this reflects a greater concentration on client- facing travel, which is often more last-minute in nature, and perhaps a reduction in non-client discretionary travel, such as conferences, which are often booked much further in advance,” says Martin Cannings, Citi’s EMEA product head.


MAKING ADVANCES Cannings’ comment illustrates why it is impossible to crack down on short-notice booking completely. Booking fewer days in advance can be interpreted as a sign of a strengthening business if clients are summoning suppliers with less warning. However, many card issuers provide sufficient information for travel managers to benchmark the booking habits of different departments, or even individuals, and with a little investigation they should be able to see where short-notice booking is justified and where it is not. Good reporting and analysis are


always needed to look beyond the headline figures of card data. For example, one factor Amex believes contributed to an 8 per cent rise in total card spend by clients last year was the increasing use of cards for a wider variety of categories, such as mobile telephone bills. And in the UK this year, AirPlus’s Klein points out that average ticket prices will probably rise because air passenger duty went up again in April. Even with this additional burden, however, Klein still expects the number of air tickets bought in 2012 to end up even higher than 2011. “Companies will keep on travelling,” she says. “They are telling us they learned their lesson in the first wave of the recession, and that they now realise that to be successful they need to travel.” n


2012 Buying Business Travel 13


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