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Corporate Travel... Extracting Value in a Recovering Market

Corporate Travel... Extracting Value in a Recovering Market. Chris Reynolds (CIPS) Nick Hurrell. CIPS, Manchester and North West Construction, 16 November 2010. Introductions and Agenda. Corporate travel trends : 2010 – 2011 Value: Smarter Buying Travel management companies

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Corporate Travel... Extracting Value in a Recovering Market

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  1. Corporate Travel...Extracting Value in aRecovering Market Chris Reynolds (CIPS) Nick Hurrell CIPS, Manchester and North West Construction, 16 November 2010

  2. Introductions and Agenda • Corporate travel trends : 2010 – 2011 • Value: Smarter Buying Travel management companies Technologies • Where to next ?

  3. 2010...The market is growing • Business Travel Growth ‘Steady but strong’ A 12% increase in air travel transactions exceeds 2008 levels for the first time • BA back in the Black Before tax profit of £158 million during the first half of this financial year • Ryanair profits leap 17% increase in half year net profit to €452m • Capacity cuts boost AerLingus profits 35% increase in profits in July, August and September. • Virgin Trains increases Market share Manchester-London: 69% to 85% • UK Hotel occupancy rates growing London 87%, Regions 75%

  4. The Market Outlook - Air

  5. Airfares: likely outcome- 2011

  6. Airline Consolidation • Global Alliances • Star Alliance • One World • Sky Team • BA/Iberia • IAG ‘Interested’ in 12 carriers • Continental/United • North West/Delta • American: Largest US to 4th in a year

  7. Europe -3.2% Nth America -1.6% M. East -2.6% ASPAC -3.0% Africa +7.5% Sth America +4.5% Average Daily Hotel Rates 2010 Source: Advito

  8. Europe +2.5% Nth America +3.5% M. East +4.5% ASPAC +5.0% Africa +4.0% Sth America +6.0% Predicted Hotel Rates 2011 Source: Advito

  9. “Unbundling” • 2011 ancillary revenues forecast at $22b • Ryanair alone: £600m in 2009 ! • Little transparency of cost • No like for like comparison at point of sale • Swallowed up in expenses • Latest charges • Blankets/Pillows on flights • Mileage multipliers • Credit Card surcharge on hotel bills

  10. Value: Smarter Buying A Managed Travel Programme..... Key Drivers: • Transparency of spend • Safety and Security of employees • Pooling of volumes • Traveller Confidence

  11. Value: Smarter Buying • Airlines: • Contract or Best deal on the day? • Hotels: • Contract is a ceiling only • Negotiate on the extras • Manage your meetings spend • Rail: • Book online and in advance

  12. Value: Travel Management Companies Too big a focus on agency fees • Accounts for only 2.5% - 5% of spend

  13. Travel Management Companies

  14. Travel Management Companies • Should offer online and telephone booking • Separate pricing for online and offline booking • Global TMC, smaller agent or specialist? • Choice of payment method

  15. Travel Management Companies • Mandate or encourage ? • Compliance to booking process and preferred suppliers • Reduce leakage • Consistent data

  16. Travel Management Companies • Multi channel sources • Capture last minute reductions • Strong relationships with their suppliers

  17. Travel Management Companies • Online and real time data • Understand data sources • Ability to hand off to 3rd parties (traveller tracking, expense management, etc)

  18. Travel Management Companies • The right person is vital • Thought Leadership • Culture fit • Confidence • Should provide travel alternatives • Offer additional products only when they are right for you • Can be outsourced

  19. Where to next?

  20. New Aircraft = More unbundling Flexible Cabins: Personalised Service...Unbundled pricing

  21. Rail - more prominent • Other Operators will use High Speed 1 (Channel Tunnel) • High Speed 2 likely • Airlines / Rail will market together • Increasing Road Congestion and Environmental issues

  22. Technology (again...) • “On the go” booking • Video Conferencing? • Social Networking • No longer for the under 30’s...

  23. Thank You... Questions ? Contact 3SIXTY Global at: chris.reynolds@3sixty-global.com or:enquiries@3sixty-global.com Tel: +44 (0) 8456 808 360

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