Unsettled outlook
The turbulent global landscape appears to have made businesses cautious when it comes to travel spend
T
ea-leaves, entrails or tarot cards? There is no evidence the Chancellor of the Exche- quer peers into any of these
items before determining his economic strategy, but if George Osborne were to read data from cards of a different kind, those used to pay for business travel expenses in 2015, he might well register concern. The figures suggest little, if any growth, in travel – usually a worrying omen for the economy. There is better news for travel managers however, because the same numbers show compa- nies are successfully keeping their average spend per trip in check. According to American Express Global
Corporate Payments, the number of trans- actions by its UK commercial card clients fell 0.3 per cent in 2015, although transac- tions across the whole of Europe rose a modest 0.7 per cent. Vice-president of UK sales Alan Gillies attributes the results to more disciplined travel management and “an increased trend for day trips rather than overnight stays in light of restrictions on T&E [travel and entertainment] spend”. Neither Barclaycard nor Visa provide specific figures, but both report lower spend by existing clients. “Like-for-like, volumes are down,” says Barclaycard commercial cards product director Maria Parpou. “The business travel market is tightening its belt and maybe switching to more economical options.” Simon Thomp- son at Visa Europe offers a similar analysis. “There has definitely been a slowdown in growth,” he says. “Corporate clients are citing economic uncertainty and an element of political uncertainty, including the EU referendum.”
24 BBT CORPORATE CARDS SUPPLEMENT 2016
Citi enjoyed a 10-15 per cent increase in spend volume on a constant currency basis across Europe in 2015 – but much of that was new business, which included a windfall in the shape of direct US rival JP Morgan exiting the European commer- cial card market. Stripping out the new business, the market incurred significant headwinds, according to head of com- mercial cards EMEA, Steve Robson. “Our clients in oil or oil-related businesses have had to rein in activities because of the extraordinarily low oil price,” he says. “But a number of other big companies are freezing travel for a while, and we have also seen lay-offs and mergers which can take a thousand cardholders out of the game at a time. Companies think of travel as a quick saving, like cutting personnel.”
LOW-COST, HIGH SPEND However, there is one sector of travel in which Citi has seen undoubted growth: spend on low-cost carriers is up almost 100 per cent in Europe and more than 200 per cent in the UK. Airplus agrees – no fewer than 49 per cent of continental flights purchased by its UK customers last year were with budget airlines, and 51 per cent of domestic flights. “We see a lot more use of low-cost carriers,” says Airplus’s UK managing director, Caroline Haywood. “They have got much better at serving the business traveller and their reputations are much improved.” Bank of America Merrill Lynch (BoAML)
says increased use of low-cost carriers has helped move average airfares downwards. Citi assesses the fall in average fares at 5-10 per cent, but says hotel, rail and car hire prices are flat. BoAML says hotel prices
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