Welcome FOR COMPANY TRAVEL & MEETINGS BUYERS ISSUE 67 MARCH/APRIL 2014 Aviation challenges: airline deals and airport capacity
Editor’s letter
In control
The value of demand management
BBT MARCH APRIL
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All change Will open access bring competition to UK rail?
Handle with care Safety and risk in the oil and gas sector
19/02/2014 16:23 ISSUE 67
Editor Paul Revel Digital Editor Tom Newcombe Executive Editor Bob Papworth Managing Editor Mike Toynbee Art Director Annie Harris Designer Javier Otero Sub Editor Richard Rees Contributors Caroline Allen, Alex Blyth, Simon Buck, Catherine Chetwynd, David Churchill, Amon Cohen, Rose Dykins, Martin Ferguson, Mark Frary, Rob Gill, Betty Low, William Maxwell, Gareth Morgan, Gary Noakes, Matthew Parsons, Dave Richardson, Ian Skuse, Graham Smith, Diane Steed, Jessica Thomas, Paul Wait Publisher Chris Mihalop Events Manager Emma Gordon Marketing and Circulation Kirsty Clark Production Manager Jamie Halling Editorial tel number +44 (0)20 7821 2715 Editorial fax number +44 (0)20 7821 2701 Email address
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Ch-ch-ch-ch-changes The pace, power and
PLEASE EXCUSE THE GRATUITOUS headline, but the lyric suddenly comes to mind as I write this (maybe because of David Bowie’s memorable presence at the recent Brit Awards – even though he wasn’t actually there). The pace,
power and
impact of change is a strong theme throughout this issue, whether it’s your corporate airline deals (p62), the rise of Generation Y (p26), or the painful journey towards resolving runway capacity in the South East (p52). On the airports saga, there’s also a fascinating look at the political manoeuvrings in Westminster and beyond (p46). The rapid evolution of booking
technology – and its influence on traveller behaviour – is a force to be reckoned with. It is analysed here in Tech talk (p24), and was debated at the Business Travel Show (p92) and in our exclusive interview with the CEO of Expedia (p38).
And, of course, at the forefront of
impact of change is a strong theme
people’s minds is change – hopefully for the better – to the economy. Talking to you in the industry, it becomes clear that a more dynamic economy brings the need to reach out to new markets for trade. And for travel buyers this means the complex challenges of managing an increasingly globalised travel programme. So
the next BBT Forum, to be held in London on April 8, will explore the key issues around effective global travel management, including compliance and culture, risk strategies and international payment mechanisms. These Forums are a great opportunity for candid debate with your industry peers. They are free to attend for travel buyers – but places are limited. For more information and to request an invitation, see p90, or visit
buyingbusinesstravel.com
Keep in touch,
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MARCH/APRIL 2014
MARCH/APRIL 2014
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Demand management UNDER CONTROL
Supplier negotiations will yield lower unit prices but, if you want real travel budget reductions, you can’t ignore
demand management, says Betty Low
LIKE HEMLINES AND HAIRCUTS, fashions in travel management change. As it increasingly became part of procurement rather than facilities or HR, the focus moved squarely on to strategic sourcing and collecting data to support supplier negotiations. But changing circumstances forced companies to realise that travel cost control is about more than negotiating lower fares and room rates.
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Indeed, the features in this issue on airline negotiations (p66) and car rental (p96) show buyers finding decreasing room for manoeuvre when striking deals with suppliers. In a white paper on demand
management, Carlson Wagonlit Travel says: “As costs for business travel continue to increase, companies realise that strategic sourcing and procurement may have limits.”
Demand management was born in the wake of the recent financial crisis. Companies – faced with pressure on cash-flow and a downturn in orders – looked for ways to cut costs quickly. So despite business travel’s importance for generating business, it became an easy target. Some companies introduced travel bans – after all, the easiest way of saving money is not to spend it. To manage the demand, in other words. Everyone agrees that this is an important part of travel management, but there isn’t consensus on the definition. In a white paper on the subject, FCM says: “Demand management is the process of cutting cost by influencing the quantity and/ or specification of the products and services you are procuring.” For some, such as American Express Business Travel director Sebastien Marchon, it is “monitoring the total number of trips made”. Many companies initially took the straightforward approach of reducing the number of business trips. Improvements in technology and its growing use in day-to-day life undoubtedly made this approach easier to implement than it might have been a few years earlier. Travel alternatives became the
Oil and gas FUEL FOR
catch-all phrase for remote meetings via desktop solutions, such as Webex, videoconference options, such as telepresence, and straightforward conference calls. More significantly, companies started looking upon travel for client-facing meetings differently from that for internal meetings. A number of companies introduced policies promoting the use of travel alternatives for internal meetings. Colleagues generally started having fewer face-to-face meetings. It was not unusual for colleagues in different global locations to go from, say, meeting every two months to doing so only once a year and using alternatives the rest of the time.
As the energy sector explores new sources around the world, health and safety issues are high on the agenda. Rob Gill reports
FACE-TO-FACE CONTACT The situation for client-facing meetings was different. Some
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WITH THE COMPLEXITIES AND DANGERS of travelling to some of the world’s most remote and unsettled destinations, the oil and gas sector is a challenging environment for travel buyers. Over the last year, a series of incidents have thrown into sharp focus the issues that buyers and their companies can face: the siege at an Algerian gas plant in early 2013, which saw the death of 40 energy workers; the crash of a helicopter carrying North Sea oil workers in August, killing four people; and the evacuation of energy workers over Christmas in South Sudan due to the country’s civil war. Given this background, it is hardly surprising that health and safety has become the number one priority for companies in the oil and gas industry – talk to any buyer in the energy sector at business travel events and this is a message that comes over loud and clear. Ryan Taylor, who has spent 17 years working in the sector, says there is now a “huge focus on duty of care” which has become more prevalent over the last two or three years. “Buyers are increasingly working with their health and safety
vice-presidents – I think this is mainly down to events around the world which have affected the industry,” adds Taylor, who is currently global travel manager for oilfi eld engineering specialist Sparrows Group.
DUTY OF CARE Managing risk for travellers within the industry, as well as ensuring their duty of care, were the major topics on the agenda during the Global Business Travel Association’s Oil, Gas and Marine Travel Symposium, held in Copenhagen last October. Speaking at the event was Mike Mann, senior vice-president of global health, safety, security, environment and quality for Stork Technical Services. He highlighted four major elements to duty of care: managing the safety and wellbeing of employees; managing and assessing risks to the company’s business; identifying risks and reducing them as much “as reasonably practical”; and complying with laws and regulations. He also identifi ed four major areas of concern for oil and gas companies: health, including diseases such as
recognised their importance and ring-fenced these from any travel ban; others put a stop to such trips, only to discover that the consequence was losing business to competitors. Advertising campaigns such
as United’s ‘It’s Time to Fly’ have emphasised the importance of face-to-face contact. But despite the best efforts of the copywriters, most modern business travellers don’t find slogging through airports with their security and immigration queues
Some recognised the importance of client-facing meetings and ring- fenced these from any travel ban
glamorous and would prefer to spend more time with their families. As Rohan Alce, a veteran airline executive, said at a recent UK travel industry conference: “When did business travel stop being fun?”
HOME WORKING It’s not just that the business travel experience has deteriorated. People’s attitude to the working environment has changed dramatically in the last five years. Not so long ago, remote working was something directly negotiated by someone who wanted to live far away from the office or reserved for new parents who elected to work from home one day a week. A home office is no longer the exception and it’s not only the self-employed working from home. There are a large number of home workers who visit the office only once a week or fortnight, so conference calls and web conferencing have become much more mainstream and integral to the working day. As Louise Kilgannon, travel buyer for a multinational pharmaceutical firm and a member of the Institute of Travel & Meetings board, says: “In the past I might have had two face-to-face meetings, but now maybe I will do one and then do the other as a videoconference. This has become a much more natural way of working.”
Those in work in 2014 are also likely to be working longer and harder, so are therefore very happy to opt for a phone call rather than a journey when it is appropriate for the purpose. As Carlson Wagonlit Travel director Nigel Turner points out, how we ‘meet’ people is not as straightforward as it once was. He says: “The way we work has changed. Time has become precious to us so people are perhaps choosing not to travel to gain more efficiency. We use conference calls more than we used to, not because people tell us to but because you can get the same thing done with a call, so demand- management is self-regulating. “We want to be efficient because we are more pressurised. Perhaps we don’t need a formalised system as much as we used to. We’re getting used to maybe not taking the trip.”
INFLUENCING BEHAVIOUR But demand management is about much more than travel avoidance. It is really about understanding and influencing the behaviour needed to deliver to the objective. Turner says: “Our role as a travel management company is to help our customers buy travel more effectively and travel more effectively, so they get better value out of every trip.” Like Turner, Kilgannon thinks demand management is about something bigger – it’s about travel departments becoming aligned with their stakeholders’ travel strategies. She says: “If I meet with a
stakeholder I try to understand what their requirements are and how to deliver that within budget. For example, we might suggest taking fewer people on a trip so this is all built into our communications. “Travel is back, but no way is there the tolerance for the same amount. You don’t see big teams on planes any longer. There’s a drive for a work-life balance. People have realised that they don’t want to be on the road every single week.”
Kilgannon and Turner both emphasise that demand management
Demand management
Oil and gas
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consideration as employees’ safety was top of the list – even though the incident had nothing to do with the company’s operations.”
RISING COSTS 19/02/2014 14:56
While it is clear that duty of care increasingly overrides all other considerations for oil and gas companies, particularly when they are affected by major incidents, the price of travel will always be at the forefront of buyers’ minds. Reports, such as Carlson Wagonlit Travel’s 2014 Travel
malaria and the lack of adequate healthcare facilities; the safety of transport and hotels; security threats, such as potential terrorist attacks, kidnapping and civil unrest; and, fi nally, environmental events including earthquakes, tsunamis, or ash clouds grounding aircraft. With all these potential problems, it’s not surprising that oil and gas companies work closely with their travel management companies (TMCs) and, also, travel security specialists, such as International SOS and Red 24, who put together evacuation plans for workers should the need arise for a speedy escape. Adam Knights, group sales and marketing director for ATPI Group, says: “Almost every company we deal with in this sector has an emergency response team and situation room ready for these types of occurrences. Not being prepared is simply not an option to customers or to a supplier of the customer when the call comes.”
“Not being prepared is simply not an option to customers when the call comes”
When energy workers are affected by a crisis, the importance of traveller tracking becomes paramount. Some companies are giving their travellers in what are considered high-risk areas Smartling mobile tracking devices, which connect to a satellite network and feature an emergency button. According to HRG director Susan
Lancaster, oil and gas companies can change their travel plans even for incidents not directly affecting their operations, such as the shopping mall terrorist attack in Nairobi last year. “One of the crew changes was due to transit through Nairobi with crew members coming in from all parts of the world,” says Lancaster. “But because of the shopping mall incident, the company’s head of security decided that crew members had to be diverted via different airports. Cost was not a
Price Forecast suggests that overall rates across the world will be rising – albeit moderately – this year.
FCM sales director Graham Ross
says: “Travel budgets are defi nitely going up, but this is due to a combination of growth in the sector, hence more travel, and the rise in the cost of travel, often because travel is at short notice, so fares are more costly. Predictions for the future of the industry look very promising and travel will rise accordingly.” Other TMCs point to the diversity
of travel arrangements needed to get to far-fl ung installations and facilities that cannot be reached through commercial airlines and, instead, require some element of charter fl ights. ATPI’s Knights adds: “The vast majority of our customers are broadly budgeting mild cost increases on like-
PUTTING TOGETHER A GLOBAL PROGRAMME
Ryan Taylor, global travel manager for oil and gas service provider Sparrows Group, is in the process of creating a global travel programme for the Aberdeen-based company
“CURRENTLY WE ARE GOING through the RFP [request for proposal] process to fi nd one TMC – at the present time we work with 14 across the group. The global tender went out to six TMCs. “We have 2,500 employees across the world in the UK, Europe, Middle East, Africa and Australia, and our annual travel budget is in excess of £10 million. “The biggest challenge is creating an internal
travel department that can work with the new global TMC.
“Our priorities are reducing costs, duty of care
and keeping transaction costs to a minimum. We want to take advantage of block buying with our own route deals. “We are looking at technology to get a
strong online booking capability – this would be for our general corporate travel between offi ces, because offshore and marine travel cannot be booked online. “Alongside the TMC, we are also tendering for a security provider to offer in-country support, including travel tracking as well as pre-trip information, such as online health webinars – malaria is an issue in West Africa, for example. “We would hope to appoint both the TMC and the security company in March, so we can start rolling out the global programme over the summer.”
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CASE STUDY
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