As more than 225 travel managers and suppliers gathered in Toronto on April 2-3 for NBTA Canada’s 4th Annual Conference & Exhibitor Showcase, questions about the ways that the economic slowdown and growing environmental concerns will affect the business travel industry were on everyone’s minds. The conference provided some answers and a chance for presenters and attendees to discuss the issues.
Economics
Scotiabank senior economist Adrienne Warren forecast that the travel industry would continue to grow but at a slower rate compared to recent years due to the effects of the economic slowdown. "We have already seen some pressure from the high Canadian dollar, at least in terms of U.S. travel to Canada," she said. Warren predicted both commodity and energy prices would remain quite firm. "In terms of the travel industry that probably means higher fuel costs, higher air fares," she said. "We saw some announcements today from Air Canada and WestJet, passing on higher prices. You can carry it for so long, but eventually these prices will begin to creep into restaurant prices, hotel prices." Although she later added that the price of oil might return to the range of $95/barrel, she said the problem will not go away in the next couple of years. "Get used to it," she advised.
Western Canada will have the advantage of its booming oil and gas industry, higher levels of trade with Asia, and a boost from the upcoming Olympics, Warren noted. So far, the outlook is good in the West, according to Shelly Lewchuk, an NBTA Board member who is also Supervisor, Corporate Travel for Canadian Natural Resources, a Calgary energy company. "I haven't seen a significant downturn, however I think that companies are being very cautious," she said. "They are scrutinizing [travel] expenditures to a high degree." Lewchuk acknowledged that oil and gas companies are benefiting from high fuel prices, and the effects of the slowdown depend on what industry you work in, even in the West.
Environment
On the environmental front, one panel tackled questions about what the industry needs to do and is doing to reduce its carbon footprint directly. Demand is growing for “green” services in business travel, they said.
Panelist Michelle White, Director of Environmental Affairs for Fairmont Hotels & Resorts, said many organizations’ requests for proposals (RFPs) for business travel agreements now include questions about what the chain is doing to mitigate its carbon footprint. Meeting planners, too, are looking to "green" their events, she said. "They are all looking at how to minimize the impacts of those meetings, and the expectation is that you will have these strategies in place because it is a key component of any venue selection."
Helen Brough, Director of Advisory Services for American Express, says the majority of American Express business travel clients are asking similar questions. The problem is that these questions about environmental programs are typically answered in vague language from marketing departments: They say, “‘We are very committed to this. We are putting procedures in place,’” she said, but, “There's no hardcore detail.”
Fairmont Hotels’ White says such vague assurances are no longer relevant; clients want concrete, measurable details. Fairmont recently signed a contract to have the World Wildlife Fund assess the company's carbon footprint and recommend a strategy for change, she says. Until that plan is complete, White adds, “We largely focus on minimizing the environmental impacts of our hotels, looking at, for example, waste management strategies, energy and water conservation."
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R to L: Brough, Johnson, White |
Assessments such as the one Fairmont is conducting are vital, according to panelist Charles Johnson, director of sales for Agresso Travel Industry Solutions. In the past, he said, CEOs might have announced their intent to reduce greenhouse gas emissions by 10% with little or no idea of what that meant. Now, there is a trend toward releasing carbon statements similar to financial statements, he said.
Although green demand is growing, Brough said, higher costs for environmentally friendly products or services can be a barrier for travel buyers. "If a hybrid car rental is more expensive, that is still an issue." She added, however, that some companies are benefiting from being green, citing a survey in which 20% of American Express business travel clients said they had actually been awarded business based on their environmental programs."
Air Travel
Many other speakers touched on environmental concerns and what the business travel industry is doing to reduce its greenhouse gas emissisons. Robert Kokonis, Air Trav president and managing director, gave attendees preview information about the new generation of aircraft, such as the Airbus 350-XWB (Xtra Wide-Body) and the Boeing 787 Dreamliner, and he noted that the airline industry has spent billions improving fuel efficiency and reducing emissions.
Kokonis’ assertion that the airline industry is receiving more than its fair share of bad press about greenhouse gas emissions, considering that it is estimated to be responsible for only 3% of global man-made CO2 emissions, was echoed when Jim Facette, President and CEO of the Canadian Airports Council, and Sam Barone, President and CEO of the Air Transport Association of Canada shared the stage. “If anybody has an economic incentive to reduce their fuel burn, I can assure you it is the airline business. Thirty percent of our costs are fuel,” said Barone, noting that fuel efficiency has improved more than 70% over the last 30 years.
The pair also spoke about other challenges facing airlines and airports. Facette called on the federal government to help Canadian airports expand their business. “Our air service agreements with different countries around the world are outdated,” he said, explaining that although the government introduced a Blue Sky policy to encourage free trade in air travel, old bilateral agreements that limit air traffic coming into the country need to be renegotiated quickly. Barone concurred but emphasized that these are trade agreements, and there should be reciprocity. “I read every day how we should allow foreign carriers to come into Ottawa, Toronto, Montreal, Vancouver,” he said. “Sure, I’ve got five carriers that will start an airline in Europe. Give me the same opportunity to do this in Europe.”
NBTA Canada News
The conference also offered workshop opportunities for attendees. Motivational speaker Mike Lipkin offered a strategizing workshop, and Kathy Irvine helped those who attended her session on generational diversity in the workplace to delve more deeply into the ways that traditionalist, baby boom, Generation X, and millennial generations can work together more effectively. Two workshops were designed especially for buyers. Sue Swenson, team lead for travel at EnCana Corp., led a discussion about Requests For Proposals (RFPs). NBTA Foundation director Daphne Bryant also led one on benchmarking Canadian travel programs and policies. Both workshops showed buyers tools available on NBTA Canada’s website that will make their work a little easier.
NBTA President and CEO Kevin Maguire, CCTE, said NBTA Canada is the flagship for the organization’s international program. He acknowledged that NBTA has, in the past, been too focused on the U.S., but he said the organization is changing to have the international focus it needs. “We now see the travel industry as it should have been seen five years ago, six years ago, 10 years ago; it is an international, global operation,” he said.
He went on to say the shift will be reflected in the services and benefits the association provides: “We have member services that we have to deliver. We have operational programs that we have to make better,” he said.
For example, the CTE program will be expanded and directed to each region. “It’s not a U.S. operation. It’s not a global operation. It is a regional educational program that encompasses the regional needs, the regional desires, and adds a global aspect to it at the same time,” Maguire said.
He went on to say this year’s Canadian conference was “a magnificent accomplishment,” thanking and congratulating NBTA president Tanya Racz and her team.
Return to Connecting News April 2008