Business travel continues to be big business – but it is also a changing business, according to a study by the National Business Travel Association. With a weakened global economy, businesses are shying away from international travel, while continuing to do business on a world stage.
When it comes to travel, businesses are becoming more frugal than ever. Most are looking to cut deals with airlines, hotels and car dealers to save themselves money. The strategy appears to be working. Companies are finding lower than standard rates on airline tickets, hotel rooms and rental cars.
That doesn’t mean the business travel industry is suffering.
In 1997, for example, American-based corporations spent $165 billion on business travel, including air travel, lodging, car rental, traveler support and administration. That number represents a sharp increase over 1982, when the industry sector was first tracked, according to the NBTA. In 1982, for example, American-based corporation spent a mere $70 billion.
The Virginia-based NBTA represents more than 2,000 corporate travel managers and travel service providers. NBTA’s member list is an impressive one, including Apple Computer, 20th Century Fox, Gateway 2000, GTECH, Miller Brewing Company, R.J. Reynolds Tobacco Company, Sara Lee Bakery and Stanford University.
Throughout a given year, NBTA also issues a series of papers that mark trends and business travel statistics. Its latest is the “1999: Business Travel Forecast – Business Travel and Corporate Travel Management: Capitalizing on Emerging Trends.”
The report was written by Mark A. Johnson, president of the NBTA and Norman R. Sherlock, the organization’s executive director. Among its findings, are details regarding a trend toward companies negotiating better deals on business travel through direct relationships:
Corporations have increasingly moved to control business travel costs through increased negotiation with travel suppliers. With an improved ability to collect data and strongly indicate market share, corporations have proactively sought opportunities to re-negotiate their air travel, lodging and car rental fees with preferred customers. In the last year, 88 percent of NBTA members had negotiated agreements with one or more air carriers, as compared with 75 percent who have preferred agreements with one or more lodging providers and 70 percent who have an agreement with one or more car rental agency.
Over 69 percent of NBTA member companies have sought to negotiate with major airlines as a means to address rising airfares. Of the percentage who reported opening negotiations with major carriers, 63 percent reported that they achieved a more favorable rate for their company.
Within the lodging sector, corporate negotiations proved to be a cost saving. Seventy-six percent of corporations with travel programs pursued negotiations with lodging entities. Over 75 percent of them achieved hotel rates below the standard corporate rate. Of those companies, 29 percent reported saving between 5 percent and 10 percent below the standard corporate rate, 38 percent reported savings between 11 percent and 20 percent, 28 percent reported savings between 21 percent and 29 percent and 6 percent of companies reported savings 30 percent below standard corporate rates.
The report also looks at the impact of “Globalization in a New Economy.” Those findings include:
As recently as 1997, international travel accounted for 20 percent of all business travel by U.S.-based corporations.
Within the wake of a negative global economy, companies have continued to strategically employ the management of business travel as a means to balance the impact of international exposure. Among offsetting strategies corporations have initiated in the third quarter of FY 1998, 53 percent have pursued alternatives to travel including video- and teleconferencing, 36 percent have moved to re-negotiate with travel supplier companies.
Over 56 percent of survey respondents have moved to reduce the number of employees traveling. In addition, over 40 percent have altered corporate travel practices and policies as a means to recapture cost efficiencies.
On average, corporations surveyed have reduced travel by 17 percent overall within both domestic and international markets as a result of reduced business to global regions. Over 22 percent of U.S.-based corporations indicate that they reduce travel to Asian markets, 13 percent will reduce travel to Europe and 16 percent have reduced travel to Latin America in the third and fourth quarters of FY 1998. Furthermore, the NBTA survey revealed that surveyed corporations will reduce travel within the domestic United States by 20 percent.
