Business Travel News - Procurement Practices 2010 - (Page 16)

Procurement Practices Evaluating 2010’s Travel Outlook By JAY BOEHMER, SETH HARRIS & MICHAEL B. BAKER T he majority of procurement professionals expect travel spending to increase or stay the same this year compared with last, as fewer than one-quarter of Procurement Practices survey respondents said they would further reduce travel spending in 2010. Though the scarcity of corporate travel in the first quarter of 2009 makes first-quarter 2010 comparisons slightly rosier for corporate travel volume trends, which in many ways had nowhere to go but up, the improvements in volumes already are materializing in airline figures, UBS aviation analyst Kevin Crissey said. for the revenue and pricing departments to figure out that they should hold some seats back because there’s actually someone to fill those seats.” Despite the year-over-year improvement in corporate fares and volume, Crissey said airline revenues derived from corporate travelers remain down 17 percent from two years ago. The survey also shows a net increase in the number of trips anticipated for 2010, and on average, companies responding to the survey said travelers would take 16 percent more trips this year. However, the prospects for a sweeping corporate travel recovery remain uncertain for 2010. “The volumes are coming back, but they’re not springing back to what you would normally see at this point in the cycle. People are probably traveling smarter,” said former Association of Corporate Travel Executives president and Bank of America travel buyer Greeley Koch, now director of strategic development at management consulting firm Acquis Consulting Group. “You hear conflicting views: Some say this is just a first-quarter bubble and there was so much pent-up demand that people had to get out there, but then I hear some CEOs say, ‘We need to go out there and meet with our customers. It’s going to cost us money, so let’s just be smart about it.’ ” WALL STREET EXPECTS CORPORATIONS TO SPEND 13% MORE THIS YEAR ON AIR TRAVEL. Corporate volume on U.S. legacy carriers in February was up around 15 percent year over year, according to UBS calculations, while corporate fares grew by only 5 percent. Though Crissey stressed that corporate air travel has not recovered, he said those volumes last month grew at an even faster rate than in January. “We’re seeing that things have certainly improved,” Crissey said. “Volumes started to be up year over year in January and meaningfully up in February. After that comes fares. Fares are lagging, which is typical, but you need the volumes in order Wall Street expects corporations to spend 13 percent more this year on air travel, Crissey said. “You may not realize it, but you’re already running ahead of this pace,” he told a crowd of corporate travel buyers said at last month’s Strategic Travel Symposium, staged by Business Travel News and the National Business Travel Association. “Maybe not your individual organizations, but collectively, you’re running ahead of this pace.” On the other hand, the industry had banked on pent-up travel demand returning at a much faster rate, said American Express vice chairman Ed Gilligan. “I don’t see it coming back in robust ways that we can hope Plans for travel spending this year compared with last year for,” he said. “I don’t think we should plan on robust recovery. We 20% 13% can be hopeful for it, but we have to 35% 31% 37% 39% 41% 49% plan on more sluggish growth.” 67% 24% Last June, American Express cor23% 14% porate client spending hit the bottom and started to increase each month, showing a “classic V-shape 2009 2008 2007 2010 recession and recovery,” a view not seen from the consumer side. More Less Same “Coming out of this recession 16 April 19, 2010 // www.BTNonline.com // BUSINESS TRAVEL NEWS http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - Procurement Practices 2010

Business Travel News - Procurement Processes 2010

Contents
Letters to Our Readers
Ebbing of Procurement Tide
Reining in Disciplinary Measures
Managing Demand and Structure
Evaluating 2010's Travel Outlook
Negotiating the Role

Business Travel News - Procurement Practices 2010