Five Major Trends in Corporate Travel Practices in Asia Pacific


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Five Major Trends in Corporate Travel Practices in Asia Pacific

  1. 1. TRAVEL Insights Abacus Five Major Trends in Corporate Travel Practices in Asia Pacific Home to some of the world’s fastest growing corporate travel markets, Asia Pacific offers vast untapped potential to operators recognising and acting on regional trends. Defining them, Abacus has collated the views of many of its most influential travel management companies (TMCs) and corporate travel agencies (CTAs) in the ‘2013 Abacus Corporate Travel Practices Survey’. Powerful brands in the travel industry, eight in ten report annual revenues in excess of $30 million, with the majority dedicated to corporate travel management. Many trends were identified, but those they see as having the greatest impact on the businesses over the next two to three years are ranked in an essential top five. Trend #1: Corporate Policy Tightens Across Organisations The generous, full-fledged privileges previously enjoyed by corporate travellers during the boom years in Asia may be consigned to the past, given that an overwhelming 97% of respondents have received instructions to further tighten corporate travel policies. There is no relaxation of the rules in sight, despite the more favourable economic outlook acknowledged by all. The levers are frequency and class of travel. Trends observed from corporate travel clients Companies are increasing policy enforcement (e.g., preferred suppliers, Lowest Logical Airfare) Companies are decreasing the number of business trips Companies have implemented policies that have forced travellers to take lower star level lodging Companies are using alternatives to travel such as web and video conferencing 97% 73% 47% Companies have implemented policies that have forced travellers to fly economy verses business class 60% 30%
  2. 2. Policies governing the use of LCCs 40% 37% 40% 33% 33% 30% Lowest fares Flight times Data capture Booking channel LCC fees associated with cancellation/trip modification Fees associated with baggage and ancillary services Secondary airport 77% Almost three-quarters of respondents (73%) reported corporate clients implementing policies to decrease the number of business trips. Six in ten clients are extending economy class thresholds to reduce business class travel. For almost half (47%), travellers are also now encouraged to opt for lower-star accommodation. But, the savings are marginalized in many cases, by the perceived increase in average daily rates at the major brand hotels: 67% say they are higher than normal. Higher occupancy rates in the major cities (50%) and the influx of new stock with the number of hotel openings (43%) have also encouraged clients to look at different products and categories for additional savings. “Travel companies need the widest choice of accommodation options and price points to meet their clients’ heightened expectations. It’s prompted many to adopt hotel content aggregators, such as Abacus RoomDeal, to demonstrate they have the range to optimize the contract,” explained Chief Executive Officer – Abacus International, Robert Bailey. The belt-tightening trend was also reflected in the way that respondents viewed themselves with four in ten (43%) feeling that their role had recently shifted more in favour of corporate procurement. Trend #2: Increasing Preference for LCCs Hotel/lodgings trends observed Average daily rates of major hotel brands are higher than normal Companies have implemented policies that have forced travllers to take lower star level lodging Occupancy rates are higher than normal in major cities There are more choices due to new hotel openings Clients are requesting shorter hotel stays than normal Environment- friendly hotel is a frequent preferred choice HOTEL 67% 50% 43% 47% 33%7% HOTEL
  3. 3. Almost three-quarters (73%) of respondents are seeing clients adopt budget airlines for more of their corporate travel, mostly as a result of policies governing the choice of lowest fare (77%), but also for the alternative flight times (40%) and data capture (40%). Agencies are supporting the move, but note difficulty in making LCC bookings where poor access to content limits their options for travellers. With a third of their clients applying conditions to the use of LCCs, in relation to the cancellation or modification of the booking, to baggage charges and other ancillary services, it is understandable that the intermediaries want to be clear on what they are buying. Ancillaries are viewed as making pricing and therefore price comparison harder for six in ten. These technological challenges are, however, being addressed as the more progressive LCCs in the region increase their focus on building corporate channels, accessible through the trade. Bailey explained, “the low cost market in Asia is not as a mature as Europe’s or the US and is yet to fully embrace corporate travel distribution, but there are some budget carriers now clearing a path to the corporate accounts, recognizing the scale of the opportunity with trade partners. They are very motivated to build share, particularly on routes where low cost competition is beginning to crowd out.” Trend #3: Corporate Booking Tool Adoption While the 2013 Abacus Corporate Travel Practices Survey showed widespread (73%) implementation of corporate booking tools (CBTs) such as Abacus TripPlan, adoption rates reflect a polarizing of clients into two groups: those benefitting from the cost savings of self-booking and those preferring to delegate travel management to colleagues or outsource it entirely to the agency. Yes 73% of corporate travel companies have implemented a Corporate Booking Tool (”CBT”) Yes, 73% No, 27% Our corporate customers have increased their use of Low Cost Carriers Our corporate accounts are booking Low Cost Carriers directly on the airline’s website Booking Low Cost Carriers presents challenges for our TMC/travel agency 73% 73% 30% 13% Impact of Low Cost Carriers on corporate travel business Low Cost Carriers have had little or no impact on our business
  4. 4. 64% of respondents agreed that a good portion of travellers preferred dealing with travel management companies and agencies, with 55% perceiving business travel itineraries to be too complex a task to undertake themselves. They pass travel planning to personal assistants where they can, or call the agent rather than attempt to book in-house. A lack of senior management support for the corporate booking system is frequently blamed. “The degree to which agents have implemented policy-compliant systems at client sites is creditable. It’s a component in securing the client-agency relationship long term. But, agencies may in some cases want to re-position corporate booking tools as serving more the personal assistants, with the mobile apps appealing to the travellers. Adoption is never uniform,” Bailey added. The mobile theme for travellers also correlated with the findings as they relate to mobile technology. Major obstacles to adoption of the CBT Lack of senior management support 55% Itineraries are too complex for self-booking 55% Other 14% Travellers prefer to talk to agents 64% Travellers use personal assistants to make travel arrangements 77% No major obstacles 5% Adoption level achieved for CBT 45% 5% 14% 5% 5% 14% 14%
  5. 5. Trend #4: Increasing Use of Smartphones and Tablets Smartphones are transformational devices that have a direct correlation with travel, the survey found. Over 83% of travel management companies and agencies felt that smartphones would have a moderate to significant impact on their business, while just under half (47%) see pervasive wireless technology as the ‘major’ trend in travel. Aligning with it should therefore be a priority, but only a third (33%) of those surveyed had implemented any mobile web or native applications for these devices, leading with a simple mobile itinerary tool. Only four in ten enable flight and hotel bookings and one in ten changes to existing arrangements. For tablet users, just one in seven had created a specific app. This is at a point when adoption rates of smartphones and tablets are soaring amongst the region’s consumers, including business travellers. Penetration, currently at 21% in Asia Pacific has a compound annual growth rate of 20%. Usage is climbing too. Non-PC digital traffic in South East Asia has been steadily increasing to over 20% in March this year, according to comScore. Significant to moderate impact-growing importance of mobile devices Don’t know Little impact-not changing my business 83% 4% 13% Impact of smartphone technology over the next 12-24 months 33% of corporate travel companies have created a mobile web or native mobile app for smartphones for corporate bookings 86% have not created specific apps for tablets (either iPad, Android or other) 14% Yes 86% No Yes, 33% No, 67%
  6. 6. Bailey explained: “Customers now want to plan their travel anywhere and at any time. They expect to be able to continue their content journey from their PC and laptop, to their tablet and mobile. TMCs and corporate travel agencies must integrate themselves into the new wireless environment.” “We see the technology strengthening the client-agency relationship and reaching out to travellers. It’s just a question of visualizing how it is applied.” The solutions available are already very flexible, such as the Abacus Mobility scalable across multiple platforms. Trend #5: Secondary Expenses for competitive advantage Secondary expenses such as meals, ground transportation, mobile data roaming are a rising concern for most companies. In the Advito 2013 Industry Forecast, secondary expenses account for 18% of the travel budget in the US. The figure is slightly lower in Asia Pacific at 10 to 14%, but is still very significant. Tracking and managing secondary expenses is therefore a growing focus with corporate travel managers looking for the means to support their clients with value-add initiatives. According to the survey, 30% of agencies now offer electronic expense management systems to their corporate clients to capture payments. More recognize the importance of capturing and managing secondary expenses to extend their service offering, as a point of competitive differentiation. Over half (53%) expressed a desire to jump in on the trend soon, seeking related solutions. Running into hundreds of thousands of dollars in receipts and countless man-hours of manual reconciliation, automated systems present a fresh opportunity for agents to support their clients. User-friendly tools are also seen to have huge appeal for frequent travellers. Percentage of travel and entertainment budget that accounts for secondary expenses (e.g., beyond air, lodging and car rental, for example meals, ground transportation, events/entertainment) 17% 13% 17% 30% 13% 10% Over 25% 20-25% 15-19% 10-14% 5-9% Less than 5%
  7. 7. Conclusion In contributing to the survey, travel management companies and corporate travel agencies have explored the issues that serve to advance or inhibit their ability to grow in the highly competitive travel space. The key to securing existing clients and attracting new is their delivery of a complete and fully-integrated service. To this end the most progressive are seeding technology in various forms into their clients’ operations and their own. Better placed to capitalise on the trends they see influencing their businesses over the next 2-3 years, they can readily tighten policy, integrate budget travel, implement corporate bookings systems and their mobile extensions and even introduce ‘wish-list’ extras like expense management applications. The essential technology is already available and customised for clients in many different commercial settings. The trends are therefore not without their challenges, but are universally positive for the Asia Pacific industry. About the Survey Abacus International commissioned Travel Tech Consulting in April 2013 to survey a representative cross-section of corporate travel organisations from across Asia Pacific on their business practices. Covering a broad range of themes, the survey explored the power and influence of the prevailing corporate travel trends seen in the industry. These were then ranked according to their perceived impact on clients and revenues over the next 2-3 years. Directional rather than projectable, the results have been distilled into an essential top five for the industry in the ‘2013 Abacus Corporate Travel Practices Survey’. For more information, contact Percentage working with clients to capture and manage secondary expenses Not currently, but planning to launch an effort 53% Yes 37% No and no plans to address secondary expenses 10% About Abacus International Singapore-based Abacus International is the Asia-Pacific’s leading provider of travel solutions and services with more than 20,000 travel agency locations in 31 markets. With over 25 years of experience in fusing international best practices and local expertise with global and local partnerships, Abacus provides travel information and reservations specifically tailored to the Asia-Pacific region. Abacus International is owned by Sabre and a consortium of Asia's leading airlines including All Nippon Airways, Cathay Pacific, China Airlines, EVA Airways, Garuda Indonesia, Dragonair, Philippine Airlines, Malaysia Airlines, Royal Brunei Airlines, SilkAir and Singapore Airlines. Sabre is the global leader in the electronic distribution of travel and travel related services. More information on Abacus can be found at