European Business Travel Barometer Reveals Market Recovery in 2015

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EUROPEAN BUSINESS TRAVEL BAROMETER
24th
edition – January 2015
Groupe Concomitance: Tel +33 (0)1 78 16 52 30 or infobarometre@concomitance.com
This report is protected by copyright - any full or partial reproduction is subject to prior authorisation of Amex and
acknowledgment of Groupe Concomitance in its role in the preparation of this report
EUROPEAN BUSINESS TRAVEL
BAROMETER
EVP 2015
Prepared by Concomitance Group

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Contents
Executive summary.................................................................................................... 3
Methodology of the barometer .................................................................................. 4
Part 1: Economic trends and travel budget developments..................................... 5
2014, a year of recovery...................................................................................................................... 5
The Business Travel market back to growth ....................................................................................... 5
Business development and International expansion in Europe as market drivers............................. 6
Air and Hotel remain the major travel expense categories ................................................................ 8
Part 2: Controlling direct costs, companies’ priority #1 ......................................... 9
Costs remain companies’ 1st
concern.................................................................................................. 9
Best-buy and Online booking to control direct costs........................................................................ 10
Part 3: Getting a complete view of expenses integrating indirect costs as
companies’ next step ............................................................................................. 14
The raising issue of indirect costs...................................................................................................... 14
Monitoring and controlling indirect costs......................................................................................... 15
This generates new expectations towards travel agencies............................................................... 17
Part 4: what about the traveler experience in the cost-focused context? ........... 19
Traveler security and safety, companies’ priority #2........................................................................ 19
Despite speeches, travelers’ level of satisfaction is little taken into account................................... 20
The exception of the VIP traveler: towards a two-speed treatment of travelers?........................... 22
Part 5: Forecasts 2015.............................................................................................. 23

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Executive summary
The Business Travel market back to growth
• In a context of slight recovery (overall GDP growth of +1,3% for the countries in the
barometer scope) and after several years of continuously decreasing growth rates,
the Business Travel market finally shows some recovery to achieve a +0,9% growth
rate (vs. +0,5% in 2013).
• Business development, especially with the objective to acquire new clients/markets,
and companies’ operations in Europe are the two main drivers of growth.
• This trend still needs to be confirmed in 2015, even if the international development
seems to be a long-term trend.
Controlling costs is still companies’ priority #1
• Controlling costs refers to both containing and monitoring expenses.
• To contain travel expenses, companies use 2 main and complementary tools: best-
buy practices (1st
lever used to optimize travel budget) and corporate Online Booking
Tool (current rate of OBT equipment reaches 66% vs. 50% in 2013). As a result of
their previous efforts, more and more companies think that they have achieved the
best expense optimization that they can achieve: nearly half of them declare that they
cannot better optimize their travel expenses than what is done today.
• As for monitoring expenses, specific procedures to follow up expenditures have
spread (90% of companies say they have implemented such procedures) but they still
need to be automated as 78% of companies still have manual processes. In this
context, companies are turning today to end-to-end solutions (OBT + Expense
Management) and want to extend them to mobile tomorrow.
• This should enable them to get a complete view of expenses (companies’ priority #3
for the 3 coming years), contain indirect costs of their travel program and better
integrate new suppliers such as C2C (Consumer-to-Consumer) suppliers or new kind
of lodging suppliers.
• In this context, companies ask their travel agency to help them face these changes.
Indeed as travel agencies are experts in the use of all these levers, they have a
critical role to play in assisting companies in this transition.
Towards a 2-speed treatment of travelers?
• The level of satisfaction of travelers is still little taken into account: only 20% of
companies measure it in order to bring changes to the company’s travel policy, and
another 25% measure it but with no impact. Traveler’s satisfaction even declines in
the ranking of companies’ travel management priorities, now listed as the 6th
priority
vs. 4th
last year.
• On the other hand, the concept of VIP travelers seems to develop as 20% companies
now purchase VIP services (vs. 12% in 2013).
• However, whoever the traveler is, he now travels in strengthened security conditions:
never have so many companies taken so many measures to improve traveler safety
and security. It will remain an important concern for companies which rank it as
priority #2 for the next 3 years.

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Methodology of the barometer
581 companies have been interviewed in this 24th
edition of the business travel barometer.
They represent 1,5 billion Euros of travel expenditures.
They were split in 3 categories:
Small and medium accounts (with budgets under EUR 500K)
Mid-sized accounts (budgets between EUR 500K and 5M)
Large accounts (budgets over EUR 3M)
People who answered the survey were decision makers with regards to business travel
within their company. They worked as Travel Managers (15%), in the Procurement
department (20%), the General Management (16%), the Finance department (15%) or in
other departments like Operations or Sales (34%).

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Part 1: Economic trends and travel budget developments
2014, a year of recovery
As expected, 2014 was a better year for many economies: except Italy, all countries in the
EVP scope enjoyed some recovery. Overall, the growth of the countries in the EVP scope
reaches +1,3% (vs. +0,2% in 2013).
Still, some disparities exist between Northern Europe and Benelux/France/Southern
Europe. The United Kingdom, Sweden, Norway and Denmark are especially driving the
growth within EVP countries, with GDP increases of respectively +3,2%, +2,1%, +1,8%
and +1,4%. On the other hand, Belgium, the Netherlands and France hardly reach +1,0%,
+0,6%, +0,4% of growth. Besides, Italy is still in recession (-0,2%) despite some
improvement.
The United States and China are still outdistancing the zone with respective GDP growths
of +2,2% and +7,4%.
The Business Travel market back to growth
After 2 years of lower and lower growth rates, the Business Travel market finally reveals
an upturn: business travel expenditures grew by +0,9% in 2014. This increase is in line
with the growth forecasted by companies during the 2013 barometer (growth estimated at
0,8%).
Mid-sized accounts are driving the growth (+2,2%) whereas large accounts suffered a
-0,9% decrease.

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As a result, the market growth is slightly lower than that of GDP. This is often the case
during recovery periods as the GDP and the Business Travel market growth are
correlated with a small time difference – when GDP comes back to growth, a positive
impact is seen on the travel market in the following year. Besides, 1 point of growth
corresponds to almost 2 billion Euros at the scope of the barometer.
Business development and International expansion in Europe as market drivers
Business development is mentioned as the first reason for travel budget increase. It now
represents 51% of travel budget while it was 46% in 2013. In other words, on 10€ spent
for business travel, 5€ is spent in business development. This 5-point increase is
equivalent to around 9 billion Euros at the barometer scope.
Developing new clients/markets especially drives business development, reaching 23% of
companies’ travel budget in 2014 (+4pt vs. 2013) while maintaining existing clients/
markets remains stable at 28% of the travel budget. On the other hand, the share of
companies’ travel budget dedicated to Meetings & Events was reduced.
As a comparison, this business dynamism in the European EVP scope is similar to the
one observed on the Chinese market, which has historically been focused on business
development and which should become the 1st
business travel market worldwide in 2016.

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As already seen during the previous years, international development is gaining
importance and drives the market growth. More and more companies want to structure
and strengthen their presence overseas: 46% of them state that they want to expand their
operations overseas during the next 3 years, which corresponds to an 11pt increase in 2
years.
This trend is even truer for Large Accounts as 57% of them integrate expanding
operations overseas in their business plan for the next 3 years.
Thus companies need to get ready no later than today if they want to provide themselves
with the means to develop international activities in the 3 coming years.

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In this context of international development, Europe is back at the center of business
travel: travel budget increase is linked to travels within Europe in 50% of cases (+8pts vs.
2013) On the contrary, travel outside Europe, to Asia and North America for example, is
no longer the main driver for market growth. This (re)focus on Europe is also due to the
fact that the companies that are driving market growth are ETI, i.e. companies that first
develop their activities in Europe.
It should be noted that Large Accounts are more travelling outside Europe (30% of their
travel expenditures vs. 24% on average). They also declare that they will keep developing
their operations internationally, outside Europe.
Domestic still represents 45% of travel budget on average.
Air and Hotel remain the major travel expense categories
Travel budget distribution among various expense categories tend to stabilize. Air and
Hotel remain the main travel expense categories, representing respectively 39% and 24%
of travel budget. On the contrary, rail expense share keeps decreasing and now
represents 12% of travel budget, down from 16% in 2012.

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Part 2: Controlling direct costs, companies’ priority #1
Costs remain companies’ 1st
concern
Business development, customer acquisition, international development, business plan…
Business travel is now considered as a strategic activity for companies. Yet, a broad
majority of them still considers business travel as a cost, rather than an investment: only
17% of them say that they view their T&E expenditures as an important contribution to the
company’s development.

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As a result, companies maintain their focus on cost control, as in the previous years. 87%
of them consider the control of direct costs as a top travel management priority for the
next 3 years. Thus it keeps its position as companies’ priority #1, even if the gap closes
with traveler security and safety conditions (priority #2) due to a higher awareness about
security issues as well as legal obligations (duty of care, especially for business travel
overseas). In fact, the number of companies integrating traveler’s security and safety in
travel management priorities has increased by +24pts over the two last years, which is the
strongest growth observed. Getting a complete view of expenses (direct + indirect) has
also gained in importance (+15pts in 2 years) and should remain a key issue in the
coming years.
This is a general trend, whatever the country or the companies’ travel budget.
NB: Complete view of expenses refers to a company’s ability to integrate all travel costs,
may they be direct (suppliers, agencies, tickets, booking fees…) or indirect (IT
development, time spent by employees, implementation of procedures…), in order to
calculate a TCO (Total Cost of Ownership). Therefore, this notion is broader than that of
cost control which is mainly linked to average prices or suppliers costs.
Best-buy and Online booking to control direct costs
Best-buy practices keep their position as the 1st
lever that companies use to optimize their
travel expenditures. The entry of new alternative suppliers such as C2C suppliers
(Consumer to Consumer) may be one explanation for this strong importance.
Yet, companies also seem to be more and more aware of the limits of using best-buy
practices:
• Additional costs due to modifications or cancellations – 1st
limit mentioned by
companies

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• Lower back margins or other factors which can contribute to optimize companies’
travel budget indirectly or at the time of expense consolidation
• Limitation of bargaining power due to reduction of corporate rate volumes
• Decline of traveler’s comfort and efficiency
As a result, the “best-buy” tends to be slightly less used as a lever to optimize travel
expenditures while online booking and advanced booking are back on the list of attractive
levers. Indeed, these levers have two main benefits: immediate savings and no side
effect.
Besides best-buy practices, the adoption of Corporate Online Booking Tools (OBT) is
increasing continuously and quickly. 66% of companies are now equipped with an OBT.
This represents an increase by +16pts vs. 2013, that is to say twice as much as the
increase observed between 2012 and 2013 (+8pts). Thus there is a strong acceleration of
the adoption of OBTs within organizations. However, even if this may seem to be already
a high equipment rate, there is still room for a higher penetration: in the US, more than
85% of companies are equipped with an OBT today.
Using an OBT has two impacts on costs:
• Reduction in booking fees
• Direct cost savings on travel expenses
• A better travel policy compliance due to the tool configuration, guilt feelings…
Moreover, companies are not only better equipped, but they have also increased the
usage of their OBT, using it for more and more bookings. 2/3 of them make almost all their
bookings through their OBT. They were only 50% in 2013.

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As a result, the compliance rate for the travel and expenditure policy has kept increasing
for several years: 8 companies out of 10 report that their compliance rate is higher than
70%. It was only 6 out of 10 in 2012.
Besides policy compliance, companies also admit that the implementation of an OBT
enabled them to make savings on their travel expenses (at constant volume). 87% of
them report at least some savings and more than 1 company out of 2 speak about
significant savings (higher than 10%).
Large Accounts seem to have a better understanding of how they can optimize their
expenses through an OBT: 75% of them report significant savings (higher than 10%).
These cost savings come both from savings on booking fees (online vs. offline) and from
supplier direct costs (better application of corporate rates and/or best-buy instructions). As
a reminder, supplier costs account for around 95% of direct travel costs.

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As a result, more and more companies declare that they cannot better optimize their
current expenses: 47% of them say they do not have any more opportunities to further
optimize their travel budget. Among these 47%, a large majority (76%) explain it by the
fact that they have done all potential savings – only few of them (13%) declare they want
to find a right balance between traveler comfort and expense optimization.
The control of travel expenses comes along with the necessity to better control the chain
overall, and thus to implement appropriate monitoring procedures.

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Part 3: Getting a complete view of expenses integrating indirect costs
as companies’ next step
The raising issue of indirect costs
As already seen, getting a complete view of expenses is the priority #3 for companies with
regards to travel management. Indeed, using an OBT leads to a transfer of charges to the
traveler, their assistant or the company’s travel manager who have to book themselves. It
may also increase in the future due to the spread of mobile booking tools.
On average, companies report that within the firm, 2,5 persons are dedicated to travel
management. This number even reaches 5 for Large Accounts.
As a result, companies are now more focusing on indirect costs.
Reducing indirect costs is now considered the 1st
lever to achieve budget optimization in
the coming years. This means that controlling indirect costs, which are still little measured
today, is a priority for companies for the next 3 years.

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Monitoring and controlling indirect costs
To be able to monitor their expenses, more and more companies have implemented
procedures dedicated to expenses follow-up. 90% of them declare they have procedures
to monitor and control travel expenses. It was 80% in 2012.
Procedures refer here to a structured and formalized set of rules dedicated to the
monitoring and control of travel expenses, such as pre-trip approval request workflow,
post-trip approval of expenses, specific reporting…
This spread of monitoring and control procedures is noticeable in all European countries
and for all travel budget size.
Yet, these procedures are still mainly manual and 8 companies out of 10 still have
procedures which are partially or even fully manual. Thus the necessity to equip with end-
to-end solutions seems to be all the more urgent for them.

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As a result, companies are turning to corporate end-to-end solutions. The dual equipment
has kept increasing for several years to reach 43% of organizations in 2014. This growth
even speeded up in the last year: +5pts between 2012 and 2013, +17pts between 2013
and 2014. Large Accounts lead the trend, with a level of dual equipment reaching 64%.
Companies’ motives are clearly linked to the wish to control the complete program, hence
not only to reduce costs.
As a result of this dual equipment, the automation of the procedures has increased (22%
of companies declare they have a 100% automated value chain vs. 15% in 2013), and
has enabled them to reduce:
• Error risks
• Fraud risks
• Time spent to control

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This generates new expectations towards travel agencies
As companies are confronted with more complexity when they chose solutions and
suppliers, they turn to their TMC and request assistance to manage these transitions. 29%
of companies would like to develop end-to-end solutions with their travel agency, 13%
would like to develop the mobile as a real alternative channel and 13% are interested in
integrating new kinds of suppliers (C2C suppliers, new lodging suppliers…) supported by
travelers themselves.
Beside this wish to fully integrate the program with end-to-end solutions or/and
equipments, the measurement of the ROI of trips appears as a second trend. Indeed, as
companies are more and more equipped with end-to-end or at least expense
management solutions, they are more able to measure the real investment they make in
business travel (thus, the “I” of the ROI of trips). However, it is still hard to determine the
true return of business travel (thus, the “R” of the ROI of trips), especially when MICE are
the travel’s motive.
Likewise, companies want to extend this end-to-end perspective to mobile, tool that they
already use a lot in their travel program. 55% of companies have already integrated the
mobile in their travel program and use it on a regular basis.
Yet, the mobile is still not a real alternative to other traditional channels like OBT since all
the value chain is not covered uniformly. On-trip functionalities are much more used: 87%
of companies currently use the mobile channel to receive alerts from providers, 77% to
check in, 74% to receive security alerts.
Logically, those companies who already use mobile on regular basis want to expand their
current mobile usage in the future and especially develop mobile functionalities related to
booking, expense management and security:

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• Currently 30% of them use the mobile channel to make their bookings, 11% for
reporting and expense management, 21% for localization.
• 46% of them want to increase their use of booking functionalities, 46% their use of
reporting and expense management options and 40% their use of the localization
ability.
The willingness to develop mobile usage is all the more important when companies
already have automated procedures. Mobile appears as a next step in their development.
The required adaptation to new suppliers and the wish for a more autonomous traveler
also explain the development of the mobile channel. This aligns with the practices
observed on the leisure travel market.
Thus travel agencies may have a role to develop the mobile channel as a real alternative
to other channels.

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Part 4: what about the traveler experience in the cost-focused context?
Traveler security and safety, companies’ priority #2
As said before, traveler security and safety has been ranked priority #2 for companies
since 2 years. This is true for all companies, whatever their size may be. The number of
companies listing this issue as a travel management priority has kept increasing in the last
years, reaching 69% of companies today (+24pts vs. 2012).
This continuously increasing importance that companies attach to security is to be linked
to their legal obligation of “duty of care” as well as to recent events. Indeed, travelling was
already risky per se, but today business travel is also taking place in a more complex and
riskier environment.
The priority given to security and safety issue is also reflected in the increase in the
number of companies taking measures for the employees to travel in optimal conditions:
87% of surveyed companies have the ability to contact their employees at any given
moment (+6pts vs. 2013), 73% of them the ability to repatriate their employees
immediately (+13pts) and 71% the ability to know all the time where their employees are.
Training employees is still left behind but is also strongly increasing (32% in 2014, +9pts).
Given the international development forecasted by companies, this issue will certainly
remain at the heart of future concerns – and will also raise the issue of the integration of
new kind of suppliers.

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Despite speeches, travelers’ level of satisfaction is little taken into account
The level of satisfaction of the travelers is little measured: 55% of companies do not
measure it at all. Besides, when it is measured, it is little used to bring changes to the
company’s travel policy. Only 20% of companies measure it to adapt their travel policy
accordingly. As a result, travel is not customized to the needs of each traveler and of each
company.
Yet, the traveler’s satisfaction can be the source of hidden costs which are still little known
and little identified: tired traveler, longer transport times, etc.
Large Accounts are more attentive to this issue: 30% of them measure the level of
satisfaction of their travelers and take their remarks into account to transform their travel
policy.
It is also interesting to notice that the more companies are equipped with booking and/or
expense management solutions, the more they measure traveler’s level of satisfaction
and integrate it in their travel program.

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This little importance attached to the traveler’s satisfaction is also noticeable in the ranking
of companies’ travel priorities for the 3 next years. The item “Traveler’s satisfaction” only
appears down on the list as a 6th
priority, while it was ranked 4th
last year. Thus, while the
traveler’s security and safety is a more and more crucial issue, their satisfaction is less
and less seen as an important priority.
Large Accounts make no exception: this trend concerns all companies, whatever their
travel budget may be.

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The exception of the VIP traveler: towards a two-speed treatment of travelers?
On the other hand, the demand for VIP services is increasing. 20% of companies are now
purchasing VIP services to their travel agency, which is about twice as much as last year.
The demand even reaches 37% among Large Accounts.
This interest is to be linked to the appeal of the “access to concierge services”
functionality on the mobile channel.

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Part 5: Forecasts 2015
The 2014 improvement has still to be confirmed in 2015. Companies estimated a +0,7%
increase of their total travel expenditures in the coming year.
Strong disparities from one country to another will still persist. While market growth should
reach +3,7% in Spain, +1,2% in the UK and Germany, Italy and France will hardly reach
growth rates of +0,3% and +0,1% of travel expenditures.

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About the European Business Travel barometer, 2015 edition
The 2015 barometer was prepared by Concomitance on the basis of a telephone survey
conducted from November 4th
to December 5th
, 2014, among persons in charge of travel
budgets ranging from less than €250,000 to over €50 million (Finance Directors, Purchasing
Directors and Travel Managers) in 581 European companies based in 10 countries:
Germany, Great Britain, France, Belgium, Luxembourg, the Netherlands, Spain, Italy,
Denmark, Sweden and Norway.
About Concomitance
Concomitance is a service company specialized since 2001 in marketing, commercial, sales
and client relations research, consultancy and performance development.
Concomitance has teams specialized in several activity sectors such as telecommunications,
travel and business travel, banking, distribution, etc.
Since its establishment, Concomitance has stood out in terms of its capacity to transpose
commercial and marketing issues into action plans which are immediately effective and
comprehensible to all players. This capacity is a direct result of Concomitance's DNA: the
prior business experience of our consultants allows us to formulate recommendations and
share them with our clients in line with the maturity of their organization.

European Business Travel Barometer Reveals Market Recovery in 2015

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