TRAVEL AVOIDANCE BY MARTIN FERGUSON
ADDRESSING POLITICIANS AND ECONOMISTS in Washington this April, the head of the International Monetary Fund (IMF) said the global economic outlook was positive, though still “too weak for comfort”. Christine Lagarde admitted some regions
were suffering high levels of unemployment, and public debt remained cause for concern. However, she was confident great swathes of the economy had already “turned the corner”. In many quarters of the corporate travel sector there is a tacit expectation that the amount corporations spend on travel will inevitably return to what is often referred to as “pre-recession levels”. In the pre-credit crunch era it was easier for travel managers to permit more profligate policies, such as short-haul business class travel and five- star hotels for all management level staff. Money was swilling around the system and confidence was sky high. What followed the collapse was a disaster
for the travel sector. Corporate travel bans and avoidance schemes were rife, pushing many suppliers to the edge of collapse and others out of business completely. What did not seem to be considered, however, was the damage travel cuts were doing to company revenues. As we head towards the third quarter of the year there is genuine belief that the economy is on a path to sustained growth, though the trauma of the financial crisis remains fresh in the minds of chief executives (CEOs) and chief financial officers (CFOs) who have become extraordinarily cost-conscious. It therefore begs the questions: is business travel seen an expense or an investment? Andrew Tessler is associate director of global forecasting organisation Oxford Eco- nomics and author of a number of travel industry studies. His most recent work was entitled Shaping the Future of Travel, a white
BUYINGBUSINESSTRAVEL.COM
Instead of travel avoidance, organisations must look at cost avoidance
paper commissioned by travel technology firm Amadeus. There is, according to his research, a strong perception among CEOs and CFOs that profitability and travel spend are correlated; bans and avoidance are only taken in extreme circumstances. “That is why coming out the worst part of the recession, business travel was only cut back in the short term for many businesses in Western econo- mies,” he says. “When there is major concern [about company finances] travel is always one of the areas to be cut. Those whom we interviewed [for the study] said this is always the case, but then it always bounces back.”
TO TRAVEL OR NOT TO TRAVEL? It is often said that travel and entertainment (T&E) spend is a company’s third to fifth biggest expense. But should it really be one of the first budgets attacked in times of dif- ficulty? Paul Tilstone, senior vice-president at the Global Business Travel Association (GBTA), rolls his eyes when he hears talk of travel avoidance. “I find the term amusing,” he says. “It just illustrates where businesses go wrong when they think of business travel. It suggests the default position for any company meeting is that it has to be face-to-face, and to challenge the meeting methodology is travel avoidance.”
Tilstone believes companies that truly com-
prehend travel would never use the phrase. “You have to understand when choosing not travel will be detrimental.” The only exception, he says, is when a company must cut travel in order to survive. “But even then, the company knows they must get people back on the road at some point to drive growth.” Instead of travel avoidance, Tom Stone, managing director of Sirius Travel Sourcing, says organisations must look at cost avoid- ance. “This is also known as ‘smart travel management’,” he says. “That could be, for example, two trips rolled into one, or turning a two-day trip with an overnight stay into a simple day trip. Use of videoconferencing continues to become more prevalent, but largely as a supplement to travel rather than a replacement.” Stone says in recent years more restric- tive policies have been put in place, such as asking travellers to downgrade to economy class on flights of under five hours. “It’s the new normal,” says Stone, who believes most progressive corporations see travel as an investment that facilitates sales, and not an unavoidable cost of business. “Smart travel contributes to the bottom line, which is why [travel] policies and preferred programmes exist.”
COST ISSUES Getting the right travel programme is key to success, insists GBTA’s Tilstone. He encour- ages company boards to think about the reasons they travel as part of the overall company strategy. “Only once they have done this can they assess when travel is most effectively used to increase company performance, and when technology would do a better or comparable job for less cost. Travel is both a bottom-line cost and an
BBT MAY/JUNE 2014 49
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124