07 February 2008 - "In spite of gathering economic storm clouds," more than half of 1,000 travel manager respondents to this year's AirPlus International Travel Management survey expect travel costs and trips to rise in 2008. Across 10 markets (nine countries in Europe, plus the United States), 54 percent of respondents said tackling travel costs would be their top priority. AirPlus released the survey this week at the Business Travel Show in London.
The Transnational spoke this week to AirPlus International North America president Richard Crum about the survey results, as well as his volunteer position as president of the Association of Corporate Travel Executives.
Nearly 60 percent of survey respondents expect an increase in the number of trips employees take, and 53 percent expect a rise in their travel bills. It sure doesn't sound like respondents are fearful of a recession or the impact it may have on travel, does it?
That is the most significant thing I noticed in the responses, that you don't see that sense of a looming recession, economic downturn or any need to cut travel. That worries me. I've seen other stories written, I think it was a JP Morgan analyst who said his own company--after him warning over and over about what would be a likely downturn--raised their travel budget year over year from '07 to '08.
We could see in the second half of the year, if we do have this economic downturn that people are forecasting, a very sharp impact on travel rather than a planned and moderate one. A concept that is going to have to be more important for people managing travel budgets is demand management: Being able to say, "What is the strategic value of each trip? How do I rate the ROI [return on investment] of each trip, so when I am in a position where I need to cut, I can cut strategically?" It's not cut 10 percent out of every budget or every department, but it's really looking at travel in terms of its strategic value to the company and making smart decisions.
While tackling travel costs was identified as the top priority for travel manager respondents, only one of eight respondents said they manage travel full time. While 39 percent of travel managers within large companies said they manage travel full time, 38 percent of large-company managers said they spend 25 percent or less of their time on travel. Are companies focusing enough resources on travel?
The way I looked at it, it's the end of the trend of moving travel into finance or procurement. Someone is a procurement professional or a buying professional, and travel is part of what they do. There was also a question about how important is travel management. In the U.S., U.K. and other regions, it still rated as a very important aspect of our business. [The results are] more about people having that multi-function responsibility because of where they sit, rather than travel becoming less important.
Traveler well-being tied as the second most important task of all surveyed. What should corporations be doing to ensure the well-being of their travelers?
The answer probably rose to second place because of the increased focus on duty of care: When they're sending employees on business trips, companies need to make sure they're taking care of travelers' well-being, from all the traditional things like helping them understand the destination, customs, currency and language, but also tracking those travelers and keeping them informed when they're on the road.
Companies are realizing that in order to take better care of travelers, they also need to tighten policies. Traditionally, companies tighten policy to manage preferreds and their programs to maximize dollars and cents. Now, in order for me, as a manager of travel, or as your company and employer to take care of you, we're going to need you to more strictly adhere to the policy and programs and use the vendors, agency, card and so on that are in place so we can do right for you.
Turning to other issues, we've been talking for the past year about the potential for airlines to add surcharges, pass-throughs or some sort of transaction fees to accept charge or credit cards as a means to reduce their own distribution costs. What is happening today, and what do you expect by year-end?
In the United States, a combination of state laws and some of the contracts with associations prohibit surcharging, so until some changes happen, you won't see anything like we've seen in Europe, Asia and other parts of the world. It still is a trend that's continuing. It started off as some of the new entrants or low-cost carriers adding on surcharges, but now Lufthansa, British Airways and the network carriers are also talking about doing it in their home markets.
Like we saw with agency commissions and the focus on global distribution system costs, it isn't a big bang; it's an evolution. But it's something that the airlines are clearly focused on. Corporations need to do more to understand the economics of a card system. The more you know, the more you can work with your card issuer, airline suppliers or TMC to get the maximum value created by these card programs.
The Single European Payment Area will come live this year, which will change a lot of the dynamics of the card industry in Europe. That is where you'll see most of the developments in terms of airlines, card acceptance, policies and costs.
Wearing your ACTE hat, last year you talked about corporate social responsibility as one of your top priorities. What has ACTE, and you as the head of ACTE, accomplished there, and what do you still wish to do?
The accomplishment--and it goes back before me, so I give credit to where it's due--is really raising the awareness of corporate social responsibility and how travel programs have to be part of that. My focus this year is taking the next step. What worries me today is what I call the gold rush of green taxes. We've seen this in the U.K. and Netherlands, I've heard about it starting in Germany and it will happen in the U.S. It will be in vogue for governments to say, "I know, what we'll do is have an environmental tax, and we'll put it on rental cars, hotels, airlines and airports."
The problem is twofold. One, history says these taxes don't actually do anything to help the environment. What they really do is sap the investment being made today in alternative energy generation, or other ways to reduce or offset the footprint, and transfer those same dollars and cents into government programs that aren't going to have an impact.
The second side of that is: This is going to turn into a nightmare when you have to think that for one trip, you may have six, seven, eight or 10 new taxes added to the bill. What I'd like to do as ACTE president is raise the attention of what we've done as an industry--everything from what the buyers have done in terms of changing their programs and offsetting, to what suppliers have done in changing their operations and reducing energy consumption and the global footprint of so many aspects of our industry.
This is one of those things where you look at all the progress and then look on the horizon and think, this could all be ruined overnight with well-intentioned governments saying we've got to do something about the environment but going about it the wrong way.
