business travel sector dips slightly ahead of brexit


Corporate travel buyers appeared divided on the impact of Brexit on corporate travel demand in early 2019. Travel buyer Rudiger Bruss of


automotive manufacturer Continental warned in February: “Costs will go down because demand will plummet.” Speaking at the Business Travel Show in London, he said: “I see demand dropping significantly to and within the UK.” However, fellow German Florian Storp, of German travel association the DRV, insisted: “We don’t see a slowing of transactions between the UK and EU.” UK corporate travel leaders also


appeared relaxed. Steven Norris, Flight Centre Travel Group corporate managing director for Europe, reported in February: “We had our largest year-on-year growth to date in the UK.” Clive Wratten, then head of travel management company Amber Road and now chief executive of the Business Travel Association (BTA), said: “We’re not seeing any hesitancy. We’ve got past the point of ‘All aircraft are going to stop flying’.” That was before the Brexit date moved not once but twice, of course. ONS figures showed a 3% decline year


on year in UK outbound corporate trips in 2018 and a 2% fall in the 12 months to June 2019. Indeed, the ONS data shows a progressive decline since 2016, the year of the Brexit referendum. UK business trips to Germany and


The Deloitte view


Business travel companies have faced challenging conditions in recent years, with UK corporate trip volumes declining. However, market analyst Mintel forecast


business travel activity would stabilise in 2019. Corporate travel spend in the UK professional services and legal sectors remains largely untouched by uncertainty around Brexit, while other sectors have benefited from localised trends, including an increase in oil and gas exploration activity. The last few years have seen consolidation and geographical expansion in the


corporate travel sector, although there were fewer transactions in 2019 than in the previous three years. Of the ‘big three’ TMCs, only American Express GBT has been active this year, acquiring a majority stake in Kanoo Travel and the business travel arm of German group DER Touristik. This diversification into the SME corporate market may be a future M&A trend among the large, global players. SME operators such as Reed & Mackay


continued to expand their international networks, in R&M’s case by acquiring


Concierge Travel in Australia while also strengthening its position in the UK wuth the acquisition of Business Travel Direct. Specialist Key Travel expanded its market share with the acquisition of Raptim Humanitarian Travel late last year. Although private equity has taken a


back seat this year, it’s worth noting all three businesses mentioned are private equity-backed. We expect to see further


consolidation in 2020. █Nigel Bland, partner, and Janice Clement- Smith, assistant director, Corporate Finance


Upbeat sentiment of buyers and TMCs belied by 2% drop in UK outbound business trips


France appeared flat year on year in 2018. Trips to the US were down, likely owing to the unfavourable exchange rate, while increased time spent in China and Hong Kong was reflected in a sharp rise in total nights. Yet the figures do not suggest a break from previous trends, merely a degree of caution on spending. None of this reflects on the health of


travel management companies (TMCs), which continue to see strong demand, attested to by the investment interest in the sector (see Investment, pages 26-28).


UK CORPORATE TRAVELLERS


FIGURE 34:


Overseas trips, 2018 -1


+1 Men


% point change on 2017


Women 76% 24% Source: ONS


NDC ‘MILESTONE’ Development of Iata’s New Distribution Capability (NDC) technology, which promises to transform third-party distribution of airline tickets and a core part of travel management, moved forward with collaboration between airlines, TMCs and technology providers to facilitate the first live bookings. American Airlines, American Express Global Business Travel and Amadeus announced completion of their first NDC bookings in August, hailing a “critical milestone”. Yet the companies acknowledged “full functionality of end- to-end booking flow and service” would depend on “reaching scalable production levels”. Gianni Pisanello, vice-president of Amadeus’ NDC (X) programme, noted the technology was not at the point “where


24 Travel Weekly Insight Report 2019-20


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