Amex Biz Travel Releases European Barometer

Travel Policies Broadening Into New Areas

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. November 19, 2008

NOVEMBER 19, 2008. American Express Business Travel EMEA announced the launch of its new annual barometer at EVP, the travel management company's leading trade show in France. Now in its 18th year, attendance at the event has been extended to travel managers and procurement professionals from across Europe, and new English language seminars have been added to the program.

'Building on the success of EVP and the benefit it brings to the industry, we're investing in expanding this premier event in France to provide a pan-European event. Bringing together travel buyers and decision-makers, industry experts and suppliers, the two-day exhibition offers a wealth of information sharing and networking opportunities, which we are sure will be of benefit to industry professionals across Europe', said David Herrick, SVP Business Travel EMEA and Global Foreign Exchange Services. 'Beginning the expansion of EVP this year, the annual Barometer has been expanded and we extended invites to a number of European clients. Next year we intend to open the invitation widely throughout Europe.'

The Barometer

Key findings of the Barometer showed that travel budgets have been closely linked with the development of business, with companies investing in travel to maintain (52%) or increase (44%) market share. However, over 70% of respondents intend to stabilize or decrease their travel budgets in 2009. Travel policies are being tightened across the board and companies seek to apply these across their business and subsidiaries. TMC's are increasingly viewed as partners to help companies to maximize their return on investment.

The globalization of procurement policies

71% of companies say they have international supplier agreements, and standardized policies, with the majority identifying air as the top category (76%). However, car rental and hotel, at 29% and 26% respectively, continue to be predominantly regional. Rail agreements remain, for the time being, a solely local activity. However, while this activity continues to be localized, it is still open to regional competition for the best rates.

Travel Policies broadening into new areas

The Barometer shows a strengthening of travel policies, particularly on control (20% increase) and tightening of expenditure limits (5% increase). There is also an increased importance on areas such as security and the environment.

The emphasis on safety and security has increased by more than 8% compared to 2007 (against previous results based on French respondent companies). In addition to the need to support the safety of their employees during their travel, companies were asked about their environmental balance. 30% of them take this into consideration in their travel policy, of which:

o76% prefer employees take a train where possible

oBy renting cars with reduced consumption (34%)

oAdopting "green" fleets

Of the European regions surveyed, the Nordics countries in particular demonstrated the greatest interest in this area.

In addition to these, 62% of companies surveyed also said they have increased the use of videoconferences. Again, Northern Europe is leading (Netherlands, the Nordic countries and Germany).

Companies are increasingly looking for TMC's who can support them in this issue, offering advice and services, with 28% incorporating these requirements in their criterion for a supplier.

Increase in process, monitoring and control of travel policies

Along with broadening of policies, control procedures are common for more than 90% of respondents. Indeed, another indicator of the maturity of European companies in this area is the demand for "pre trip" reports and the provision of business consulting services to analyze the movement and implementation of their agreements, upstream of the trip. Whereas, in more traditional companies "post trip" reporting and analysis of contracts are favoured.

The introduction of measurement tools and control have been accompanied by measures limiting the autonomy of employees for their travel expenses, although 51% still give travellers partial autonomy for the expenses they incur. Many companies believe that air, rail and car rental expenditure are well under control, but hotels, catering and ground services (seminars, taxis etc.) are much less well identified.

The key role of the TMC

TMC's are also recognized by respondents as critical in the provision and implementation of online booking tools with 57% of firms using an SBT. TMC's play a crucial role in both counseling and assistance for the implementation and manage the deployment of the tool for 84% of respondents.

In their approach to optimize and streamline their costs, companies report utilizing a TMC for:

oNegotiating rates, 57%

oUsing pre-negotiated rates, 28%

oImplementing a reservation system, 41%

Overall, companies are looking for value from their travel program and 60% say they have adopted a solution which has been proposed by their TMC, driven by a business need. These include driving lower direct costs, such as the migration of online traffic (40%), optimizing travel policy (26%) and the purchase (18%).

The types of remuneration are also changing: for example, the transaction fee was widely imposed in Europe for 71% of respondents, particularly following the extension of reservation systems online. New approaches are emerging as the combination of management fee and transaction fee (14%).

In parallel, a new model of remuneration was found in Sweden and Great Britain, and takes place today in France and the Netherlands: "Business Process Outsourcing, where the TMC is delegate for partial or total management of the travel budget of a company.

Perspectives 2009

When asked in September, more than 70% of firms planned to stabilize their travel budget or to cut back, with an average decrease of 12% reported by those expecting to cut back. However, this varies greatly across Europe: Britain with 32% of budgets revised downwards, northern Europe with 24%, and Spain with 23%. Impacted later, Belgium and France are respectively 19% and 17%.