Corporate travel professionals from around the world have been watching closely as the global economy has slowed and the cost of oil has skyrocketed. Industry colleagues have begun to share and compare cost containment measures, and the recent uncertainty on Wall Street has the business travel community wondering what will happen next.

To gauge the impact on American businesses and their travel operations, in NBTA from July through September surveyed 230 of its U.S. Direct (travel buyer) members, the majority of whom report a T&E spend of $10 to $25 million. The response was calm. While more than 50 percent of respondents are witnessing a cost savings mentality at every level within their organizations, it is clear that business travel is here to stay.

“The business travel community is not panicking, they are planning,” said Kevin Maguire, NBTA President & CEO. “Travel managers are strengthening current cost containment measures and reevaluating policies and budgets for 2009. Good times or bad – businesses will always send people on the road.”

To save on air travel costs, more than 60 percent of respondents are emphasizing advance purchase of tickets. Nearly 50 percent are sending fewer employees to conventions and tradeshows.  The NBTA International Convention & Exposition, however, broke attendance records this year, with more than 6,400 corporate travel professionals present.

“To reduce travel costs, companies are restricting participation in some meetings and conferences to allow for participation in those that will most benefit the company and employee,” said Maguire. “The business travel community knows that attending our annual Convention is the best opportunity of the year to network with clients and colleagues, carve out cost-saving strategies, and become more aware of what’s out there to help in today’s uncertain times.”

Companies are increasing the usage of meetings technologies to replace actual trips. Seventy-five percent of respondents are using more teleconferencing or web-based meetings applications, while nearly 60 percent have increased the usage of video teleconferencing. Only 13 percent are making use of TelePresence, a set of technologies that allow a user to feel and appear as if he or she is attending a meeting at a location other than their true location.

New airline add-on fees imposed this year have also taken a toll on corporate travel managers, with 75 percent calling luggage and other amenities fees “misleading.” Nearly 70 percent will consider negotiating these new fees with preferred airlines during the upcoming RFP process.

One respondent said, “I think it’s ridiculous to unbundle services and charge extra fees that should be included in the service provided. It adds more receipts to handle, more expense reports, etc. Just add those costs into the total price of the ticket.”  Another respondent agreed, “Low fare options are no longer clear. It’s too complicated and only adds to frustration for travelers and travel managers.”

Last week, one legacy carrier did just as travel managers have requested. Air Canada dropped its $25 second-bag fee and instead rolled fuel surcharges of between $20 and $60 into the overall price of its tickets. According to a September 18 article in the Toronto Star, Ben Smith, Air Canada’s executive vice president and chief commercial officer, said “the move reflected ‘expressed preferences’ of Air Canada’s customers, suggesting the extra charge was unpopular.”

Most survey respondents are hopeful that supply and demand of travel services will level off next year, but nearly half feel that business travel will decrease if the economy continues to deteriorate. ”Travelers will continue to spend until costs escalate,” said one respondent. “Then they will begin to adjust travel habits when costs reach unreasonable levels.”

Since the financial crisis has worsened in the last few weeks, NBTA has been in touch with members to again assess their situations and needs. While concerns and cost containment measures increase, and members and NBTA continue to watch the volatile market closely, corporate travel professionals seem positive and minimally affected.

“Travel buyers are comfortable with and confident in their current contacts and spending,” said Maguire. “While some are scaling back commitments, renegotiating contracts, and sending out fewer people, they are still expecting growth and are hopeful that business travel will help the global economy pull through this challenging time.”

View full survey report.

Return to Connecting News September 2008