European companies continue to decrease cuts to business travel budgets this year
Business travelers wait at an airport.
The good news is budget cuts have decreased annually since 2009, but doesn’t start expecting spending increases also. Economic uncertainty and rising travel costs means corporate travel budgets will likely remain flat in 2013.
The majority of European companies said they maintained their business travel budgets in 2012 according to an industry survey released on Wednesday, with travel spend to be protected from cuts next year.
American Express Global Business Travel takes a Barometer of the business travel landscape on an annual basis to analyse corporate travel spend and firms’ adherence to travel policies. In its 2012 survey of over 500 European companies the travel management firm found that 63 percent of them maintained their business travel budgets in the last year, with 23 percent increasing travel spending.
Just 14 percent of companies cut business travel budgets. This compares to a telling decrease of 21 percent in 2011, 40 percent in 2010 and 66 percent in 2009.
Most of the surveyed firms (73 percent) are not planning to tinker with budgets next year, while only 16 percent intend to increase spending.
Another prominent player in the travel management space, Carlson Wagonlit Travel CWT.L has similar predictions for 2013. Andrew Waller, CWT’s president EMEA, wrote in a recent forecast report that, “All indications we have are that business travel will remain flat in Europe throughout 2013… Growth is unlikely until there is more clarity around solving the euro crisis and confidence returns.”
“We see this process stretching well into 2014.”
The AMEX barometer also found that the implementation of a strict corporate travel policy is now widespread, with more than 90 percent of large companies confirming that they have one.
However, AMEX found that only 30 percent of companies measure the return on investment of travel spending, saying that this makes “it hard to analyse the bottom line benefits that travel expenditure can offer.”
“Companies across Europe recognise that business travel is an important investment that adds value and drives business growth,” said Anthony Drury, vice president and GM, American Express Global Business Travel, UK and Nordics.
“Our Barometer helps companies understand how to maximise their business travel spend by providing an overview of trends and best practices in Europe.”
Some of these trends include booking tickets in advance; booking best available fares; using preferred suppliers; favouring rail over air travel; using low-cost travel options; and developing virtual meetings.
Creeping cost of travel
Despite the economic uncertainty in Europe, the cost of travel looks set to rise, though only slightly.
According to the 2013 CWT Price Forecast, EMEA air fares are expected to go up by 2.5 percent thanks to airlines‘ tight capacity controls.
AMEX Global Business Travel expects conservative increases in corporate hotel rates, despite relatively constant hotel room capacity, and flat car rental prices.
“The European hotel market in particular has seen little expansion as the recent economic crisis has constrained investment,” it says.
High speed rail fares are also set to rise by 9 percent in premium cabins, with a forecast 4.3 percent overall for the region.