THE BREXIT EFFECT What does commercial card data for 2016 tell us about how the UK’s Brexit vote has affected business travel? Different issuers have reached different conclusions about the evidence they have seen. According to Citi’s head of commercial cards EMEA Steve Robson, total card spend across EMEA was lower in the second half of 2016 than in the first half. “Normally, the second half is flat or slightly stronger than the first,” he says and attributes the dip to “the Brexit effect”. Robson adds that figures show Brexit costing UK-based customers directly, with hotel and restaurant average transaction values for UK cardholders rising in the second half of the year “because of the depreciation of the pound”. However, Airplus International’s UK transaction figures indicate an alternative story. “The six months after the Brexit vote show exactly the same patterns as the previous year, suggesting there has been little knee-jerk reaction in the corporate world,” says UK managing director Carrie Haywood.


UK BUSINESS TRAVEL AIR SPEND BY NUMBERS AVERAGE TICKET PRICE All


UK domestic Continental Long haul


Economy


Premium economy Business First


2015 £529 2015 £192 2015 £312 2015 £2,095


2015 £328 2015 £1,709 2015 £2,976 2015 £4,439


PERCENTAGE OF SPEND UK domestic Continental Long haul


Economy


Premium economy Business First


2015 11% 2015 37% 2015 52%


2015 59% 2015 5% 2015 35% 2015 1%


PERCENTAGE OF TICKETS Economy


Premium economy Business First


2015 93% 2015 1% 2015 5% 2015 1%


*Actual non-rounded figure: 0.2%*


Source: Average of all air tickets booked by UK customers of Airplus International, 2016


2016 £531 2016 £172 2016 £295 2016 £2,074


2016 £314 2016 £1,668 2016 £2,934 2016 £3,655


2016 8% 2016 37% 2016 55%


2016 56% 2016 6% 2016 37% 2016 1%


2016 92% 2016 2% 2016 6% 2016 0%*


Although he won’t quote figures, Diners Club marketing director Adrian Steele also partly credits greater use of budget airlines for lower average ticket prices. Generally, however, says Steele, “we are seeing closer adherence to policy, leading to the same volume of journeys but average spend moving down, especially for sectors under pres- sure, such as oil and gas. There is more focus on lost savings opportunities.” American Express sees it differently.


It says air transactions in the UK fell by an unspecified amount. UK commercial payments vice-president and general manager Karen Penney attributes this to a shift to rail or video-conferencing. UK rail spend rose 2.4 per cent.


BOOKING EARLIER Travel and entertainment spend by Citi clients across Europe, Middle East and Africa jumped just under 10 per cent after currency adjustments, but Steve Robson, head of commercial payments


In association with


EMEA, says all the growth came from new clients. Total spend by existing clients was flat to down, mainly because of clients in challenged sectors, such as oil and shipping, reducing employee numbers and imposing travel restrictions. Average transaction value for air purchases was also flat to down. “There is a definite trend to booking earlier for air,” adds Robson. Average transaction value for hotels fell even more sharply, down 10 per cent. Over at Conferma, the virtual card technology provider, average transac- tion values rose slightly in 2016, but chief executive Simon Barker attributes that to travel management companies increasingly using virtual cards to pay for meetings and event expenses. “We are seeing £250,000 to £500,000 going on a single invoice,” he says. Similar to what Airplus saw for air bookings, the time between when hotels are booked with a Conferma virtual card and when travellers check


in has lengthened, up from 17.9 days in 2015 to 18.5 in 2016. “The further out you book, the better the deal, although there will come a point where it is not prudent to book any further in advance,” adds Barker.


He makes a similar point about the prices at which rooms are booked with a Conferma card number and the actual price paid at check-out. The dis- crepancy between the two has gradu- ally fallen since 2013 and fell again last year from 5 per cent to 3.7 per cent. Barker believes the gap cannot narrow much more because there will often be hidden costs that are not fully revealed until check-out, such as local taxes. The narrowing of the gap is testament to buyers having already spotted and factored in most of these costs, he says. Barker also pays tribute to travel managers for average hotel cancellation fees falling from £113 to £96. “They are getting more sophisticated in what they are looking to negotiate on.”●


BBT CORPORATE CARDS SUPPLEMENT 2017 21


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