Negative Economic Impact on Global Travel Industry Stronger Than Expected

ACTE Business Travel Survey

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. February 10, 2009

FEBRUARY 10, 2009 - The collapse of the global economy has had a profound impact on the business travel industry, placing a new emphasis on corporate travel department objectives, procedures, and existing contracts between buyers and suppliers, according to a comprehensive survey conducted by the Association of Corporate Travel Executives (ACTE).

Compared with a similar survey taken last year, there are dramatic changes in travel spends, areas of projected savings, and a new approach to the manner in which business travel may be conducted in the future.

One significant change is a dramatic increase in the number of business travel managers reporting they will spent less on travel in 2009 than last year. Last year's ACTE 2009 Business Travel Spend Survey, taken in September, indicated that 33 percent of travel managers would spend less on business travel in 2009, 31 percent would spent the same, and 36 percent would spend more. The current poll indicates that 71 percent of respondents will spend less on travel in 2009, with 21 percent claiming they will spend the same, leaving only 8 percent claiming they will spend more.

'There are a number of reasons for this change,' said ACTE Executive Director Susan Gurley. 'The continued drop in U.S. consumer confidence has a profoundly negative effect on demand, which causes increases in layoffs and joblessness. Lack of demand causes a slump in manufacturing, which in turn creates a slowdown in global commerce. This has a massive trickledown effect on business travel. Among the hundreds of thousands of layoffs reported in the U.S. alone, there are literally thousands of business travellers now removed from business travel circulation.'

The ACTE 2009 Business Travel Spend Survey illustrates that the hardest hit area of business travel is internal meetings. ACTE research shows that member companies are targeting non-revenue producing (non-strategic) internal meetings as these can constitute up to 40 percent of a travel budget. The growing popularity of electronic business travel alternatives is enabling companies to reclaim as much as $10 million (USD) from their travel budgets, without compromising their travel objectives. The survey showed that interest in electronic travel alternatives jumped from 32 percent in 2008 to 50 percent in 2009, making it the number one ranked priority for this year.

Sixty-one percent of the survey's respondent travel managers indicated they have approached their vendors to renegotiate contracts in mid-term. Eighty-three percent have focused on their hotel vendors as the most likely source of savings. Forty-six percent are approaching the airlines, and 31 percent are looking at reducing their car hire spends (rental car). Sixty-seven percent of ACTE members report that the hotel industry has been the most proactive in responding to the current crisis.

Though CSR is running in last place as a priority, compared with the economy and cost cutting objectives, it is still an important initiative for companies. Noted Gurley, 'Corporate Social Responsibility has not fallen from favour in these challenging times. As the survey shows, however, good CSR does not automatically include greener travel choices, as under present conditions these frequently conflict with the greater urge and necessity to cut costs.'

This latest ACTE survey revealed that travel managers have set savings goals ranging from 10 percent to 20 percent, depending on the market sector and their volume.