Trends in CorporaTe Travel
demand managemenT
Contents
Executive Summary ...3
I. T&E Spend Targets ...5
II. Long-Term Outlook: T&E versus Sales ... 10
III. Planned Tactics for Achieving Savings ... 14
IV. Deployment of Travel Alternatives ... 21
V. Impact of Electronic Travel Alternatives on T & E... 26
VI. Firms With Carbon-Reduction Policies Take the Lead ... 32
VII. Does Video Add Value? ... 38
VIII. What’s Next ... 40
Methodology ... 42
Table of Figures
Figure 1.1: Travel Spend Targets for 2011 vs. 2012 ...7
Figure 1.2: Percent of Respondents Targeting a Reduction in Travel Spend, 2009 - 2012 ...8
Figure 1.3: T & E spend targets for 2011 by region ...8
Figure 1.4: Travel Spend Targets in 2012 by Region ...9
Figure 1.5: Targets for European travel programs with spend reduction goals ... 10
Figure 1.6: Targeted increases in travel spend in 2012 ... 10
Figure 1.7: Increased Travel Spend Targets by Company Size ... 11
Figure 2.1: Expected Change in T & E to Sales Ratio 2010 vs. 2012 ... 13
Figure 2.2: T & E to Sales Ratio by Region ... 14
Figure 2.3: Expectations for T & E Spend to Sales Revenue by Company Size ... 15
Figure 2.4: Expectations for T & E Spend to Sales by Industry ... 15
Figure 3.1: Tactics to Control Travel Spend ... 16
Figure 3.2: Policy Enforcement by Region ... 17
Figure 3.3: Planned Tactics to Control Spend by Company Size ... 18
Figure 3.4: Planned Sourcing Initiatives to Control Travel Spend ... 19
Figure 3.5: Evaluation and Inclusion of Discount Carriers/Lower Tier Hotel Brands in Travel Program ... 20
Figure 3.6: Hotel Pricing Model by Region ... 21
Figure 3.7: Hotel Pricing Model by Company Size ... 22
Figure 3.8: Issues with Hotel Agreements Based on Dynamic Pricing ... 22
Figure 4.1: Penetration of Various Electronic Travel Alternatives* ... 23
Figure 4.2: Scope of Deployment of Electronic Alternatives in 2011 (n=158) ... 24
Figure 4.3: Deployment of Conferencing Technology to 75% or more of Travelers (2009 vs. 2011) ... 25
Figure 5.2: Communication & Training Provided During Conferencing Deployment ... 30
Figure 5.3: Effect of Training on T & E Reduction ... 31
Figure 5.4 Effect of Travel Policy to Encourage Adoption on Savings ... 31
Figure 5.5: Travel Department’s Role in Decision Making on Conferencing Technology ... 32
Figure 5.6: Travel Department’s Role in Managing/Tracking Travel Alternatives Usage ... 32
Figure 6.1. Is Reducing Carbon Currently an Explicit Goal for Your Company’s Travel Program?... 34
Figure 6.2 How Companies Informed and Trained Users Following Deployment of Travel Alternatives ... 35
Figure 6.3: Tactics Used to Encourage Adoption of Travel Alternatives ... 35
Figure 6.4: Companies That Reduced Travel Spend Following Travel Alternatives’ Deployment ... 36
Figure 6.5: Expectation for Change in Relationship between T & E and Sales Revenue in the Next 2-3 Years.. 36
Figure 6.6: Role of Travel Department in Decision-making About Implementing Travel Alternatives ... 37
Figure 6.7: Current Role of Travel Department in Managing/Tracking Use of Travel Alternatives ... 37
Figure 6.8. Does Your Company Measure the Impact of Travel Alternatives on Travel Spend? ... 38
Figure 6.9. Is Reducing Carbon Currently an Explicit Goal for Your Company’s Travel Program?... 39
Figure 6.10 Carbon Reduction Included in Travel Program by Company Size ... 39
Figure 7.1: Usefulness of Video-conferencing as a Replacement to Travel ... 40
Figure 7.2: Quality of Video-conferencing 2009 vs. 2011 ... 41
Figure 7.3: External-Connectivity Issues’ Impact on Video Conferencing Usefulness ... 41
Figure 8.1: Expected Change in Future Use of Conferencing to Replace Travel for Various Purposes ... 42
Figure 8.2: Social Media Integration into Travel Program ... 43
Figure 8.3 Companies That Provide Business Travel Applications for Travelers’ Mobile Devices ... 43
Figure M.1. Respondent Profile by Company Size (Total Revenue) ... 44
Figure M.2. Respondent Profile by Annual T&E (Respondent’s Region) ... 45
Executive Summary
Following two consecutive years of double digit reductions in 2009 and 2010, corporate travel budgets are projected to rebound for a second year in 2012 according to a recent global survey of more than 200 corporate travel managers. The study, conducted by Kotler Marketing Group and the Association of Corporate Travel Executives (ACTE), found that 55% of global travel programs plan to increase their travel spend in 2012, continuing the momentum from 2011 when 73% increased their travel budgets.
Yet even with the business environment improving, corporate travel managers remain under pressure to optimize their travel dollars and find savings, the study found. Travel managers are looking to a combination of demand management and sourcing tactics to control costs. The top four demand-management tactics that they will rely on more in 2012 are:
• Reducing non-preferred vendor usage • Increasing adoption of self-booking tools
• Requiring advance purchase of travel reservations • Encouraging use of electronic travel alternatives
(The full report provides detailed analyses by geographic region and company size, of planned changes in corporate travel spend as well as demand management tactics.)
The study found no let up in travel managers’ expectations for being able to negotiate lower prices with travel suppliers. More than half expect this tactic to achieve incremental savings for them in 2012.
The study also examined the penetration of “dynamic pricing” in the hotel industry, a pricing model that offers corporations a discount off a floating, best-available rate. While this model has been adopted in some sectors in the business travel industry, travel managers in other sectors have been resistant.
(See the full report for analysis of the expense categories on which travel managers are most likely to focus their negotiation efforts this year.)
Electronic Travel Alternatives
Electronic travel alternatives (e.g. web- and video-conferencing) remain one of the most popular sources looked to for future travel savings. The study examined this trend in depth in order to address a set of key issues faced by corporate decision makers:
• To what degree do conferencing tools actually reduce corporate T & E spend once deployed? • Do some conferencing tools make more effective travel substitutes? If so, in what situations? • Which best practices for managing conferencing deployments have the biggest impact on results?
The study identified key characteristics of the respondent companies that achieved maximum travel savings from conferencing technology. One of the most notable was that carbon-reduction goals are a part of their corporate travel strategy. The study found that these companies were more than twice as likely to achieve travel savings during the first year of their conferencing technology deployment. They out-performed in terms of measures such as total travel savings, internal travel savings and savings on executive travel.
However, the study found that many companies failed to realize travel savings from conferencing deployments, with a key reason being the lack of coordination between IT and travel departments. Notably 51% of travel managers reported having no involvement in managing conferencing technology’s use as a replacement for travel.
(See the full report for the five best practices that had the biggest impact on travel savings achieved following web- and video-conferencing deployments.)
The survey also solicited input on new tools that are being introduced into the business travel arena— social networking and mobile travel apps. Less than 20% of companies have integrated social media as a communication medium for travelers into their travel programs, while a majority (52%) of companies is providing business travel applications for travelers’ personal mobile devices.
The full report presents details of the study findings, including breakdowns by respondent organization size, geographic region, and industry.
Methodology
The study was undertaken in partnership with the Association of Corporate Travel Executives (ACTE). ACTE is a global association with members representing both corporate travel buyers and suppliers. The survey was fielded to the travel buyer members only. Responses from vendors and travel consultants were omitted, as were responses from suppliers of electronic travel alternatives such as video-conferencing.
Preliminary interviews were conducted with travel managers representing a broad cross-section of regions and industries. Survey data was gathered via an online instrument in November 2011 resulting in 201 qualified complete responses.
Respondent Profile
By its nature the ACTE membership represents mostly large global enterprises. Since smaller companies often do not have a dedicated travel function, responding companies’ size represented firms with larger sales revenues than a random sampling of corporate responses.
Figure M.1. Respondent Profile by Company Size (Total Revenue)
27% 32% 29% 12% $10B or more in sales $1B to $10B in sales Less than $1bn in sales Don’t know
Respondents were asked to provide the most recent annual T & E spend for the travel program in the region they would base their response on.
Figure M.2. Respondent Profile by Annual T&E (Respondent’s Region)
The survey was conducted globally with strong response from the US, Europe and Asia-Pacific:
Figure M.3. Regional Representation
49% 7% 25% 4% 14% 1% 11% 13% 14% 15% 47%
>$100mm regional travel spend $50-100mm regional travel spend $25-50mm regional travel spend $10-25mm regional travel spend <$10mm travel spend
United States or North America Canada
Europe
Middle East/Africa Asia-Pacific Latin America
About the Authors
About ACTE
The Association of Corporate Travel Executives (ACTE), founded in 1988, is a leading non‐profit organization that serves and advances the global business travel industry in 102 different countries. For more than 20 years, ACTE has continued to fulfill its vision of uniting travel executives around the world, providing them with up‐to‐date news, knowledge, beneficial research findings and networking opportunities. The education of ACTE members infiltrates to more than 12 million business travellers worldwide. From corporate buyers to agencies and suppliers, all sectors of the industry are granted equal membership. ACTE has representatives in Africa, Asia‐Pacific, Canada, Europe, Latin America, Mexico, Middle East and the United States. To join ACTE, or for more information, visit www.acte.org
About Kotler Marketing Group
Kotler Marketing Group is a global consulting, research and training firm, specializing in solving sales and marketing challenges. Our philosophy is based on the work of Dr. Philip Kotler of the Northwestern
University Kellogg School of Management. Dr. Kotler is widely regarded as one of the world’s leading strategic marketers. For more on Kotler Marketing Group, please go to www.kotlermarketing.com
