Travel Management Priorities for 2013 - Carlson Wagonlit Travel
Travel Management Priorities for 2013 - Carlson Wagonlit Travel
Travel Management Priorities for 2013 - Carlson Wagonlit Travel
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Executive summarySurvey on travel management priorities <strong>for</strong> <strong>2013</strong>Large and mid-sized companies share the same travel priorities, according to CWT’s latest global client survey on travelmanagement priorities. In <strong>2013</strong>, companies of all profiles will continue to make driving air and ground savings their top focus,followed by improving traveler compliance and optimizing hotel spend. As areas that offer major savings opportunities, itis no surprise they dominate the rankings in these economically challenging times. Other recognized sources of hard savings,optimizing online adoption and optimizing the travel policy, come next, while “softer” ways to enhance program per<strong>for</strong>mancetake on less importance overall.Figure 1<strong>Travel</strong> managers’ priorities <strong>for</strong> <strong>2013</strong>p<strong>2013</strong>RankingPriority1 Driving air and ground transportation savings2 Improving traveler compliance3 Optimizing hotel spendNotes:4567891011Optimizing online adoptionOptimizing the travel policyEnhancing the traveler experienceFurther consolidating the travel programDeveloping key per<strong>for</strong>mance indicatorsAddressing safety and security needsTackling meetings and eventsMaking the program more environmentally friendlyRespondentsCWT asked travel managers to select their top five travel management priorities <strong>for</strong> <strong>2013</strong> and rank them in order of importance. The responses were weightedto take into account how often each priority was ranked 1st, 2nd, 3rd, 4th or 5th. The “Respondents” column shows the proportion of travel managers whoincluded the priority in their top five.“Driving air and ground transportation savings” was identified as a priority by fewer travel managers than “improving traveler compliance” (61% compared to64%) but ranked higher overall because it figured higher in travel managers’ top five.61%64%59%55%49%43%33%34%25%16%8%Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 706 travel managers worldwide (November 2012)This year’s results also reveal some differences between regions, reflecting the market conditions faced by respondents aswell as program maturity. For example, while driving air and ground savings remains the top priority <strong>for</strong> country/regionaltravel managers in Europe, the Middle East and Africa, and Latin America, improving traveler compliance is considered moreimportant by travel managers in Asia Pacific and North America, as well as those responsible <strong>for</strong> global programs. Compared tothe total sample, optimizing online adoption is also a stronger focus <strong>for</strong> country/regional travel managers in EMEA and globaltravel managers (who rank it 3rd instead of 4th). As could be expected, global travel managers accord a higher priority thantheir regional colleagues to further consolidating the travel program. <strong>Travel</strong> managers in Asia Pacific, on the other hand, ranksafety and security higher (7th vs. 9th in the total sample), while in Latin America, more importance is attached to developingkey per<strong>for</strong>mance indicators (4th vs. 8th) and enhancing the traveler experience (5th vs. 6th).<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 5
Regulatory changes will have a varied impact. For example in China (“Zhng Guó” in transliteration), new rules allowinginternational airlines to ticket via <strong>for</strong>eign global distribution systems will be slow to take effect, partly due to lengthy approvalprocedures. On the other hand, relaxed visa regulations in some countries should bring good news <strong>for</strong> the impacted passportholders. Meanwhile, the European Union’s controversial new carbon emission trading system will likely see higher airlinecosts passed on in fuel surcharges. On this “green” theme, more companies will be tracking their carbon footprints in their keyper<strong>for</strong>mance indicators.Finally, all eyes will be on the growing debate surrounding “unmanaged” business travel or “open booking,” which someindustry observers are advocating as an alternative to travel booked through travel counselors and online booking tools. Lackingsufficient proof of real cost savings and traveler satisfaction, this <strong>for</strong>m of “travel management 2.0” seems to be weighed downby disadvantages. However, much awaited further research should be published by the Global Business <strong>Travel</strong> Association, aswell as by the CWT <strong>Travel</strong> <strong>Management</strong> Institute later this year…Figure 3Business travel trends in <strong>2013</strong>Source: CWT <strong>Travel</strong> <strong>Management</strong> Institute<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 7
<strong>2013</strong> priorities and planned measuresGlobal annual surveyCWT conducts an annual online survey of travel managers to benchmark their priorities and the measures they plan to implementover the year to come.This year, the sample more than doubled to 706 travel managers, up from 290 last year. Further, the scope of the surveywas extended to include companies with mid-sized national programs (representing at least US$2 million of travel spend) inaddition to those with the largest international programs (more than US$100 million of travel spend over at least 2 regions).<strong>2013</strong> prioritiesIn <strong>2013</strong>, the overall ranking of priorities remains fairly stable compared to 2012. As can be expected, travel managers intend tofocus most on areas representing the greatest savings opportunities rather than those linked more to the traveler experience.What is more surprising perhaps is that the ranking of priorities is identical <strong>for</strong> companies with major global programs and thosewith mid-sized national programs that may not have reached the same levels of maturity. Also worth highlighting are a numberof regional variations:Driving air and ground savings is the top priority overall but an especially high priority <strong>for</strong> travel managers in LatinAmerica, 82 percent of whom ranked this area in their top five.Improving traveler compliance is the top priority <strong>for</strong> travel managers with global responsibilities, 75 percent of whomranked the area in their top five, as well as respondents in Asia Pacific (66 percent) and North America (65 percent).Optimizing hotel spend is highly ranked by all categories of travel managers (53-60 percent, depending on the region).Optimizing online adoption is accorded more importance by travel managers in Europe, the Middle East and Africa, andtravel managers with global responsibilities (ranked by both as the number three priority).Optimizing the travel policy is a priority <strong>for</strong> 49 percent of respondents overall, although the percentage per region variesquite considerably—from 32 percent in Latin America to 53 percent in North America.Enhancing the traveler experience is a top five priority <strong>for</strong> more travel managers in North America and Latin America(51 percent and 50 percent respectively) than in Europe, the Middle East and Africa (34 percent).Further consolidating the travel program is a high priority <strong>for</strong> more global travel managers (46 percent) than the overallsample (33 percent).Developing key per<strong>for</strong>mance indicators is ranked higher by travel managers in Latin America (in 4th position, comparedto 8th overall).Addressing safety and security needs is a stronger focus <strong>for</strong> Asia Pacific (32 percent of respondents, ranking 7th) thanthe overall sample (25 percent, ranking 9th).Tackling meetings and events is cited more often by global travel managers than the overall sample (21 percent and16 percent respectively).Making the program more environmentally friendly is almost always the lowest-ranking priority <strong>for</strong> the differentcategories of travel managers.8
Figure 4<strong>Travel</strong> managers’ priorities <strong>for</strong> <strong>2013</strong><strong>2013</strong>Ranking1234567891011Driving air and ground transportation savingsImproving traveler complianceOptimizing hotel spendOptimizing online adoptionOptimizing the travel policyEnhancing the traveler experienceFurther consolidating the travel programDeveloping key per<strong>for</strong>mance indicatorsAddressing safety and security needsTackling meetings and eventsMaking the program more environmentally friendlySample size: 706 travel managersTotal samplePriorityRespondents61%64%59%55%49%43%33%34%25%16%8%Industrial manufacturing3%Aerospace,defense, oil, gas& construction27%Banking, consulting& insurance18%Breakdown by travel managers’ scope of responsibilitySurveyed companies by sectorMedia, hotels, restaurants & transportation6%Asia PacificEurope, Middle Eastand AfricaLatin AmericaNorth AmericaGlobalPriority Respondents Priority Respondents Priority Respondents Priority Respondents Priority RespondentsOther7%Consumer products, food & retail16%Chemicals, pharmaceuticals& healthcare8%IT & telecommunications15%Compliance66%Air & ground64%Air & ground82%Compliance65%Compliance75%Air & ground59%Compliance62%Hotel59%Air & ground57%Air & ground56%Hotel53%Online adoption59%Compliance57%Hotel60%Online adoption57%<strong>Travel</strong> policy51%Hotel60%KPIs50%Online adoption54%Hotel56%Online adoption49%<strong>Travel</strong> policy51%<strong>Travel</strong>er experience50%<strong>Travel</strong> policy53%Consolidation46%<strong>Travel</strong>er experience47%KPIs35%Online adoption48%<strong>Travel</strong>er experience51%<strong>Travel</strong>er experience41%Safety & security32%<strong>Travel</strong>er experience34%<strong>Travel</strong> policy32%Consolidation35%<strong>Travel</strong> policy35%Consolidation27%Consolidation31%Consolidation32%KPIs32%KPIs38%KPIs22%Safety & security23%Safety & security25%Safety & security28%Safety & security17%Environment7%Meetings & events15%Meetings & events14%Meetings & events18%Meetings & events21%Meetings & events7%Environment13%Environment2%Environment6%Environment2%Sample size: 59 travel managers 287 travel managers 44 travel managers 253 travel managers63 travel managersNotes:CWT asked travel managers to select their top five travel management priorities <strong>for</strong> <strong>2013</strong> and rank them in order of importance. The responses were weightedto take into account how often each priority was ranked 1st, 2nd, 3rd, 4th or 5th. The “Respondents” column shows the proportion of travel managers whoincluded the priority in their top five.“Driving air and ground transportation savings” was identified as a priority by fewer travel managers than “improving traveler compliance” (61% compared to64%) but ranked higher overall because it figured higher in travel managers’ top five.Regional results include country/regional travel managers.Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 706 travel managers worldwide (November 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 9
Asia PacificIn Asia Pacific, the number one priority <strong>for</strong> travel managers is improving traveler compliance, with driving air and groundsavings falling to 2nd place. Optimizing hotel spend remains the third priority, while optimizing the travel policy comesfurther up the rankings (4th rather than 5th), swapping places with optimizing online adoption. Another area that is givenmore importance is addressing safety and security needs, which ranks 7th in Asia Pacific, compared to 9th in the total sample.In contrast, developing key per<strong>for</strong>mance indicators ranks slightly lower (9th vs. 8th). (See Figure 4 on Page 9.)Compared with other regions, travel managers in Asia Pacific intend to place more focus on:Communicating/providing training on the travel policy and empowering travel counselors to en<strong>for</strong>ce rules (to improvecompliance)Tightening air and ground travel policy while finding the right balance between negotiated and restricted fares, as well asexploring low-cost carrier opportunities (to drive air savings)Mandating preferred booking channels and consolidating hotel spend on fewer properties to leverage larger volumes innegotiations (to optimize hotel spend)Increasing the scope of online booking tool (OBT) implementation and mandating OBT usage (to optimize online adoption)And less focus on:Negotiating fuel surcharges and ancillary fees (to drive air and ground savings)Globalizing volumes and contracts (to further consolidate the travel program)Figure 5Asia Pacific key indicators (air)Average ticket price in economy classDomesticContinentalIntercontinentalAverage ticket price in business classContinentalIntercontinentalUS$283US$503US$1,242US$1,775US$4,667Intercontinental flights booked in business class 34%Flights booked at least 14 days in advanceDomesticContinentalIntercontinental21%41%57%Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on tickets booked by CWT clients (Q3 2012)10
Figure 6Top priorities and planned measures <strong>for</strong> travel managers in Asia Pacific<strong>2013</strong>Ranking PriorityPlanned measures Respondents *Communicate and provide training on travel policy72%1ImprovingtravelercomplianceActively remind employees of policyEngage management throughout the organizationTrack and communicate compliance levels67%59%56%Empower travel counselors to en<strong>for</strong>ce compliance49%2Driving airand groundtransportationsavingsFind the right balance between negotiated and restricted fare usageTighten air policy (class of travel, use of connecting flights, advance booking, etc.)Work with airline alliancesNegotiate point-of-origin pricing57%51%43%40%Concentrate volume on a limited number of suppliers40%Consolidate hotel spend on fewer properties to leverage larger volumes in negotiations61%3Optimizinghotel spendMandate preferred booking channelsMandate the use of preferred hotels58%58%Consolidate multiple sources of hotel data52%4Optimizingthe travel policyAddress advance purchase behaviorStandardize the policy regionally or globallyAim <strong>for</strong> best-in-class travel policy guidelines57%50%37%5OptimizingonlineadoptionEnhance communication/trainingTrack and communicate online booking tool (OBT) usageIncrease scope of OBT implementationMandate OBT usage76%69%45%45%* Percentage of respondents who selected the planned measure having cited the corresponding priority in their top fiveSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 59 travel managers in Asia Pacific (November 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 11
Europe,In Europe, the Middle East and Africa, driving air and ground transportation savings and improving traveler complianceremain the top two priorities <strong>for</strong> travel managers. Compared to the total sample, optimizing online adoption comes higherin the ranking, switching places with optimizing hotel spend (ranking 3rd and 4th respectively). Optimizing the travelpolicy remains in 5th place, while enhancing the traveler experience ranks slightly lower (7th vs. 6th in the total sample).(See Figure 4 on Page 9.)Compared with other regions, travel managers in Europe, the Middle East and Africa intend to place more focus on:Tightening air and rail policy (to drive air and ground transportation savings)Addressing advance purchase behavior (to optimize the travel policy)And less focus on:Negotiating point-of-origin pricing (to drive air and ground transportation savings)Implementing an expense management tool (to improve traveler compliance)Implementing social media tools/apps (to improve the traveler experience)Figure 7Europe, Middle East and Africa key indicators (air)Average ticket price in economy classDomesticContinentalIntercontinentalAverage ticket price in business classContinentalIntercontinentalUS$447US$577US$1,617US$1,689US$6,523Intercontinental flights booked in business class 39%Flights booked at least 14 days in advanceDomesticContinentalIntercontinental36%46%64%Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on tickets booked by CWT clients (Q3 2012)12
Middle East and AfricaFigure 8Top priorities and planned measures <strong>for</strong> travel managers in Europe, Middle East and Africa<strong>2013</strong>Ranking PriorityPlanned measures Respondents *1Driving airand groundtransportationsavingsTighten air policyFind the right balance between negotiated and restricted fare usageConcentrate volume on a limited number of suppliers40%40%38%2ImprovingtravelercomplianceActively remind employees of policyEngage management throughout the organizationCommunicate and provide training on travel policy71%56%47%3OptimizingonlineadoptionEnhance communication/trainingTrack and communicate online booking tool (OBT) usageEncourage travel counselors to steer travelers to the OBT58%44%40%4Optimizinghotel spendMandate the use of preferred hotelsNegotiate amenities (e.g., Internet, breakfast and parking)Consolidate hotel spend on fewer properties to leverage larger volumes in negotiations54%39%39%5Optimizing thetravel policyAddress advance purchase behaviorStandardize the policy regionally or globallyAim <strong>for</strong> best-in-class travel policy guidelines61%38%30%* Percentage of respondents who selected the planned measure having cited the corresponding priority in their top fiveSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 287 travel managers in Europe, Middle East and Africa (November 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 13
Latin AmericaDriving air and ground transportation savings also remains the top priority when looking at the survey results <strong>for</strong> LatinAmerica. Optimizing hotel spend and improving traveler compliance switch places, ranking 2nd and 3rd respectively.However, optimizing online adoption and the travel policy drop to 7th and 8th place as travel managers in this region makea higher priority of developing key per<strong>for</strong>mance indicators and enhancing the traveler experience (in 4th and 5th place).(See Figure 4 on Page 9.)Compared with other regions, travel managers in Latin America intend to place more focus on:Implementing advance booking rules and tightening rental car policy (to drive air and ground savings)Introducing mandates on preferred hotels (to optimize hotel spend)Tracking changed/cancelled bookings and related costs (as key per<strong>for</strong>mance indicators)Offering traveler profile management tools (to enhance the traveler experience)And less focus on:Introducing measures to optimize the rail program, in view of the limited offering in this region (to drive ground savings)Implementing social media tools (to enhance the traveler experience)Figure 9Latin America key indicators (air)Average ticket price in economy classDomesticContinentalIntercontinentalAverage ticket price in business classContinentalIntercontinentalUS$269US$824US$1,403US$1,857US$4,581Intercontinental flights booked in business class 25%Flights booked at least 14 days in advanceDomesticContinentalIntercontinental22%36%55%Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on tickets booked by CWT clients (Q3 2012)14
Figure 10Top priorities and planned measures <strong>for</strong> travel managers in Latin America<strong>2013</strong>Ranking PriorityPlanned measures Respondents *Driving airConcentrate volume on a limited number of suppliers58%and ground1 transportationsavingsWork with airline alliancesImplement advance booking rules47%42%2Optimizinghotel spendMandate the use of preferred hotelsConsolidate hotel spend on fewer properties to leverage larger volumes in negotiationsNegotiate amenities (e.g., Internet, breakfast and parking)77%50%50%3ImprovingtravelercomplianceActively remind employees of policyCommunicate and provide training on travel policyEngage management throughout the organization72%64%60%4DevelopingKPIsModified/cancelled booking and related costsMissed air savings (vs. lowest logical airfares)Average ticket price evolution and benchmarking77%46%41%5Enhancing thetraveler experienceOffer mobile servicesOffer traveler profile management tool55%41%* Percentage of respondents who selected the planned measure having cited the corresponding priority in their top fiveSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 44 travel managers in Latin America (November 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 15
North AmericaIn North America, travel managers’ top priority is improving traveler compliance, which pushes driving air and groundtransportation savings to 2nd place. Their 3rd, 4th and 5th priorities match the results of the total sample: optimizing hotelspend, online adoption and the travel policy. (See Figure 4 on Page 9.)Compared with other regions, travel managers in North America intend to place more focus on:Negotiating multi-year contracts and implementing flexible, dynamic negotiations with suppliers throughout the year(to drive air savings)Extending the geographical scope of the travel program and standardizing processes (to further consolidate the travelprogram)Leveraging technology (to tackle meetings and events)And less focus on:Finding the right balance between negotiated and restricted fare usage (to optimize air and ground savings)Implementing advance booking rules (to optimize hotel spend)Defining criteria <strong>for</strong> using travel alternatives (to optimize the travel policy)Figure 11North America key indicators (air)Average ticket price in economy classDomesticContinentalIntercontinentalAverage ticket price in business classContinentalIntercontinentalUS$562US$761US$1,567US$2,410US$6,055Intercontinental flights booked in business class 37%Flights booked at least 14 days in advanceDomesticContinentalIntercontinental47%56%66%Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on tickets booked by CWT clients (Q3 2012)16
Figure 12Top priorities and planned measures <strong>for</strong> travel managers in North America<strong>2013</strong>Ranking PriorityPlanned measures Respondents *1ImprovingtravelercomplianceActively remind employees of policyEngage management throughout the organizationCommunicate and provide training on travel policyTrack and communicate compliance levels76%64%58%58%2Driving airand groundtransportationsavingsConcentrate volume on a limited number of suppliersNegotiate multi-year contracts and implement flexible, dynamic negotiations withsuppliers throughout yearTighten the air policy (class of travel, connecting flights, advance booking, etc.)46%46%42%Negotiate amenities (e.g., Internet, breakfast and parking)49%3Optimizinghotel spendConsolidate hotel spend on fewer properties to leverage larger volumes in negotiationsMandate the use of preferred hotels47%45%Request last-room availability (LRA) agreements from hoteliers41%4OptimizingonlineadoptionEnhance communication/trainingTrack and communicate online booking tool (OBT) usageEncourage travel counselors to steer travelers to the OBT71%60%44%5Optimizingthe travel policyAddress advance purchase behaviorStandardize the policy regionally or globallyAim <strong>for</strong> best-in-class travel policy guidelines52%50%47%6Enhancingthe travelerexperienceOffer mobile services 62%* Percentage of respondents who selected the planned measure having cited the corresponding priority in their top fiveSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 253 travel managers in North America (November 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 17
Global travel managersLike travel managers in North America and Asia Pacific, global travel managers make improving traveler compliance their toppriority <strong>for</strong> <strong>2013</strong>, followed by driving air and ground transportation savings. Online adoption and hotel spend are theirnext main areas of focus, followed by consolidation, which comes higher in their list of priorities compared to the total sample(5th vs. 7th). (See Figure 4 on Page 9.)Compared with country/regional travel managers, global travel managers intend to place more focus on:Implementing traveler messaging tools (to improve compliance)Negotiating point-of-origin pricing and introducing more mandates (to drive air transportation savings)Globalizing volumes and contracts, and consolidating sourcing (to further consolidate the travel program)Implementing a wider range of measures (to support all priorities)And less focus on:Tightening the travel policy (to optimize air and ground savings)Tracking changed/cancelled bookings and the related costs (to drive air savings)18
Figure 13Top priorities and planned measures <strong>for</strong> global travel managers<strong>2013</strong>Ranking PriorityPlanned measures Respondents *Engage management throughout the organization79%1Improvingtraveler complianceTrack & communicate compliance levelsActively remind employee of policyCommunicate & provide trainings on travel policy75%66%53%Implement traveler messaging tool (CWT Program Messenger)53%2Driving airand groundtransportationsavingsConcentrate volume on a limited number of suppliersWork with airline alliancesNegotiate point-of-origin pricingNegotiate multi-year contracts and implement flexible, dynamic negotiations with suppliersthroughout year69%63%46%46%Review and update online booking tool (OBT) configuration/settings periodically75%3OptimizingonlineadoptionEnhance communication/trainingEnhance OBT featuresTrack and communicate OBT usage72%64%64%4Optimizinghotel spendConsolidate hotel spend on fewer properties to leverage larger volumes in negotiationsMandate the use of preferred hotelsNegotiate amenities (e.g., Internet, breakfast and parking)51%49%49%* Percentage of respondents who selected the planned measure having cited the corresponding priority in their top fiveSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on a survey of 63 global travel managers (November 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 19
<strong>2013</strong> business travel trends from A to ZThe following table shows the cross-over between travel managers’ priorities and key market trends <strong>for</strong> <strong>2013</strong>.Survey results and commentary are included in the A-Z of trends as described on Pages 21-72.Figure 14<strong>Travel</strong> managers’ priorities and key industry trends at a glanceTrends<strong>Priorities</strong>Air & groundComplianceHotelOnline adoption<strong>Travel</strong> policyConsolidation<strong>Travel</strong>er experienceKPIsSafety & securityMeetings & eventsEnvironmentPageA- Ancillary fees21B- Brazil, India and China24C- Carbon emission trading30D- Duty of care32E- Expense management34F- Foggy economic outlook35G- Game techniques37H- Hotel reviews39I- Inflation41J- Joint agreements44K- KPIs47L- Low-cost carriers49M- Meetings and events52N- New virtual agents54O- Online usage55P - Packed planesQ - Quick quizR - Rail travelS - Social mediaT - TechnologyU - Unmanaged travel programsV - Visa regulationsW - Well-beingX Y- Gen X&YZ - Zhōng Guó (China)56575861626467697072Source: CWT <strong>Travel</strong> <strong>Management</strong> Institute20
ncillary fees on top of fares and rates will bewatched closely by travel managers in all areas of theAtravel program and leveraged in negotiations.Air & ground Compliance Hotel <strong>Travel</strong> policy KPIsCWT estimates that ancillary fees account <strong>for</strong> 5-10 percent of the corporate air budget 2 and can add up to 33 percent to the cost ofa hotel stay. 3 Car rental “extras” on top of daily or weekly rates can also be significant. More travel managers are there<strong>for</strong>e lookingbeyond fares and rates to effectively manage the total cost of travel.How to tackle ancillary spend?Three main areas are likely to capture more attention:Clarifying the policy on ancillary fees. In a previous CWT survey 4 only 35 percent of surveyed travel managers said theirtravel policy included a special section on ancillary fees. At the very least, companies need to let travelers know which fees arereimbursable, but they can also distinguish between different traveler categories (e.g., by allowing frequent travelers to claimreimbursement <strong>for</strong> airport lounge access). These policy items should be supported by regular communications to travelers.Tracking ancillary spend. CWT’s survey of travel managers’ priorities reveals that nearly one in two global travel managers(46 percent) intend to monitor ancillary spend. But how? Until more ancillary fees are booked through global distribution systems(see Page 23), expense reports and credit card figures will remain the best sources of data on ancillary spend. <strong>Travel</strong> managementcompanies can provide support with tracking, spend estimates and data analysis, enabling clients to monitor program per<strong>for</strong>manceon both the traveler and airline sides.Negotiating ancillary fees with suppliers. Forty-four percent of all surveyed travel managers intend to negotiate hotel amenitiesto optimize spend, while 34 percent of global travel managers plan to negotiate fuel surcharges and other ancillary fees to drivesavings in air and ground transportation. Companies can ask suppliers to provide in<strong>for</strong>mation on ancillary fees so they can moreaccurately compare competing offers, and this can lead to better discounts or even waived fees and improved conditions <strong>for</strong>travelers. For example, some CWT clients with large spend volumes have successfully negotiated frequent flyer perks (e.g., loungeaccess and priority boarding) <strong>for</strong> all their travelers.A major source of revenues <strong>for</strong> suppliersThis focus on ancillary fees is particular important given that suppliers seem in no hurry to reintegrate them into basic prices.Some airlines have introduced fare bundles that include selected ancillary services. (One of the latest examples is AmericanAirlines, which in December 2012 launched optional “Choice Essential” and “Choice Plus” packages offering one free checkedbag and waived ticket change fees along with other services.) Generally speaking, however, ancillary fees continue to be a majorsource of revenues <strong>for</strong> suppliers:The U.S. hotel industry is expected to record a 3.5 percent year-on-year increase in 2012 revenues from amenityfees (e.g., Internet, telephone, business center access and resort fees), reaching an estimated US$1.95 billion accordingto a <strong>for</strong>ecast by New York University. 5 The report suggests the increase comes less from new types of fees than highercharges <strong>for</strong> the same services and increased volume.2CWT <strong>Travel</strong> <strong>Management</strong> Institute, Mastering the Maze: A Practical Guide to Air and Ground Savings (2012)3CWT <strong>Travel</strong> <strong>Management</strong> Institute, Room <strong>for</strong> Savings: Optimizing Hotel Spend (2009)4See Footnote 25Bjorn Hanson, Divisional Dean of New York University’s Preston Robert Tisch Center <strong>for</strong> Hospitality, Tourism and Sports <strong>Management</strong>, Trend Analysis Report (August 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 21
Global airline ancillary revenues are also increasing but holding quite steady as a proportion of all revenues, at 5.4percent in 2012 vs. 5.6 percent in 2011 according to a <strong>for</strong>ecast by global distribution system provider Amadeus. 6 Globally,ancillary fees are expected to bring in US$36.1 billion in 2012, with the strongest revenue increases in Latin America andthe Caribbean; the Middle East and Africa; and Asia Pacific.Airlines continue to evolve their offering by adding new ancillary services, with recent announcements includingonboard Wi-Fi on some U.S. carriers’ international flights, and a “no-show fee” reportedly in the works <strong>for</strong> Southwest’srestricted tickets.Two “classic” fees (checked bags and cancellation fees) still represent airlines’ largest ancillary revenues. Amadeusreports <strong>for</strong> example, that these two charges represented 65 percent of total ancillary revenue at Delta Air Lines and52 percent at American Airlines in 2011.Fuel surcharges appear to be a new source of revenue <strong>for</strong> many airlines, having become disconnected from actual fuelcosts. According to CWT transaction data, fuel surcharges have risen on all kinds of flights, especially intercontinental, sincefirst quarter 2012, even when oil prices have dropped or stabilized. The trend is particularly marked on domestic routes, asshown in Figure 15. As yet, few companies consider fuel surcharges a negotiable item, but they may want to bring them tothe negotiating table with airlines. Their travel management company can help in tracking fuel surcharges and ancillary feesin general.Figure 15Fuel surcharges appear somewhat disconnected to oil price trendsNotes:This chart encompasses all classes of service <strong>for</strong> network carriers based in every region of the world. 12 carriers were included in 2011 and 19 in 2012.Values have been recalculated using flat exchange rates to eliminate artificial price variations.Source: CWT, based on Amadeus and U.S. Energy In<strong>for</strong>mation Administration data6Amadeus/IdeaWorks, Amadeus Worldwide Estimate of Ancillary Revenue <strong>for</strong> 2012 (August 2012)22
Airline ancillary fee distribution: still a work in progressTwo problems typically faced in the corporate air travel program are knowing how ancillary fees compare between airlinesand impact the cost of travel, and how to track traveler spend on ancillary fees when they are paid as separate expensesrather than included in the fare.For the moment, airlines do not systematically make ancillary fees and packages available in global distribution systems(GDSs). The issue is not so much that the technology is unavailable but that the industry needs to agree on standards,and in particular, airlines need to provide the content without discrimination across all distribution channels.A number of initiatives look promising although the desired changes will not happen overnight:More airlines will be equipped technologically to enable e-ticketing of ancillary services via an “electronicmiscellaneous document” (EMD). This system, developed under the leadership of the International Air TransportAssociation (IATA), enables ancillary fee data to be included in IATA’s billing and settlement system. IATA’s objectiveis <strong>for</strong> all commercial carriers to be EMD-capable by the end of <strong>2013</strong>. However, to be useful to corporate buyers,this system must be adopted <strong>for</strong> airline sales through GDSs. Carriers are only just starting to use the capability. (Seebelow.)Airlines have begun to provide more ancillary products through GDSs. For example, in 2012, Delta Air Linesreached agreements to sell Economy Com<strong>for</strong>t (extra legroom) through the Amadeus and <strong>Travel</strong>port GDSs, whileUS Airways began selling ChoiceSeats (preferred seating assignments) through Sabre, initially without enablingEMDs. Air France adopted Amadeus’s solution to distribute its SeatPlus seating on long-haul flights and enable travelcounselors to use EMD <strong>for</strong> tracking and fulfillment.U.S. airlines may be required by law to display ancillary fees through all sales channels if the U.S. Departmentof Transportation includes this measure in new rules expected in May <strong>2013</strong>. Its controversial “Enhancing AirlinePassenger Protections III” regulation has already been postponed several times.IATA is pushing ahead with a New Distribution Capability (NDC) aimed at providing airlines with identicalcapabilities across all sales channels and greater consistency <strong>for</strong> clients. Basically, the system would involveGDSs accessing content directly from participating airlines through shared application programming interface (API)technology. Although this technology already exists—it is used, <strong>for</strong> example, to access content from some low-costairlines—the aim is to implement a more powerful and efficient industry-wide standard that would support productdifferentiation and customization (e.g., optional service packages). Participation is optional, but airlines and GDSsmust choose to cooperate <strong>for</strong> IATA to achieve its aims.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 23
azil, India and China will continue driving growthin business travel spend, at around twice the worldBaverage.Air & ground Hotel Online adoptionGlobal business travel spending is expected to grow by 8.1 percent 7 in <strong>2013</strong>, at just over twice the <strong>for</strong>ecast rate of economic growth(3.6 percent). 8 However, business travel spending will grow at two speeds: slower overall in developed countries (mostly wellunder 5 percent), and much faster (double-digit growth) in some developing countries. Three countries in particular stand out: India(21.5 percent <strong>for</strong>ecast growth), China (14.7 percent) and Brazil (12.6 percent). Some of their key features are described here.Figure 16Forecast global business travel spending (US$ billions)123456789101112131415United StatesChinaJapanGermanyUnited KingdomFranceItalyKoreaBrazilCanadaIndiaAustraliaRussiaSpainNetherlands2012 <strong>2013</strong> % change254.9194.866.250.840.235.732.931.130.122.522.421.722.117.918.5266.7223.667.452.541.336.132.534.733.923.127.222.723.817.618.9+4.6%+14.7%+1.8%+3.3%+2.8%+1.1%-1.2%+11.8%+12.6%+2.3%+21.5%+4.6%+7.8%-1.6%+2.2%Source: GBTA Foundation, GBTA BTI Outlook ( July 2012, September 2012, October 2012, January <strong>2013</strong>)7GBTA Foundation, GBTA BTI Outlook Annual Global Report and Forecast, Prospects <strong>for</strong> Global Business <strong>Travel</strong> 2012-2016 (July 2012)8International Monetary Fund, World Economic Outlook (October 2012)24
BrazilProjected business travel spend in <strong>2013</strong>: US$ 33.9 billion (+12.6 percent vs. 2012)The world’s 6th largest economyPopulation: 199 million16 cities with more than 1 million inhabitants24 percent of the population aged under 156.5 percent estimated unemployment (<strong>2013</strong>)Sources: International Monetary Fund, World Economic Outlook (October 2012), Central Intelligence Agency, World Factbook (January <strong>2013</strong>), Brazilian Instituteof Geography and Statistics (2012), Population Reference Bureau, World Population Data Sheet (2012)Brazil’s economy is <strong>for</strong>ecast to grow by 4 percent in <strong>2013</strong>, resuming faster growth after slower per<strong>for</strong>mancein 2012 and 2011 (1.5 percent and 2.7 percent respectively, compared to 7.5 percent in 2010, according to theInternational Monetary Fund).The country boasts a highly dynamic airline industry, with many recent mergers and changes in global alliancemembership:Avianca-TACA merged in 2009 and entered Star Alliance in 2012GOL announced the decision to drop the Webjet brand name in 2012 after receiving final approval <strong>for</strong> itsmerger with the carrierAzul and Trip announced their intended merger in 2012TAM, newly merged with LAN, announced it would leave Star Alliance (without confirming it would join LAN inoneworld)Figure 17Market share in Brazil’s domestic aviation market1% 5% 5% 9% 5% 35% 40%PassaredoAviancaTRIPAzulWebjetGOLTAMSource: ANAC – National Civil Aviation Agency of Brazil (October 2012)Capacity and traffic are set to grow in <strong>2013</strong> especially in the domestic market, despite a slowdown in the secondhalf of 2012. New entrants will continue to expand rapidly although perhaps taking less market share away from newlymergedleaders TAM and GOL than in previous years.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 25
There is no strong distinction between low-cost carriers and network carriers in Brazil.Hotels are experiencing an upward trend in occupancy despite a slowdown in 2012. Brazil reportedly has themost rooms under construction (3,831) in the Central/South America region. 9 About 50 percent of available hotelsare independent.A high proportion of travel content is unavailable in global distribution systems, although airlines are progressivelyreintroducing content. (In 2005, the country’s two largest carriers, TAM and GOL, pulled all of their domestic contentout of GDSs, in effect removing 90 percent of Brazil’s inventory.)Online adoption among Brazilian companies is being driven by online booking tools specifically developed <strong>for</strong> themarket, given the fragmentation of content.Credit cards are widely accepted <strong>for</strong> travel in Brazil, which is not the case of all Latin American countries.A high-speed rail network is in the pipeline, with several routes planned: Campinas–Sao Paulo–Rio de Janeiro,Brasilia–Goiania, Belo Horizonte–Curitiba, and Ribeirao Preto–Uberlandia. The project is still in the planning stage,however, with no firm launch dates yet.CWT <strong>for</strong>ecasts low to high price increases <strong>for</strong> Brazilian business travel in <strong>2013</strong>, depending on the category:Air: +1.6 percent to +6.1 percentHotel: +13.1 percent to +14.8 percentCar: +2.3 percent to +3.4 percent9STR Global, Global Development Pipeline Report (September 2012)26
IndiaProjected business travel spend in <strong>2013</strong>: US$27.2 billion (+21.5 percent vs. 2012)The world’s 10th largest economyPopulation: 1.20 billion53 cities with more than 1 million inhabitants31 percent of the population aged under 159.8 percent estimated unemployment (2011)Sources: International Monetary Fund, World Economic Outlook (October 2012), Central Intelligence Agency, World Factbook (January <strong>2013</strong>), PopulationReference Bureau, World Population Data Sheet (2012), Office of the Registrar General and Census Commissioner, India (2011)India’s GDP is expected to grow by 6 percent in <strong>2013</strong>, compared to 4.9 percent (<strong>for</strong>ecast) in 2012, 6.8 percent in2011 and 10.1 percent in 2010.Given this strong GDP growth, combined with a young population and expanding middle class, the country’saviation market is likely to remain among the world’s fastest growing over the coming decades. However,carriers such as Kingfisher and Air India are struggling to maintain profitability in a predominately low-cost market.(Budget airlines account <strong>for</strong> more than 60 percent of domestic business.) One key issue is fuel prices being keptartificially high by government regulation.Figure 18Indian carriers’ share of the domestic market3%6% 7% 18% 19% 19% 28%KingfisherJetliteGo AirAir IndiaJet AirwaysSpice JetIndigoSource: CWTAlso worth noting:India’s hotels are expanding faster than in any other Asia Pacific country, with 54,738 rooms 10 in the pipeline.Although India’s rail network is one of the world’s largest in the world, it currently has no high-speed lines.Several projects are under review <strong>for</strong> possible construction within the next few years.The first section of Mumbai Metro, a new mass rapid transit system, is due to open in <strong>2013</strong>. Running on adedicated elevated rail corridor, the system will link the northern and southern parts of the city, as well as itssuburbs.Although drivers are not required to hold an Indian driving license, <strong>for</strong>eigners renting vehicles tend to preferhiring a chauffeur to get round the country’s busy roads.CWT <strong>for</strong>ecasts varied price trends <strong>for</strong> Indian business travel in <strong>2013</strong>:Air: +0.3 percent to +1.7 percentCar: +2.6 percent to +4.6 percentHotel: -3.6 percent to -5.1 percent10STR Global, Global Development Pipeline Report (September 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 27
ChinaProjected business travel spend in <strong>2013</strong>: US$223.5 billion (+14.7 percent vs. 2012)The world’s 2nd largest economyPopulation: 1.34 billion (July 2012)90 cities with more than 1 million inhabitants16 percent of the population aged under 154 percent estimated unemployment (<strong>2013</strong>)Sources: International Monetary Fund, World Economic Outlook (October 2012), Central Intelligence Agency, World Factbook (January <strong>2013</strong>), PopulationReference Bureau, World Population Data Sheet (2012)China’s economic growth is likely to accelerate again in <strong>2013</strong> at a <strong>for</strong>ecast 8.2 percent, after slowing slightly overthe last few years (from 10.4 percent in 2010 to 9.2 percent in 2011 and a <strong>for</strong>ecast 7.8 percent in 2012).In line with its booming economy, China’s aviation industry is growing rapidly. More than 90 percent of thedomestic market is shared by four airlines (Figure 19). Three of these (China Airlines, China Eastern and ChinaSouthern, all members of SkyTeam) will fly as a regional alliance in January 2012. SkyTeam remains the largest alliancein China with 44 percent of the market, compared with Star Alliance’s 20 percent. Chinese low-cost carriers offer flightsmainly on sub-routes with the exception of Spring Airlines, which operates primary domestic routes from its base atShanghai Hongqiao International airport.Figure 19Chinese airlines’ share of the domestic market9% 11% 24% 25% 31%OthersHainan Airlines GroupChina Eastern GroupChina Southern GroupAir China GroupSource: CWTChinese high-speed rail has been developing at a remarkable rate, providing an alternative to many air routes<strong>for</strong> business travelers. According to the International Union of Railways, 11 China will have 742 miles of high-speedrail in operation and 5,612 miles under construction by 2012, making its network the world’s largest.11Source: International Union of Railways, High-Speed Lines in the World (July 2012)28
Also worth noting:China has the world’s second largest pipeline of hotel rooms under development (214,971 rooms) after theUnited States (299,201 rooms). 12Most <strong>for</strong>eigners renting a car in China also hire a chauffeur since a Chinese driver’s license is required.Online booking continues to rise.Credit cards are widely accepted in the region.Foreign global distribution systems (GDSs) are now authorized to sell non-Chinese airline content, followingthe government’s decision in October 2012 to relax regulation. (See Page 72.)CWT <strong>for</strong>ecasts low price increases <strong>for</strong> Chinese business travel in <strong>2013</strong>:Air: +0.6 percent to +1.7 percentHotel: +0.3 percent to +1.2 percentCar: +2.1 percent to +3.9 percent12STR Global, Global Development Pipeline Report (September 2012)See Pages 41-43 on inflation in travel prices worldwide.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 29
Carbon emission trading: non-European carriers will beexempt from the controversial EU Emissions TradingScheme until the fall, pending a global agreementthrough the International Civil Aviation Organization.Air & groundMuch has been written about the European Union’s Emissions Trading Scheme (EU ETS) and whether or not airlines from outsidethe region should participate, but what does it mean in practice? What impact can travel managers expect to air travel costs in <strong>2013</strong>?What the EU ETS is and why it was introducedIn a nutshell:The European Commission describes the EU ETS as “a cornerstone of the European Union’s policy to combat climate changeand its key tool <strong>for</strong> reducing greenhouse gas emissions cost-effectively.”It is a “cap and trade” system that works by fixing an annual allowance <strong>for</strong> the total emissions emitted by companies in specificindustries, and requiring any companies exceeding this limit to buy surplus credits from those emitting less.Companies can trade credits or “bank” them <strong>for</strong> use at a later date, but the main aim is to encourage businesses to reduce theircarbon footprints by associating them with a financial cost.From <strong>2013</strong>, there will be a single EU-wide cap on emissions and the system of free allowances will gradually be replaced byauctions.In January 2012, the scheme opened up to aviation, or more specifically, all airlines operating domestic or international flights arrivingat or departing from EU airports. After a good deal of controversy, however, the European Commission announced in November 2012that “as a gesture of goodwill” it would defer application of the scheme to flights into and out of Europe until after the fall, pending newproposals by the International Civil Aviation Organization (ICAO). Meanwhile, the EU ETS will continue to apply to flights in and between30 European countries (the 27 EU Member States plus Iceland, Liechtenstein and Norway).Why it is controversial: unfair and illegal or a step in the right direction?The EU ETS has met with strong reactions from airlines, industry groups and governments:Opponents argue that the European Commission has unilaterally imposed an extraterritorial tax and that the rulesdiscriminate against certain airlines (e.g., those operating more carbon-intensive shorter routes, older fleets or flights with lowerpassenger occupancy levels). Reportedly, a group of 29 countries lobbied the European Union in 2012 to suspend the EU ETS,including China, India, Russia and the United States—with an underlying threat of trade war and retaliatory measures such asreviewing bilateral air agreements, suspending discussions on EU airlines’ operating or landing rights, and imposing additionalcharges on EU airlines. The Obama Administration even introduced the “European Union Emissions Trading Scheme Prohibition Actof 2011” to prevent U.S. airlines from participating in the scheme.On the other hand, the European Commission maintains that its action does not constitute a tax, which would be in breachof the EU-U.S. Air Transport Agreement, and that it is compatible with international law, as confirmed by the European Court ofJustice in a case brought by some U.S. airlines and trade associations. Moreover, it is “committed to finding a comprehensive andnon-discriminatory multilateral agreement within the ICAO, and the EU legislation is designed to be amended in the light of such anagreement.” The European Commission insists that it will reinstate the rules <strong>for</strong> <strong>for</strong>eign airlines if “suitable progress” is not made atthe ICAO’s fall General Assembly.30
Some airlines have acknowledged support <strong>for</strong> the EU ETS. For example, U.K.-based Flybe has stated that “a well-designedemissions trading scheme rewards airlines who have invested in new aircraft and incentivizes those who haven’t,” while “it is unfairand discriminatory that long-haul airlines, who are the biggest polluters, would not have to pay the cost of their emissions.” Thecompany notes that limiting the scope to intra-EU flights captures only 20 percent of EU carbon emissions from aviation, or 0.5percent of total EU emissions.What kind of international agreement is likelyThe International Air Transport Association has said that the European Commission’s decision to “stop the clock” on the implementationof the EU ETS to flights to and from non-EU countries represents “a significant step in the right direction and creates an opportunity<strong>for</strong> the international community.” For the moment, there is little visibility on the kind of solution that could be proposed if membercountries reach an agreement.The impact on air travel: higher fuel surcharges?The immediate impact of the EU ETS will be limited to airlines operating intra-European flights, at least until the fall. But what will thatimpact be?The actual costs to airlines will be unknown until the first accounting period (January to December 2012) is closed.By March 31, <strong>2013</strong>, airlines must surrender the correct number of allowances (1 per ton of CO 2), including any bought to coversurplus emissions. Failure to do so will generate a fine of €100 (approximately US$133) per allowance. Crucially, it is estimatedthat only about 60 percent of airlines’ emissions will be covered by free allowances, meaning that costs will rise, varying withairlines’ fuel efficiency and carbon trading conditions.Over the past year or so, a number of airlines have stated that the extra costs associated with the system will run intobillions of dollars <strong>for</strong> the industry, and that these costs will be passed on to travelers as higher fuel surcharges. In 2012,<strong>for</strong> example, the announced increases linked to EU ETS have ranged from less than €3 (US$4) to more than €10 (US$13) <strong>for</strong>European and long-haul flights.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 31
uty of care to employees: awareness of the businessresponsibilities will rise worldwide, although markedDregional differences are likely to remain.Safety & securityWestern companies have long been aware of their duty of care to employees but increasingly they are addressing how thisresponsibility extends to their business travelers. More and more, their concerns go beyond understanding and respectingcomplex regulation in different countries to implementing voluntary duty of care initiatives as an integral part of corporate socialresponsibility.Awareness driven by diverse national lawsLegally speaking, duty of care covers the employer’s responsibility to ensure the safety and well-being of employees, althoughthe precise definitions and applications vary significantly between countries. A few highlights of different legislation 13 illustratethis diversity:The United Kingdom’s Corporate Manslaughter Act of 2007 makes the country’s regulation one of the most stringentworldwide. Companies operating there can be prosecuted <strong>for</strong> negligence even if specific decision-makers are not identified.Moreover, they can be held liable <strong>for</strong> an employee’s death abroad if due to the negligence of management in the U.K.Under Australia’s Workplace Health and Safety laws, companies or individual supervisors can be prosecuted <strong>for</strong> negligenceif reasonable employee protection measures have not been taken.France’s Labor Code is another particularly strict law that can lead to criminal penalties. Employees are considered to be atwork at all times during a trip, meaning that any injuries incurred by business travelers are work-related in the eyes of the law.The Netherlands requires Dutch employers to provide travelers with advance written in<strong>for</strong>mation on possible risks linkedto <strong>for</strong>eign assignments.United States laws on duty of care vary between states. In general, Workers’ Compensation laws, which require companiesto pay indemnities to employees injured during work, do not apply outside U.S. territory, although some states make anexception <strong>for</strong> employees on <strong>for</strong>eign business travel.So far, duty of care regulation has been introduced mainly by the most developed countries and clearly drives companies’awareness of their responsibilities to employees. According to a study carried out by International SOS, 14 unsurprisingly,awareness of the legal and moral responsibilities is greatest in regions that impose strict regulation.However, the situation is changing in countries like China, where global companies are influencing local standards and helpingto raise awareness of corporate social responsibility issues. This is reflected in the CWT survey of travel management priorities,which shows that 32 percent of travel managers in Asia Pacific will prioritize safety and security in <strong>2013</strong>, compared to only25 percent of all respondents on the total sample.13See the International SOS white paper, Duty of Care of Employers <strong>for</strong> Protecting International Assignees, their Dependents, and International Business <strong>Travel</strong>ers(2009) and iJet’s Duty of Care: Are you covered? (March 2012)14International SOS, Duty of Care and <strong>Travel</strong> Risk <strong>Management</strong> Global Benchmarking Study (2011)32
Addressing duty of care risks in business travelSo what are the areas involved in ensuring duty of care <strong>for</strong> travelers? These can range from preventing and dealing with<strong>for</strong>eseeable “mundane” accidents in a company’s offices, to keeping travelers safe in the event of unexpected and hugescalenatural disasters. The risks associated with travelers’ health, safety and well-being are numerous, including administrativeproblems (e.g., lack of visa); inadequate in<strong>for</strong>mation on local destinations; illness or death while traveling; loss or theft ofpersonal items; lack of personal data security; cultural and linguistic isolation; accidents in transportation, accommodation andvisited offices; contact with violence or crime; and exposure to infectious diseases, unstable geopolitical contexts or naturaldisasters.When assessing these risks, it can be useful <strong>for</strong> travel managers to focus on key elements identified by iJet International, whichinclude:Adequate, tailored insuranceClearly written and communicated corporate travel policiesLimited out-of-policy bookings (those not going through the travel management company, which do not benefit from travelertracking and other services)Up-to-date destination intelligenceIn<strong>for</strong>mation on airline safetyLimited numbers of employees on any given flightCarefully selected preferred hotelsWell-managed use of ground transportation (self-drive vs. other options)Availability of hotlinesBenchmarking of standards of care in their industriesAccording to the CWT survey, the most popular planned measures <strong>for</strong> tackling safety and security are providing destinationin<strong>for</strong>mation to travelers, and implementing traveler tracking and real-time notifications. (Notably, 82 percent of theglobal travel managers who prioritize safety and security plan to implement tracking/notifications, and 73 percent destinationin<strong>for</strong>mation.) The next most popular measures are providing a 24/7 security hotline, implementing a disaster/crisisresponse plan, and providing medical assistance and security services (identified by at least 32 percent of all respondentseach time).Given that companies can be held to account by local and/or <strong>for</strong>eign laws, it is advisable <strong>for</strong> them to apply the highest possiblestandards of duty of care in all the countries in which they operate.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 33
E thexpense management: companies will increasinglyfocus on this area to improve data consolidation anduser experience.Air & ground Hotel <strong>Travel</strong>er experience<strong>Travel</strong> managers juggle a wide range of data from many different sources to serve both day-to-day tactics and long-term strategy.However, getting accurate, comprehensive and workable data often remains a challenge. As companies are focusing more onmanaging the total cost of travel (including hotel amenity fees, additional airline costs, car rental extra fees, meals and so on), theyare naturally turning their attention to expense management. The economic downturn has been another key driver <strong>for</strong> companies tomaster this area.Sizeable benefitsWith improvements in expense management, companies can consolidate all-important data and increase control over spend whileaccessing a number of other benefits:Increased compliance. A strong travel and expenses policy and enhanced reporting capabilities can improve visibility and reducesystem abuses or outright fraud. This helps companies to meet regulatory requirements <strong>for</strong> accountability while supporting strategicobjectives. As an example, online expense claim tools can show out-of-policy spend items and send a reminder to travelers whileflagging non-compliance to auditors. In CWT’s survey of travel management priorities, 12 percent of travel managers intend toimplement an expense management tool to improve traveler compliance.Reduced expense management costs. Directsavings are possible when improvements aremade in areas such as policy, reporting andnegotiations with expense management providers.In addition, indirect savings can be achieved byimplementing more efficient processes, bothin terms of the technological systems usedand the way expense management teams areorganized. For example, an automated expensemanagement system can reduce the costof processing expense claims by more than30-40 percent, according to industry experts.Figure 20Three main areas are involved in expense managementExpensemanagementPolicyProcessesAuthorized expenses and amountsEmployee’s roles, cost centers andhierarchy in the expense approval processFiling of expense claims and invoicesProcessing and reconciliation of expense claimsApproval and reimbursement of expense claimsVAT reclaim and reimbursementAuditing34Web-based software, hosted softwareEnhanced traveler experience. Filing expensemanagement reports can be a heavy administrativetask that lowers productivity and can be a sourceof stress <strong>for</strong> employees. Companies can there<strong>for</strong>eenhance the traveler experience by improvingexpense management tools and processes,SystemSource: CWT <strong>Travel</strong> <strong>Management</strong> Instituteor manual spreadsheetsensuring that the system in place is user-friendly and efficient. As a general rule, the more automated and integrated the system,the greater the time savings <strong>for</strong> everyone involved. Among the features worth considering are electronic reports (including scannedreceipts), mobile apps <strong>for</strong> on-the-go expense claims, easy-to-use expense categories, currency conversion, pre-populated claims<strong>for</strong>ms (integrating data from online booking tools and corporate payment cards), automated compliance checks, integration withfinance systems and automatic reimbursement.More detailed in<strong>for</strong>mation on expense management can be found in an in-depth report by the CWT <strong>Travel</strong> <strong>Management</strong> Institute,Business <strong>Travel</strong>er Services: Finding the Right Fit (2011).
Foggy economic outlook: the European debt crisis,U.S. policy on taxes/public spending and downgradedglobal growth <strong>for</strong>ecasts are among the factorsproducing economic uncertainty <strong>for</strong> <strong>2013</strong>.KPIsWhat impact will the economy have on business travel in <strong>2013</strong>? As the GBTA Foundation put it in their 2012 annual <strong>for</strong>ecast, 15“navigating the current path of the global economy can be likened to driving a foggy road […] with alternating patches of clear drivingand clouded vision.” However it would appear likely that GDP growth will pick up slightly in <strong>2013</strong>, led by developing economies. Incompanies, the mood will be “business travel as usual“ but at the more cautious end of the scale.Growth in GDP and business travel spend despite downgraded <strong>for</strong>ecastsVarious sources predict a slight improvement in <strong>2013</strong> leading up to faster growth in 2014, “when the [economic] mist will clear.” At thetime of publication, the latest <strong>for</strong>ecast by the International Monetary Fund dating from October 2012 pointed to 3.6 percent growthin <strong>2013</strong>, compared to 3.3 percent in 2012. Results were downgraded from the previous <strong>for</strong>ecast largely due to uncertain conditions,not only <strong>for</strong> the most advanced economies but leading emerging markets such as China, India, Russia and Brazil.Figure 21Forecast GDP growth* Includes China, India, Indonesia, Malaysia, Philippines, Thailand and VietnamSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on data from the International Monetary Fund, World Economic Outlook (October 2012)15GBTA Foundation, GBTA BTI Outlook Annual Global Report and Forecast, Prospects <strong>for</strong> Global Business <strong>Travel</strong> 2012-2016 (July 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 35
Among the sources of uncertainty are the euro area crisis and U.S. policy on taxes and public spending now that the immediate“fiscal cliff” scenario has been averted. (This would have meant sweeping tax hikes combined with spending cuts to reduce the publicdeficit, leading to a possible mild recession. However, President Obama introduced a law extending tax relief measures on January 1,<strong>2013</strong>.) Austerity policies, high unemployment and weak consumer confidence are likely to continue in developed economies.On the other hand, high employment growth and solid consumption should continue to drive many emerging and developingmarkets, even if growth is likely to be slower than pre-crisis levels.Against this backdrop, the business travel market should continue growing at a faster pace than the economy, according to <strong>for</strong>ecastsmade by the GBTA Foundation.Figure 22Year-on-year <strong>for</strong>ecast growth in global business travel spend (%)(<strong>2013</strong> vs. 2012)Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on data from the GBTA Foundation, GBTA BTI Outlook (July 2012, September 2012, October 2012 and January <strong>2013</strong>)CWT expects this context to produce modest inflation in travel prices across all regions—typically of just a few percent, as discussedon Pages 41-43.36
ame techniques will become popular as a way toGrein<strong>for</strong>ce compliance with the travel program.ComplianceWhich works best: the carrot or the stick? While many companies successfully use sanctions against “rogue” employees to addresscompliance issues (e.g., non-reimbursement of out-of-policy expenses), more and more are looking at positive ways to rein<strong>for</strong>ce thedesired traveler behavior while educating and engaging travelers in a managed travel program. In particular, game techniques arebecoming more popular as travel managers turn to both tried-and-tested and newer methods to boost compliance—one of their topconcerns.Compliance: a top priorityIn the CWT survey, compliance was cited as a top five priority by 64 percent of all respondents, making this the most common focus<strong>for</strong> <strong>2013</strong>. (It ranks 2nd overall, since driving savings in air and ground transportation tended to rank higher in the top five.)To address compliance, travel managers intend to focus largely on communications tactics such as actively reminding employees ofthe travel policy (72 percent), communicating and providing training (55 percent), and tracking and communicating compliance levels(54 percent). <strong>Travel</strong> managers clearly understand the importance of communication to travelers, who mostly want to do the right thingbut often are unfamiliar with the policy or think they can find better deals on their own. Although only 8 percent of travel managersplan to motivate travelers through game techniques, this can be seen as a quite significant figure considering that the approach is stillquite new.Encouraging friendly competitionOver the last few years, game techniques have crept into many fields as a way to motivate people to act in certain ways or per<strong>for</strong>mbetter. Some cultures are more inclined to participate in such initiatives (China, Brazil, Russia, the United Kingdom and the UnitedStates, according to the Newzoo 2011 National Gamers Survey).In business travel, a well-known example is the frequent flyer “miles” awarded by airlines that can be redeemed to reward loyaltravelers. Within business travel programs, some companies are instituting similar points systems to reward bookings that respect agiven budget or other compliant behavior such as:Booking in advanceTaking restricted airfares and/or lowest logical faresBooking hotel rooms at the same time as flightsChoosing preferred hotelsUsing the corporate online booking toolOther companies are encouraging friendly competition between travelers or business units by communicating their per<strong>for</strong>mance oncompliance metrics. For this, they may use traveler-centric travel management tools such as the traveler scorecard produced byCWT Solutions Group (Figure 23).<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 37
Figure 23<strong>Travel</strong>er-centric tools such as a traveler scorecard can motivate employees to comply with the travel policythrough friendly competitionObjective: provide travelers with visibility on their travel spend and buying behavior, with the related savings or losses<strong>for</strong> the companyBenefits: traveler ownership of the savings/loss impact drives the desired behavior in non-mandated programenvironments, stimulated by friendly competition between individual travelers or business unitsSource: CWT Solutions Group38
otel reviews by corporate travelers will improvethe travel experience and boost negotiations withHhoteliers.Compliance Hotel <strong>Travel</strong>er experienceIncreasingly, social reviews are holding sway among business travelers when booking accommodations. According to a Google/IPSOSsurvey, 16 one in three business travelers already post reviews online of properties they stay at, while 57 percent enjoy reading aboutother travelers’ experience. Rather than ignore the influence of social media, savvy travel managers are integrating them into the travelprogram.Relevant in<strong>for</strong>mation from trusted colleaguesIn practical terms, the travel management company provides a client with a dedicated plat<strong>for</strong>m <strong>for</strong> its travelers to share reviews onpreferred hotels. Reviews can only be made by travelers who have stayed at the properties in question: after a business trip, travelersreceive an automatic email alert asking them to comment on their experience. <strong>Travel</strong>ers who are selecting a hotel <strong>for</strong> an upcomingtrip can see the relevant reviews from trusted colleagues, in addition to up-to-date details about the properties in the hotel program.When managed as part of the corporate travel program through a dedicated plat<strong>for</strong>m provided by the travel management company,hotel reviews can bring significant benefits:Increased compliance, since the reviews focus on preferred hotelsGreater negotiating power with hoteliers thanks to feedback from travelers, which can be integrated into per<strong>for</strong>mance dashboardsAn enhanced traveler experience, since travelers can more easily choose hotels to suit their preferences, having access to trustedin<strong>for</strong>mation on the location, quality of amenities, etc.In the CWT survey, more than 50 percent of travel managers said they plan to mandate the use of preferred hotels in <strong>2013</strong>, makingthis the most popular measure <strong>for</strong> driving hotel spend optimization. Corporate hotel review sites can be an attractive solution <strong>for</strong> them,as well as <strong>for</strong> travel managers in a non-mandated environment, since these tools channel travelers toward preferred hotels (unlikecommercial review sites that can motivate travelers to book outside the program).16Google and IPSOS OTX Media, <strong>Travel</strong>ers’ Road to Decision (July 2011)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 39
Case study: new hotel review feature visited by more than 900 travelers in the firstsix months of implementationL’Oréal Group was one of the first CWT clients to implement CWT Hotel Intel, a dedicated plat<strong>for</strong>m that enables travelers tofind in<strong>for</strong>mation on preferred hotels and share their feedback with colleagues inside their company.After the first six months in operation, more than 900 travelers had visited the plat<strong>for</strong>m, generating more than 750 reviews.Further, 90 percent of those travelers recommended the hotels they had visited to their colleagues.Apart from providing travelers with a user-friendly interface to L’Oréal’s global hotel program, the company wanted togather feedback on different properties. This was <strong>for</strong> two reasons: to improve traveler satisfaction and to increase L’Oréal’snegotiating power with hoteliers. The company is using the in<strong>for</strong>mation it has gathered to help build its <strong>2013</strong> hotel program.Corinne Delbreil, travel, meetings and events manager <strong>for</strong> L’Oréal Global Procurement, has shared her feedback on the toolitself:“We are extremely happy with the tool. It is smart, innovative and perfectly adapted to our environment. It’svery easy to use and the feedback based on actual bookings has been very constructive and valuable.”Her colleague Marion Carroy, Social Media Manager at L’Oréal’s Global Innovation department added,“CWT Hotel Intel has really changed the way we prepare our business trips. The site is really pleasantto navigate and in a few clicks we know what our L’Oréal colleagues have recommended, if the hotel isavailable and what our company has negotiated <strong>for</strong> us.”L’Oréal includes more than 550 hotels in the review tool, enabling travelers to search <strong>for</strong> approved accommodation by cityand office location. The hotels appear on a map with the approved rate, amenities included, ranking, reviews and photos.Users can access the tool via the corporate intranet, customizing the display by language and currency.Figure 24Example of in<strong>for</strong>mation displayed to travelers in CWT Hotel Intel40
Inflation may hit travel prices modestly overall, withincreases of well under 5 percent in most categoriesand regions.Air & ground Hotel KPIs Meetings & eventsCWT’s <strong>2013</strong> <strong>Travel</strong> Price Forecast predicts moderate price inflation across all travel categories and in every region of the world,led by Asia Pacific and Latin America. A number of likely developments are pinpointed to help travel managers with the year’sbudgeting.Here are some of the main highlights:Asia Pacific: economic growth should stabilize, bringing modest price increasesThis region has experienced strong economic growth over the past several years, driving prices upward. In <strong>2013</strong>, growth isexpected to stabilize with modest price increases overall but wide variations between countries.Air ticket prices should increase by about 2.5 percent in the region during <strong>2013</strong>, largely due to the number of low-costcarriers entering the market and keeping prices lower than typically seen in this part of the world.Average daily hotel rates will likely increase by about 3.5 percent in <strong>2013</strong>. Singapore will lead the way with an 8 percentincrease amid strong travel demand and lagging supply. Meanwhile, prices in Hong Kong will also increase more than theregional average as clients shift to lower-category properties.Car rental rates will likely experience the highest inflation of anywhere in the world, with a 5.9 percent increase in<strong>2013</strong>. Rates in Australia and New Zealand will rise quite sharply due to increased demand and more tightly managed fleets.Meetings and events spending is likely to increase by about 6 percent. Group sizes are expected to decrease by around3.8 percent as organizations attempt to mitigate rising supplier prices by holding smaller, shorter meetings.Europe, Middle East and Africa: continued economic uncertainty will limit priceincreasesWhile Europe is facing continued economic uncertainty, most Middle Eastern and African economies are faring reasonably well.The region should there<strong>for</strong>e experience moderate travel price increases overall in <strong>2013</strong>, although economic volatility couldprompt significant changes at any point.Airfares will likely climb 2.5 percent during <strong>2013</strong>, as carriers have been diligent in controlling capacity and yielding highload factors despite economic concerns.Average daily hotel rates will likely increase 1.3 percent overall during <strong>2013</strong>, with differences between cities. A decreasein post-Olympic demand <strong>for</strong> rooms in London will bring rates down there. Meanwhile, increased interest in mid-rangeproperties is expected throughout France as brands invest in upgrading those offerings.Car rental rates may increase 1.2 percent in <strong>2013</strong>. Recent consolidation in the region, combined with aggressive growthplans of low-cost providers, is creating increased competition that should hold down prices.High-speed rail prices will likely increase by 4.3 percent as this mode of transportation continues to offer a competitivealternative to air travel in key markets. Notably, increases of up to 9 percent are expected in premium-class carriages, wherecorporate travelers typically ride to access free Wi-Fi and other amenities.Meetings and events spending will increase less than in other regions, with an expected 1 percent rise in costs perattendee per day. As a result, there will be less pressure on organizations in the region to reduce group sizes to offset higherprices and spend is likely to increase by about 3 percent.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 41
Latin America: still a focal point with the highest global hotel inflationThis region continues to experience economic growth overall, although significant disparities between counties will create variedtravel pricing next year.Air ticket prices are likely to increase by 1.3 percent overall, with two main pricing trends. Countries with healthyeconomies like Brazil and Chile should experience solid price inflation, while countries with weaker economies like Argentina,Colombia, Mexico and Peru can expect moderate decreases to only slight growth.Average daily hotel rates will likely rise by about 6.3 percent. Brazil will see the largest increase in hotel rates, and in fact,is the only nation in CWT’s entire 48-country <strong>for</strong>ecast expected to see double-digit price increases in <strong>2013</strong>.Car rental rates will likely increase by 1.4 percent, primarily due to U.S.-based brands expanding operations in the regionto meet increasing demand. However, Brazil-based Localiza is a major player that will offer an added element of competitionto international suppliers in its home market.Increases in meetings and events spending per attendee and per day will be the highest in the world, at an averageof 11 percent. Meanwhile, group size will decrease by about 7 percent as buyers seek to offset higher supplier costs.North America: no major rate increases as economies improve slowly and steadilyWhile the economies of the United States and Canada are experiencing slow and steady improvement, no major growth isexpected <strong>for</strong> the <strong>for</strong>eseeable future. This will help contain travel price increases <strong>for</strong> most categories of spend.Air ticket prices may increase by 2.8 percent. Carriers in both countries will remain disciplined about controlling capacityto ensure that demand outpaces supply, enabling price increases.Average daily hotel rates will likely increase by 3.2 percent throughout the year. As always, increases will vary by market,with the top business destinations able to command much higher prices. Western Canada will experience particularly highincreases based on an influx of <strong>for</strong>eign demand <strong>for</strong> the area’s energy and mining resources.Car rental rates may well decrease by 1.1 percent. For yet another year, car rental firms in North America will struggleto raise prices as the market remains highly competitive with only a few existing suppliers available to battle <strong>for</strong> corporatebusiness.Meetings and events spending should continue to grow, with an average 4.8 percent increase expected in the costper attendee per day, along with an average 6 percent increase in group size. At the end of 2012, advance bookings<strong>for</strong> <strong>2013</strong> were already strong, with booking windows increasing by 5 percent as organizations showed more confidence inthe future.(See the full report, available online, <strong>for</strong> more details.)42
Figure 25CWT’s global price <strong>for</strong>ecast <strong>for</strong> <strong>2013</strong> at a glanceEUROPE, MIDDLE EAST& AFRICANORTH AMERICAAIRH22012 + 0.9% to +1.7%H1<strong>2013</strong> + 1.8% to +2.8%H2<strong>2013</strong>+2.7% to +3.9%H22012H1<strong>2013</strong>H2<strong>2013</strong>H22012H1<strong>2013</strong>H2<strong>2013</strong>GroupSizeCost perattendeeper dayHOTEL+2.2% to + 4.4%+2.4% to +3.9%+2.8% to +3.8%CARRENTAL-1.3% to -1.0%-1.2% to -0.9%-1.2% to -1.0%MEETINGS &EVENTS+4.0% to+8.0%+4.3% to+5.3%LATIN AMERICAAIRH22012 -1.5% to +0.4%H1<strong>2013</strong> -0.4% to +2.1%H2<strong>2013</strong>+0.5% to + 2.8%H22012H1<strong>2013</strong>H2<strong>2013</strong>H22012H1<strong>2013</strong>H2<strong>2013</strong>GroupSizeCost perattendeeper dayHOTEL+4.4% to +6.8%+5.4% to +6.9%+5.7% to + 7.2%CARRENTAL+0.7% to +2.3%+0.9% to + 1.9%+0.8% to + 2.0%MEETINGS &EVENTS-5.0% to-9.0%+9.8% to+12.2%AIRH22012 + 1.6% to +2.1%H1<strong>2013</strong> + 2.3% to + 2.8%H2<strong>2013</strong>+2.3% to +2.8%H22012H1<strong>2013</strong>H2<strong>2013</strong>H22012H1<strong>2013</strong>H2<strong>2013</strong>H22012H1<strong>2013</strong>H2<strong>2013</strong>GroupSizeCost perattendeeper dayHOTEL+0.3% to +2.3%+0.1% to +2.2%+0.3% to + 2.4%CARRENTAL+0.6% to +1.4%+0.8% to + 1.5%+0.9% to +1.7%RAIL+3.8% to +4.7%+4.1% to +4.2%+4.2% to +4.6%MEETINGS &EVENTS+2.5% to+3.5%+0.0% to+2.0%ASIA PACIFICAIRH22012 + 1.9% to +2.9%H1<strong>2013</strong> + 2.2% to +3.2%H2<strong>2013</strong>+1.8% to +2.6%H22012H1<strong>2013</strong>H2<strong>2013</strong>H22012H1<strong>2013</strong>H2<strong>2013</strong>GroupSizeCost perattendeeper dayHOTEL+2.3% to + 3.6%+3.4% to +4.4%+2.9% to +3.4%CARRENTAL+5.5% to +6.1%+5.4% to +6.1%+5.7% to +6.2%MEETINGS &EVENTS-3.1% to-4.5%+5.0% to+7.0%Source: CWT, <strong>2013</strong> CWT <strong>Travel</strong> Price Forecast (July 2012)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 43
Joint agreements are in the air, with airline alliancesexamining ways to extend membership to low-costand “hybrid” carriers.Air & ground <strong>Travel</strong> policy ConsolidationMembership of the three main global airline alliances—oneworld, SkyTeam and Star Alliance—has been growing year by year,and <strong>2013</strong> will be no exception. Three major airlines (EVA Air, Malaysia Airlines and SriLankan Airlines) are expected to joinduring the period, while 13 others will celebrate their first full year of membership after joining in 2012. A further two airlinesare awaiting confirmation of membership in 2014. (See Figure 26.)Figure 26At least 18 major airlines have joined a global alliance or applied <strong>for</strong> membership since the start of 2012AeromexicoAir FranceDelta Air LinesKorean AirAerolineas ArgentinasAeroloftAir EuropaAlitaliaChina AirlinesChina EasternChina SouthernCzech AirlinesKenya AirwaysKLMMiddle East AirlinesSaudiaTAROMVietnam AirlinesXiamen AirlinesGaruda IndonesiaAmerican AirlinesBritish AirwaysCanadian AirlinesCathay PacificQantasairberlinFinnairIberia ExpressJapan AirlinesLANMexicanaNIKIOpenSkiesRoyal JordanianS7 AirlinesMalaysia AirlinesSriLankan AirlinesQatar AirwaysAir CanadaLufthansaScandinavian AirlinesThaï Airways InternationalUnited AirlinesAdria AirwaysAegan AirlinesAir ChinaAir New ZealandANAAsiana AirlinesAustrianAviancaBrussels AirlinesCopa Airlines SWISSCroatia Airlines TACAEGYPTAIR TAM AirlinesEthiopian Airlines TAP PortugalLACSATurkish AirlinesLOT Polish Airlines US AirwaysShenzhen AirlinesSingapore AirlinesSouth Africa AirwaysEVA Air1997 1999 2000FoundersYear-end 2012Additional membersBold: denotes new members in 2012<strong>2013</strong>-14PendingSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteMore flexible alliance rulesWithin each alliance, key members <strong>for</strong>m tight partnerships—usually requiring antitrust immunity—to increase their global reachand boost their attractiveness <strong>for</strong> customers. Up until now, alliance rules have prevented the <strong>for</strong>mation of such partnershipswith outside airlines, which has discouraged some non-members from joining, particularly in the Middle East. Other criteria andthe costs associated with alliance membership have also presented a barrier <strong>for</strong> some airlines, especially <strong>for</strong> low-cost carriers.However, this situation is changing:Qatar Airways’ pending membership of oneworld (in 2014) is likely to lead to a reshuffling among airlines seeking a strongMiddle Eastern hub. oneworld’s Qantas, <strong>for</strong> example, has aligned with Emirates Airlines, while Skyteam’s Air France-KLMhas signed a codeshare agreement with Abu Dhabi-based Etihad Airways. These agreements are particularly symbolic inthat they involve non-alliance members (Etihad and Emirates), showing a new flexibility on the part of alliances.44
Following oneworld’s decision to admit airberlin in 2012, SkyTeam is planning to test a new “hybrid partnershipplat<strong>for</strong>m” in <strong>2013</strong> aimed at creating close cooperation with low-cost or hybrid carriers 17 without the costs or requirementsof full membership. A key focus will be the use of a common IT plat<strong>for</strong>m providing an interface with full-service airlines.With this plat<strong>for</strong>m, the alliance hopes to attract the many low-cost or hybrid carriers in Brazil and India especially, but thereis considerable scope worldwide. According to the CAPA Centre <strong>for</strong> Aviation, low-cost carriers account <strong>for</strong> more than half ofnon-alliance airline capacity, or nearly a quarter of all global airline capacity.Figure 27Low-cost carriers account <strong>for</strong> more than half of non-alliance capacityAlliance membersUnaligned airlines+oneworld affiliatesLow-cost carriers24% 17% 12% 25% 23%OtherSource: CWT <strong>Travel</strong> Mangement InstituteBased on CAPA – Centre <strong>for</strong> Aviation data (2012)AirAsia XeasyJetGolIndiGoJetBlue AirwaysLion AirRyanairSouthwest AirlinesSpiceJetWestJetEtc.Alaska AirlinesEl AlEmiratesEtihad AirwaysGulf AirHainan AirlinesIcelandairVirgin Atlantic AirwaysEtc.A number of other developments are noteworthy:As seen in Figure 26, airlines based in the high-growth Asia Pacific or Latin America regions feature heavily among the newalliance members (confirmed or pending), with some potential shifting between alliances. For example, following its mergerwith Chile’s LAN Airlines, Brazil-based TAM Airlines is expected to leave Star Alliance in <strong>2013</strong> to join oneworld or becomeindependent.U.S.-based Delta Air Lines is seeking antitrust approval to take a 49 percent in Virgin Atlantic. If approved, the joint venturewould strengthen Delta’s offering <strong>for</strong> premium passengers and could open the door to Virgin joining SkyTeam.Star Alliance’s US Airways has reportedly been in talks with oneworld’s American Airlines, although this has not beenconfirmed by the carriers.Alliances in the travel programAgainst this dynamic backdrop, nearly two-thirds (63 percent) of global travel managers intend to work more with airlinealliances as an opportunity to further drive air and ground savings. More generally, alliances and joint ventures will also be ofinterest to the 49 percent of all survey participants who said they would make a priority of globalizing spend volumes andcontracts to further consolidate their programs. In addition to hard-dollar savings, alliances can offer a variety of soft benefits, asshown in Figure 28.17Airlines positioned in between low-cost airlines and full-service network carriers<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 45
Figure 28Potential pros and cons of working with airline alliancesPotential advantagesHarmonized classes, published faresand targets, including both nonstopand connecting flights, depending onthe participating carriersIncreased program coverage (new routes)Possibility of combining fares fromtwo partner airlinesPotential disadvantagesReduced competition, with airlinesin a more dominant positionHigher fares due to reduced competitionIncreased volume commitments requiredfrom clientsBetter connections between participatingcarriers, schedules and frequenciesEasier management of requests <strong>for</strong> proposalsthrough a single contact and simplifiedofferingsSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteThe benefits will vary depending on the airlines involved and their fit with a company’s travel program. <strong>Travel</strong> managers there<strong>for</strong>eneed to ask the right questions, such as:Does the alliance network match our travel footprint?Would our program use at least three of the partner airlines?Do we have large enough volumes to attract them?Can we save money compared to contracting with airlines individually?Can we add incremental volumes to negotiate higher discounts?CWT also recommends maintaining competitive pressure, working with primary and secondary preferred airline groups to ensurethe best possible coverage while maximizing volume discounts. Likewise, it is important to communicate the right in<strong>for</strong>mationto travelers so they are kept in<strong>for</strong>med of the company’s choice of preferred carriers and the benefits of alliance deals.More in<strong>for</strong>mation can be found in an in-depth report by the CWT <strong>Travel</strong> <strong>Management</strong> Institute, Mastering the Maze, A PracticalGuide to Air and Ground Savings (2012), available on carlsonwagonlit.com.46
ey per<strong>for</strong>mance indicators: more companies willtrack their carbon footprints (including emissions fromKtravel) to comply with stricter reporting regulation.KPIsEnvironmentAccording to the CWT survey of travel management priorities, 15 percent of travel managers prioritizing key per<strong>for</strong>manceindicators intend to track carbon emissions in <strong>2013</strong>, while 8 percent will prioritize making the travel program more environmentallyfriendly, an area that has consistently ranked bottom of the list of travel managers’ priorities over the past few years. One reasonmay be that the economic slowdown has naturally led to lower carbon emissions than expected and there<strong>for</strong>e less pressureto make improvements, but this situation will not last. Tighter regulation, combined with demand from stakeholders, willencourage more companies to track their carbon footprint from all areas of activity, including travel.How corporate carbon emissions are classifiedAt the corporate level, carbon emissions are divided into three “scopes,“ according to the Greenhouse Gas Protocol, theemissions accounting tool most widely used by government and business leaders:Scope 1: direct emissions from sources owned or controlled by the reporting organizationScope 2: indirect emissions from the consumption of purchased energy and there<strong>for</strong>e a consequence of the organization’sactivity but produced by another entityScope 3: other indirect emissions from operations, including transportation in vehicles owned or controlled by third partiesMost emissions from business travel are there<strong>for</strong>e considered in Scope 3, although fully-owned car fleets would tend tocome under Scope 1.The corporate carbon footprint and travelA company’s carbon footprint actually refers to how much greenhouse gas it has emitted, carbon being the most commonof six greenhouse gases. The process of measuring a carbon footprint involves collecting operational data and multiplyingeach source of emissions by an accepted emissions factor to generate a carbon dioxide equivalent (CO 2e).In the business travel program, carbon emissions are typically calculated per passenger kilometer or per hotel room nightafter factoring in various criteria. Per kilometer, car transportation produces more carbon than air, and short-haul flightsmore than long-haul flights. Rail is the most carbon-efficient solution of all.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 47
Regulatory vs. voluntary measuresMany governments have passed regulation requiring specific types of companies to report on their direct and energy-relatedemissions (Scopes 1 and 2). For example:In the United States, the Environmental Protection Agency introduced a rule in 2009 requiring facilities emitting more than25,000 metric tons of greenhouse gasses per year to provide annual reporting. The first reports (<strong>for</strong> the year 2010) werepublished in January 2012.In the United Kingdom, new regulation due to come into effect in April <strong>2013</strong> will require all companies listed on theLondon Stock Exchange to report on Scope 1 and 2 emissions. The rule may be extended to all large companies from 2016after review in 2015.In France, a new law (“Grenelle II”) introduced in 2012 requires all companies with more than 500 employees to disclosetheir emissions.The European Union has also introduced a controversial emissions trading scheme, which is mandatory <strong>for</strong> certain industries,including aviation. (See Pages 30-31.)In parallel, specific laws require the transportation sector, including travel agencies, to disclose the carbon footprint of theirservices to customers. For example, this kind of regulation will take effect in France from the second half of <strong>2013</strong> and a Europeaninitiative is likely to follow. Companies that obtain this in<strong>for</strong>mation will have a head start in undertaking wider Scope 3 carbonreporting if they are not doing so already.While regulation is clearly important <strong>for</strong> leading the way, companies are increasingly undertaking voluntary carbon reportingto demonstrate corporate social responsibility to their stakeholders. According to the Carbon Disclosure Project’s Global 500Climate Change Report 2012, business travel is the most commonly tracked Scope 3 category among Fortune 500companies.48
Low-cost carriers will gain more ground in the travelprogram as new entrants open up opportunities,especially in Asia Pacific and Latin America.Air & ground<strong>Travel</strong> policyLow-cost carriers (LCCs) have been expanding faster than traditional airlines, judging by their growing share of total capacityin nearly all regions of the world. LCCs now account <strong>for</strong> 26.1 percent of global capacity, or a 1.8 percentage point increase inshare since 2011.Figure 29LCCs’ share of capacity in 2012 and year-on-year growth+0.4 pts +5 pts +0.7 pts -0.2 pts30.1%24.1% 36.6% 31.6%North America Asia Pacific Europe, Middle Eastand AfricaSources: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on data from CAPA – Centre <strong>for</strong> Aviation, OAG and UBM AviationLatin AmericaBudget airlines are among the world’s fastest growing carriers, with some notable examples:U.S.-based Southwest Airlines remains the world’s largest LCC.Ryanair has entered the top 10, beating China Southern and US Airways.easyJet has also moved up several places to its position just outside the top 20.Indonesia’s Lion Air has emerged as one of the largest LCCs in southeast Asia.India’s IndiGo has more than doubled its capacity over the past two years.A growing share of corporate air spendLCCs will be used increasingly by business travelers in <strong>2013</strong>, according to the CWT survey. Notably, 34 percent of global travelmanagers and travel managers in Asia Pacific intend to extend their programs to budget airlines to optimize air transportationsavings. Worldwide, LCCs already represent approximately 20 percent of all domestic trips taken by CWT clients.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 49
However, companies that integrate LCCs into their programs need to take into account numerous challenges, such as lessfrequent flight schedules, flights often from secondary airports, and the costs and risks related to booking outside of the GDSs.Specific markets can also present problems, such as the need <strong>for</strong> Singaporean travelers to communicate one-time PINs toauthenticate payment by credit card.CWT advises travel managers to carefully weigh the benefits of choosing LCCs:Be opportunistic and invite offers from LCCs if they are willing to bid <strong>for</strong> business.Consider the total cost of travel, including ancillary fees and travel to aiports.Factor in booking behavior, since the lowest budget fares tend to be available well in advance.Consider the practical implications <strong>for</strong> travelers, such as the convenience of schedules and total travel times (includingairport transfers and connecting flights).Who’s who and what’s new? LCC developments worldwideLow-cost carriers are continuing to shake up markets around the world, with new brands springing up (often as subsidiariesof network airlines) and existing brands launching new domestic and international routes. Various low-cost and hybridcarriers have also announced joint agreements. Here are some of the main recent developments:Asia PacificChina’s Junayeo Airlines launched routes to Japan in 2012, joining Spring Airlines as the only Chinese LCCs to flyinternationally.Japan launched three new LCCs in 2012, each as a joint venture with established airlines: AirAsia Japan (withAll Nippon Airways and Malaysia’s AirAsia), Jetstar Japan (Japan Airlines and Qantas) and Peach Aviation (ANA).These budget airlines appear to be stimulating demand <strong>for</strong> domestic travel, while the impact on corporate travel is notyet clear.In 2012, Singapore Airlines’ subsidiary Scoot became the region’s third low-cost long-haul carrier, joining AustraliaheadquarteredJetstar and Malaysia’s AirAsia X. Scoot also announced a memorandum of understanding with TigerAirways to serve join itineraries between Thailand, Vietnam, Malaysia and Australia.South Korea’s hybrid airlines such as Air Busan and Jin Air have grown to around a third of domestic market share.Thai Airways’ hybrid subsidiary Nok Air has announced it will launch international service in <strong>2013</strong> alongside itsdomestic service. However, the Thai group, which also owns regional hybrid Thai Smile, has dropped plans to launchan ultralow-cost carrier.Virgin Australia has bought a 60 percent stake in the Australian operations of Tiger Airways.Europe, Middle East and AfricaU.K.-based Easyjet said it would unveil new technology in <strong>2013</strong> aimed at facilitating corporate bookings through travelmanagement companies, and announced a 0.5 percent increase in its share of the European business market to6 percent in November 2012.New Spanish LCC Iberia Express has launched flights out of Madrid.50
Lufthansa is merging its point-to-point German and European services from its Frankfurt and Munich hubs withsubsidiary Germanwings to <strong>for</strong>m a new airline brand in January <strong>2013</strong>.Russia has been attracting increasing attention from international LCCs, around a dozen of which already offer flightsto destinations in the country.Ryanair has become Italy’s largest airline, overtaking Alitalia in 2011.Norwegian looks set to become Europe’s first network budget airline (i.e., operating a hub and spoke system ratherthan point-to-point flights only).Latin AmericaIn Colombia, VivaColombia made its debut in May 2012. JetBlue also began flights to the country from Fort Lauderdalein the United States, taking the first steps in plans to expand in the country and throughout Latin America.Brazil’s GOL has announced it would relaunch U.S. flights, serving Miama and Orlanda via Santo Domingo in theDominican Republic.Leading Mexican LCC Interjet has ceded some of its domestic share to focus on international growth. Volaris, anotherbudget carrier, has picked up much of the traffic, as part of its significant domestic growth.North AmericaSouthwest Airlines is seeking international expansion, campaigning to build a new international terminal at Houston’sHobby Airport with a view to adding 25 flights abroad daily. The world’s largest LCC has already taken over AirTran’sflights to Mexico and Caribbean following its acquisition in 2010.Air Canada has announced it will launch a low-cost international carrier in <strong>2013</strong>.Canada’s WestJet intends to target business travelers and offer new services to move up the value chain from a no-frillscarrier to a lower-cost full-service airline.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 51
Meetings and events held both in person and onlinewill be explored by more companies as a way tocontrol costs while leveraging other features offeredby new technologies.Meetings & eventsEnvironmentAccording to the CWT survey of travel managers, leveraging meetings and events (M&E) technology will be a popular action in<strong>2013</strong>, especially in Asia Pacific and North America, where more than 50 percent of survey respondents prioritizing M&E plan toimplement this action. Increasingly, companies will not see technology as an either/or proposition (virtual meetings vs. face-tofacemeetings) but integrate technology into live in-person events.Hybrid vs. purely virtual meetingsHybrid meetings use technology to provide a new kind of experience toattendees, by:Opening up access to a wider audience, linking at least one group of faceto-faceparticipants with people in other locationsEnabling “live” or deferred participationBoosting participant engagement though interactive features such as amoderated chat, online questions and answers, voting and feedbackProviding instant online access to content (videos, slides, speakers’biographies, etc.)Hybrid meetings integrate technologywith traditional event practices to createnew types of attendee experiences andcontent delivery tools. They include anymeeting or event with at least one groupof face-to-face participants that digitallyconnects with participants in otherlocations.They can there<strong>for</strong>e be seen as a way to provide more value (or a higher “return on event”) and reach a wider audience, whilepotentially reducing costs compared to more traditional events.Organizing hybrid events: a team ef<strong>for</strong>tHybrid meetings can provide cost savings that meet the needs of procurement departments, but they also requirethe creative talent of marketing departments, as well as the technology skills of IT. With several departments involved,ownership of hybrid meetings can be complex and effective teamwork is vital.“A third-party full-service meetings and events agency can be a useful partner coordinating ef<strong>for</strong>ts betweenthe different stakeholders not only <strong>for</strong> hybrid events but the entire strategic meetings management strategy.”Thierry Duguet, CWT Vice President Meetings & Events, EMEAAt the same time, companies will continue to set up purely virtual meetings in suitable situations, such as video meetings andconference calls <strong>for</strong> regular team updates. Here, the main benefits are savings in terms of travel costs and carbon emissions.According to the CWT survey, more than half of surveyed travel managers (53 percent) plan to increase their use of virtualmeetings to reduce the environmental impact—although just as many (55 percent) will be considering environmentally friendlytravel options.52
Figure 30Why go digital? Benefits of virtual and hybrid meetingsReduce travel and meeting space costsReach a wider or more geographically spread audienceReduce the carbonfootprint of an eventby enabling virtualparticipationImprove the user experience and adapt to new customer trendsOffer wider interaction with remote audiencesConvey the image of an innovative companySource: CWT Meetings & EventsVenue sourcing only in growing demandCompanies are increasingly relying on their full-service meetings and events agencies to manage every aspect of their strategicmeetings management strategy, from designing policy to managing day-to-day coordination of specific events.In addition, many clients are starting their strategic meetings management strategies by asking <strong>for</strong> support with specific tasks,and in particular venue sourcing only. This covers areas such as:Venue search and selection (hotels, unique spaces and other venues)Negotiation of rates and packagesContract managementVenue management<strong>Management</strong> of deposits and billbackCWT expects focused strategic meetings management strategies, with venue sourcing as a first step, to be a growing trend in<strong>2013</strong>.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 53
ew virtual agents or avatars will assist travelers withNbooking, checking and other questions.<strong>Travel</strong>er experienceFaster security controls, shorter queues at airport desks and instant customer service helpanywhere in <strong>2013</strong>? These are all possibilities, thanks to the growing numbers of virtualagents or “avatars” servicing customers of airlines and airports.The future is now2012 saw a flurry of initial trials aimed at simplifying, speeding up and improving service atvarious points in the travel process:At border control. People crossing the border between Mexico and the United Statesmay have been surprised to see “Elvis” 18 (officially “AVATAR” or Automated Virtual Agent <strong>for</strong> Truth Assessments in Real-Time).This virtual border guard sits in a kiosk and asks travelers questions while two cameras and a microphone check <strong>for</strong> signs oflying. If any anomalies are detected, a real border guard takes over. The kiosk also reads passports and checks fingerprints,like many of the fast-track passport control systems in place in airports around the world. <strong>Travel</strong>ers wishing to use the systemneed to register in advance with the U.S. Customs and Border Protection’s “Trusted <strong>Travel</strong>er” program.In airport halls. Numerous airports in the United States, United Kingdom and other countries have been testing life-sizeholographic virtual assistants, which provide answers to frequently asked questions on anything from security regulations todirections <strong>for</strong> taxi stands. Some of these avatars repeat in<strong>for</strong>mation in a loop, while others are activated if a person steps intorange. The most advanced, such as those at Dubai International, go beyond prerecorded messages to engage dynamicallywith travelers asking specific questions. As an alternative, Munich Airport has introduced an “InfoGate” service that allowstravelers to talk with real customer service agents via videoconferencing.Anywhere by mobile phone/the Internet. <strong>Travel</strong>ers can now often get answers to their questions from virtual agentsusing SMS, instant web messaging and/or speech. Future services should integrate increasingly intuitive voice recognitionsoftware, hot on the heels of technology like Apple’s Siri, which responds to more natural speech (vs. older software thatlimits users to specific keywords or commands). Virtual assistance is already offered by many airlines, such as Alaska Airlines,Iberia and Vueling.Novelty factorAccording to initial feedback, one reason these avatars can be efficient in airports particularly is the sheer novelty factor thatgrabs users attention and gets in<strong>for</strong>mation across. With new developments constantly popping up, perhaps even the weariestroad warriors will be pleasantly surprised.18Nickname reported by CNN (August 15, 2012)54
nline adoption will continue its growth momentumOacross regions.ComplianceOnline adoptionIt is well known that online booking tools reduce transaction costs whileoffering travelers a fast, convenient way to make travel arrangements.OBTs can also play a key role in policy compliance when configured in theright way. Companies that have introduced online booking, however, facethe ongoing challenge of getting the most out of their OBTs—by extendingimplementation to more countries and/or by increasing the proportion ofbookings made when an OBT is already available.Scope <strong>for</strong> higher adoptionWhile not all bookings can be handled efficiently online, most travelmanagers believe they could drive adoption rates higher among their travelers. This is reflected in the CWT survey of travelmanagement priorities, in which 55 percent of all respondents said they would make a priority of optimizing onlineadoption. The results show very little variation between regions, confirming that online adoption is a top priority worldwide.To boost online adoption, the most popular measures overall will be enhancing communication/training, tracking andcommunicating OBT usage, and encouraging travel counselors to steer travelers toward their OBT depending on thetype of booking. Global travel managers will be looking in particular at reviewing their OBT configuration and updating thesettings periodically, as well as enhancing OBT features. <strong>Travel</strong> managers in Asia Pacific, on the other hand, will place moreemphasis than other respondents on mandating OBT usage. Other planned measures include increasing the scope of OBTimplementation and deploying best-in-market OBTs.In terms of what has already been achieved, online adoption still varies significantly between regions although the gapsare gradually closing, according to CWT data. Levels reached in Asia Pacific, and especially China, are fast approaching thosein North America, the most mature market. Meanwhile Latin American adoption is catching up with Europe.In <strong>2013</strong>, improvements are expected to be particularly marked in the East, thanks to a combination of market developmentsand user readiness. Based on client per<strong>for</strong>mance in 2012 and projects in the pipeline <strong>for</strong> <strong>2013</strong>, CWT <strong>for</strong>ecasts a strong increasein online adoption in China, India and Eastern European countries.A shifting supplier landscapeOne development that will be interesting to watch is the strategy taken by different OBT providers, some of which have recentlyshifted from a regional to a global focus. It remains the case that the best OBT <strong>for</strong> a particular company depends on where thatcompany is based, as well as whether its implementation strategy is local/regional or global. Given the complexity of this market,companies continue to rely on advice from travel management companies to select the best tools <strong>for</strong> their needs.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 55
acked planes will be the norm as airlines adjust capacityPcautiously to meet traffic growth.Air & ground Compliance <strong>Travel</strong> policyJust when it seemed that planes could not get any fuller…Airlines have been taking a cautious approach to capacity increases over the past few years and this trend should continue in<strong>2013</strong> given the weak global economy. Globally, expected capacity increases should be slightly lower than gains in traffic(+3.4 percent capacity vs. +3.7 percent traffic in <strong>2013</strong>, compared with +3.0 percent capacity vs. +3.2 percent traffic in 2012).Regional variationsThe global figures hide some notable differences between regions:In Latin America, expected capacity growth (+5.1 percent) will lag behind traffic growth (+6.4 percent), reversing the trendin 2012.In North America, capacity growth is likely to grow only slightly (+0.7 percent) but still faster than traffic (+0.4 percent),easing conditions slightly <strong>for</strong> passengers after 0.8 percent capacity cuts in 2012.In Europe, the Middle East and Africa, capacity is <strong>for</strong>ecast to grow at almost the same rate as traffic, with the strongestgains in the Middle East (+2.1 percent capacity vs. +2.2 percent traffic in Europe, +6.2 percent capacity and traffic in Africa,and +12.1 percent capacity vs. +12.3 percent traffic in the Middle East).In Asia Pacific, capacity should continue to grow faster than traffic <strong>for</strong> the third consecutive year (+5.0 percent capacity vs.+4.4 percent traffic in <strong>2013</strong>).Figure 31Forecast year-on-year evolution of air traffic and capacityGlobal3.2 3.03.7 3.4Latin America8.16.56.45.1North America Europe Middle East Africa15.512.47.96.912.3 12.1-0.8 2.8 2.66.2 6.20.20.4 0.7 2.2 2.1Asia Pacific2.3 3.04.4 5.0TrafficCapacityTrafficCapacityTrafficCapacityTrafficCapacityTrafficCapacityTrafficCapacityTrafficCapacity2012F<strong>2013</strong>FSources: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on data from IATA, Financial Forecast (December 2012)In this tight capacity environment, the most popular measure planned by travel managers to improve their policies is promotingadvance purchasing (55 percent of respondents), which is an effective way to ensure seat availability at the best prices.Further, 38 percent of travel managers intend to work on finding the right balance between the use of negotiated fares andrestricted fares to drive air and ground savings.56
uick quiz: test your knowledge of global programQper<strong>for</strong>mance on intercontinental flights.KPIsAt last count, intercontinental flights accounted <strong>for</strong> 12 percent of all tickets booked by CWT corporate clients but 48 percent of totalspend. Test your knowledge of global program per<strong>for</strong>mance on these flights with three questions:1. In which region do companies pay the lowest average ticket price on intercontinental flights?2. Worldwide, roughly what percentage of intercontinental flights are booked at least 14 days inadvance by business travelers?3. In which region do business travelers book the highest proportion of business class tickets onintercontinental flights?Answers1. Companies in Asia Pacific pay the lowest average ticket price (ATP) on intercontinental flights at US$1,242, compared tothe highest ATP in Europe, Middle East and Africa at US$1,617.2. About two-thirds (63 percent) of intercontinental flights are booked at least 14 days in advance by business travelers.Compared with this global average, per<strong>for</strong>mance is slightly stronger in Europe, the Middle East and Africa (64 percent), aswell as North America (66 percent), but weaker in Asia Pacific (57 percent) and Latin America (55 percent).3. In Europe, the Middle East and Africa, business class tickets account <strong>for</strong> 39 percent of intercontinental flights taken bybusiness travelers, compared with 25 percent in Latin America.Source: CWT global transaction<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 57
ail travel will be faster and more convenient <strong>for</strong>business travelers as the global high-speed networkRexpands further.Air & ground <strong>Travel</strong>er experience EnvironmentHigh-speed rail developments tend to be good news <strong>for</strong> the travel program <strong>for</strong> a whole host of reasons, from the mostobvious (convenient, reliable travel between city centers) to the wider reaching (such as increasing price competition on keybusiness routes and providing a lower-carbon alternative to air).New services in <strong>2013</strong>Companies can benefit from several new lines or services opened recently or due to come into service this year:In China, the world’s longest high-speed line (1,428 miles or 2,298 kilometers of track) opened in December 2012, nowconnecting 28 cities from Beijing to Guanzhou, the capital of Guangdong Province. The country has already opened morethan 5,780 miles (9,302 kilometers) of high-speed track since the start of its high-speed project in 2007, which includesfour East–West lines, four North–South lines and a connection to Hong Kong. Its network is not only the world’s mostextensive but also the fastest growing. (See Figures 32-33.) More than 74,500 miles (120,000 kilometers) of track shouldbe in service by 2020.In France and Germany, direct connections between Frankfurt and Marseille via Strasboug, Mulhouse and Lyon have beenlaunched by SNCF and Deutsche Bahn respectively. Deutsche Bahn has also announced plans <strong>for</strong> direct links from Londonto Frankfurt via Brussels and Cologne, as well as to Amsterdam via Rotterdam.In Italy, Nuovo Trasporto Viaggiatori, Europe’s first private operator of domestic trains partly owned by France’s SNCF haslaunched service, intending to serve nine cities and 12 stations on two main axes (Turin–Salerno and Rome–Venice) whenfully rolled out.In Spain, a high-speed rail link from Barcelona to the French border should open in <strong>2013</strong>, as the last leg of the Madrid–Lleida–Barcelona–France line.In Turkey, the Ankara–Istanbul line is expected toopen by the end of September <strong>2013</strong>, as part of awider project connecting Ankara with Istanbul, Izmirand Bursa, as well as reaching Antalya, Erzincan,Kayseri and Sivas, by 2023.Latest projects in the pipelineMeanwhile, numerous high-speed rail projects are underconstruction or discussion around the world expandingcurrent networks or bringing high speed to new countries.Among the latest announcements:Figure 32China has the world’s largest high-speed rail networkGermany8%France11%Italy5%Current share of world networkOther*11%China37%In India, the Railways Ministry has announced thatwork could start on the country’s first high-speedline (Pune–Mumbai–Ahmedabad) by November<strong>2013</strong>, while several other high-speed corridors havereceived initial planning approval.In Morocco, construction has begun on a highspeedrail system that will connect Tangier to Rabat,Casablanca and Marrakech.Spain12%Japan16%*Includes Belgium, Netherlands, South Korea, Switzerland, Taiwan,Turkey, United Kingdom and United StatesSource: International Union of Railways, High-Speed Lines in the World (July 2012)58
Figure 33China also has the fastest growing high-speed rail networkHigh-speed rail under construction46% 18% 8% 8% 5% 5% 10%China Spain Turkey France Germany Japan Other**Includes Morocco, Saudi Arabia, South Korea and SwitzerlandSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on data from the International Union of Railways, High Speed Lines in the World (July 2012)In Saudi Arabia, the “Haramain” Medina–Mecca project has moved into the second phase of construction and is nowscheduled <strong>for</strong> completion in 2014. Jeddah and King Abdul Aziz International Airport will also be served.In Thailand, the government intends to open international bidding in early <strong>2013</strong> <strong>for</strong> the first phase of a high-speed railproject linking Bangkok to Pattaya, Pitscanulok, Nakhon Ratchasima and Hua Hin. Completion of the four routes is scheduled<strong>for</strong> 2018.In the United States, the Central Valley segment (Merced–Fresno) of the Cali<strong>for</strong>nian high-speed line may start constructionin <strong>2013</strong> after the likely awarding of contracts mid year. Meanwhile, the state of Arkansas will begin studying the possibilityof a high-speed rail between Memphis, Little Rock and Texarkana.High-speed rail in the travel programRail neatly fits in with travel managers’ number one priority in <strong>2013</strong>, driving air and ground savings. According to the CWT survey,15 percent of the travel managers who identified this area as a priority intend to manage the trade-offs between air and rail. Inaddition, 55 percent of the travel managers who will prioritize making the travel program more environmentally friendly intendto promote environmentally friendly travel options such as rail.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 59
Six reasons to consider high-speed railConvenience: shorter or similar door-to-door journeys than by air <strong>for</strong> some short-haul routes and a productive onboardworking environmentPunctuality: better per<strong>for</strong>mance than air, which is more impacted by rush-hour congestion and many <strong>for</strong>ms of adverseweatherCompetitive prices: often significantly cheaper than air, especially when booked in advanceSafety: better per<strong>for</strong>mance than air travel although the difference is slight, according to European Transport SafetyCouncil statistics“Greenness”: much lower carbon emissions than comparable road or air tripsImproved distribution: rail content increasingly available through the major online booking tools and global distributionsystemsThree tips <strong>for</strong> managing the trade-offs between air and railIdentify the main routes where rail may be an alternative to air. Rail is typically worth considering <strong>for</strong> routes under600-800 km, which can be covered in about three hours by high-speed rail.Calculate your current volume of air traffic on these routes and the potential savings offered by switching torail.Optimize the rail class policy. Ticket prices can be at least 40-60 percent lower in standard class than in first.Source: CWT <strong>Travel</strong> <strong>Management</strong> Institute, Mastering the Maze: A Practical Guide to Air and Ground Savings (2012)60
ocial media strategies will be implemented byalmost two-thirds of global travel managers as a keySaction to improve the traveler experience.<strong>Travel</strong> policy<strong>Travel</strong>er experienceAmong the travel managers who consider improving the traveler experience a top five priority <strong>for</strong><strong>2013</strong>, 62 percent intend to implement a social media strategy. This measure is the second mostpopular <strong>for</strong> this priority, after offering mobile services (65 percent)At a regional level, the scores are lower, although travel managers in Asia Pacific appear to be adoptingsocial media at a quicker pace (32 percent, compared to 28 percent in North America, 22 percent inEurope, Middle East and Africa, and 14 percent in Latin America).These regional differences are largely in line with a study of social engagement conducted by GlobalWebIndex, a U.K.-basedcompany that researches online consumer behavior. Their Social Engagement Benchmark Score Report, released in October 2012,measures social engagement in terms of 12 key behaviors categorized as participation (using a social network, using a micro blog,posting on a <strong>for</strong>um and commenting on a story), content creation (uploading a photo, uploading a video, writing a blog and writinga news story) and brand engagement (liking a product or brand, reviewing a product or brand, retweeting brand content, andupdating a video/photo to a branded page). According to this report, Asia Pacific countries such as China, Indonesia, India, Vietnamand the Philippines have the highest social engagement scores at around 80 percent, while European countries including Sweden,France and the United Kingdom score lowest at around 40 percent. Significant differences exist within regions, however. Notably,Japan ranks far below other countries in Asia Pacific, at the bottom of the global league table.Which social media tools <strong>for</strong> business travel?Overall, the use of social media is still relatively new in business travel programs, although well entrenched in the leisure sector. Asbusiness travelers have now become familiar with social media tools <strong>for</strong> their personal trips, they tend to want to use them in abusiness context: <strong>for</strong> planning travel, finding in<strong>for</strong>mation while on the road or sharing reviews upon their return. To limit unproductiveor non-compliant behaviors, but also to improve travelers’ experience, travel managers need to understand the various social mediatools and define clear social media guidelines in their travel policy. Dedicated tools and applications are gradually coming on tothe market. For example, CWT now offers an online plat<strong>for</strong>m enabling employees from a client company to access in<strong>for</strong>mation onpreferred hotels and share reviews. (See Pages 39-40.) In addition to enhancing the traveler experience, social media tools can beinvaluable <strong>for</strong> communicating with travelers during emergencies and ensuring their safety.More widely in the travel industry, suppliers have jumped on the bandwagon and are implementing social media strategies toachieve a range of objectives, including personalizing the customer experience, communicating with travelers and offering innovativeservices. For example:Qantas has used Facebook and Twitter to communicate with passengers during crises (e.g., when its fleet of aircraft wasgrounded by industrial action in 2011).KLM’s “Meet & Seat” service enables travelers to connect and be seated with like-minded passengers who wish to sharein<strong>for</strong>mation from their LinkedIn or Facebook profiles. Aimed at business travelers in particular, this service has been extendedfrom an initial three routes (between Amsterdam and New York, San Francisco and Sao Paulo) to 10 further routes (betweenAmsterdam and Atlanta, Buenos Aires, Cape Town, Houston, Johannesburg, Los Angeles, Mexico City, Nairobi, Rio de Janeiro andToronto).British Airways’ “Know Me” program involves staff with iPads using Web photos and in<strong>for</strong>mation to recognize and greet VIPcustomers, armed with details on their preferences and any comments made on social networks.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 61
echnology will be the traveler’s best friend, with mobile/Wi-Fi connectivity and a growing range of business travelTapps making travel smoother and more productive.<strong>Travel</strong> policy<strong>Travel</strong>er experienceBusiness travelers are embracing new technology, whether in terms of smarter, more portable devices or the apps and servicesthat go with them. Recent surveys offer interesting illustrations. For example:70 percent of business travelers carry a smartphone, 19 compared with much lower figures in the general population (e.g.,42 percent of U.S. mobile subscribers 20 ).68 percent of business travelers use their tablet more often than their laptop and similarly 69 percent would choose theirtablet over their laptop if allowed only one device on the road. 2179 percent of smartphone-owning business travelers would use mobile check-in and check-out hotel services if available. 22Almost 94 percent of surveyed travelers in the U.S. want flight status in<strong>for</strong>mation pushed to mobile devices be<strong>for</strong>e take-off. 2386 percent of business travelers expect Wi-Fi at the airport. 24A proliferation of new technology servicesSuppliers have been quick to adapt, with an ever-wider selection of mobile apps, web services and Wi-Fi offerings. The numerousannouncements include:50 percent of airlines worldwide now offermobile check-in and this figure couldrise to 90 percent by 2015. Similarly,46 percent of airlines offer mobile boardingpasses, rising to a possible 85 percent by 2015,while more than half of all airlines offer kioskservices, such as bag-tag printing (76 percent)and lost baggage services (51 percent). 25U.S. airlines intend to start rolling out Wi-Fion international flights in <strong>2013</strong> after alreadyoffering the service on domestic flights.The technology is now available <strong>for</strong> Wi-Fiservices in the Channel Tunnel betweenFrance and the United Kingdom. Eurostar hasannounced it will introduce refurbished trainsoffering high-speed broadband in <strong>2013</strong> and2014.Figure 3450 percent of airlines now offer mobile check-in28%41%50%2010 2011 2012Airlines providing mobile check-inSource: CWT <strong>Travel</strong> <strong>Management</strong> InstituteBased on data from SITA, 2012 Passenger Self-Service Survey (October 2012)19SITA, 2012 Passenger Self-Service Survey (October 2012)20comScore, Mobile Future in Focus (2012)21Four Points by Sheraton survey (August 2012)22Smith Micro survey (June 2012) reported by emarketer23FlightView survey (September 2012)24Infographic by PC Housing, based on data from CWT, Computerworld andFrequentFlyerService.com (May 2012)25SITA, Airline IT Trends Survey (2012)62
How do mobile boarding passes work?Mobile boarding passes are a great boon <strong>for</strong> travelers who wish to save time be<strong>for</strong>e arrivingat the airport but may not have access to a printer or prefer to go paper-free. When checkingin online, travelers can opt to have their boarding pass sent to a mobile device. The airlinethen sends a link by SMS to a QR (“quick response”) code that serves as a scannableboarding pass containing all the necessary personal in<strong>for</strong>mation and flight details <strong>for</strong> thetraveler to pass security checkpoints.Since the link requires an Internet connection, travelers who may not have a Wi-Fi connectionat the airport should access the QR code be<strong>for</strong>ehand and save it as an image on their device.New apps and solutions <strong>for</strong> the travel programOn the side of travel management companies, new services are also coming onto the market to help travel managers improvethe traveler experience within travel programs. As an example, CWT has announced mobile and social services including:CWT To Go, an award-winning free mobile app providing secure access to real-time travel in<strong>for</strong>mation (itineraries, flightnotifications and trip in<strong>for</strong>mation) along with features such as calendar sync, click-to-call CWT and weather <strong>for</strong>ecasts.CWT Market, an “app of apps” offering a useful pre-selection of travel tools <strong>for</strong> business travelers.CWT Hotel Intel, an innovative travel review site that allows business travelers to share hotel ratings and reviews within asecure, company-specific site.In 2012, CWT also acquired WorldMate, the leading developer of mobile technology in travel, in line with its strategy to investin innovation and offer mobile solutions as an integral part of its travel management offering.<strong>Travel</strong> managers are taking this trend into account, acknowledging the benefits of new apps <strong>for</strong> travelers along with the need tosteer them in the right direction and manage the risks of non-compliance with travel policy. In the survey on travel managementpriorities, 54 percent of travel managers expressed their intention to offer mobile services in <strong>2013</strong>. While it is important toprovide the right services, it is equally important to accompany changes with a clear policy and communications on whichservices are authorized by the program.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 63
Unmanaged travel programs may tempt somecompanies with a low-control culture, but the real risksto employee safety, access to appropriate content andcost optimization must be taken into account.Compliance<strong>Travel</strong> policy“Unmanaged travel,” “open booking” and “travel management 2.0” have crept into travel managers’ vocabulary as an alternativeto travel booked through TMC counselors and corporate online booking tools. Although some industry observers are alreadyadvocating a switch to a less controlled environment, the vast majority of stakeholders are waiting <strong>for</strong> hard evidence of benefits.Some oppose outright what appears to be a step backward that ignores the value brought by specialized sourcing and othertravel management services. Those who are tempted by the idea would do well to conduct a pilot be<strong>for</strong>e implementing full-scalechanges.What is unmanaged travel?Up until recently, the travel management industry used “unmanaged travel” to refer to travel booked outside a TMC-managedprogram. New terms have now appeared, recognizing that companies must manage travel however it is booked—not just <strong>for</strong>budgetary reasons but to ensure that travelers get the right levels of service, safety and security. More specifically, “open booking,”is a travel management strategy that allows business travelers to book through any channel (e.g., the websites of airlines, hotelsand car rental providers, or consumer aggregator sites), while their companies capture booking data through alternative technology.“<strong>Travel</strong> management 2.0” acknowledges the impact of the Internet and social media on booking behavior, with the potential totranspose the best of customer-centric leisure travel apps and services into a business context—or create new ones.Why would a company switch to open booking?The case <strong>for</strong> open booking rests on two attractive, but controversial claims: lower costs and increased traveler satisfaction. While muchhas been said on the topic, concrete evidence is still lacking and opinions remain divided in the business travel community.In particular, one survey that has sparked debate, GBTA/Concur’s Global Business <strong>Travel</strong>er Study 2012, found that “unmanagedtravel” cost 3 percent less than travel “under guidelines.” Clearly, this flies in the face of conventional travel management wisdomand its broad vision of cost control that goes beyond travelers reasoning “But I found it cheaper on the web!” Moreover, the study’sconclusion was based on “guestimates” (“Approximately, how much did your last trip cost <strong>for</strong> all travel-related expenses? Yourbest estimate is fine.”) by a relatively small sample of respondents. In response, a pilot program led by a company, Sapient, andreported by TRX/BTN Group in Open booking: is it right <strong>for</strong> your travel program? (December 2012), found that travelers spent15-20 percent more when booking outside their travel management company, based on actual spend data. Both GBTA and CWTintend to publish more in-depth research in <strong>2013</strong>.Similarly, the argument that travelers prefer a much less controlled booking environment has yet to be proven across all types ofcompanies. While the idea may seem appealing at first, particularly when many travelers already make bookings out of policy,the reality may be less so in moments when the value of TMC support is most visible to travelers: especially when they requirecomplex bookings, ticket changes/refunds or support during emergencies. Typically, the industry underlines the priceless service oftracking, contacting and looking after travelers in a crisis, which is key to duty of care. Indeed, according to CWT’s survey of travelmanagement priorities <strong>for</strong> <strong>2013</strong>, 82 percent of global travel managers focusing on traveler safety and security intend to implementtraveler tracking and real-time notifications. But it is also worth remembering that as many as 55 percent of some companies’ dayto-daycorporate bookings involve several international legs or asymmetrical outward and return journeys (vs. simple point-to-pointbookings), while a significant amount of tickets involve exchanges or refunds (8.6 percent exchanges and 7.9 percent refunds),according to CWT global transaction data.64
For the moment, the downsides of open booking appear to outweigh the upsides:Figure 35Potential advantages and disadvantages of open bookingPotential advantagesAbility of travelers to choosecheaper prices if available throughalternative providers and bookingchannels within a given budget.Lower booking costs associated withglobal distribution systems, onlinebooking tools and travel managementcompanies.A better fit <strong>for</strong> “Gen Y” travelers whoexpect a high degree of customizationin line with the best of onlineconsumer travel tools.Flexibility <strong>for</strong> travelers to book how,what, when and with whicheversupplier they prefer.Potential disadvantagesWeaker supplier negotiations and lowerdiscounts, especially <strong>for</strong> international flights.Companies may lose the ability to guide travelersto preferred suppliers, diluting negotiated discountson the total cost of travel (including upfrontdiscounts and back-end rebates on fares, rates andancillary fees).Less control over data on both supplier andtraveler per<strong>for</strong>mance. Without complete data,companies cannot effectively audit the availabilityof negotiated fare classes, travelers’ reasons <strong>for</strong> notbooking the lowest fares, etc. Similarly, TMCscannot provide companies with per<strong>for</strong>mancebenchmarks, which are important <strong>for</strong> driving<strong>for</strong>ward best practices.Compromised traveler safety and security.Off-channel bookings may not be serviced by aTMC partner, who will there<strong>for</strong>e be unable totouch reservations or access in<strong>for</strong>mation requiredto assist travelers. Also, travelers can go too far intheir ef<strong>for</strong>ts to find cheap prices, picking optionsthat do not meet acceptable minimum standards<strong>for</strong> safety and security.Inability to use lodge cards to charge travelexpenses directly to the relevant cost center.<strong>Travel</strong>ers must there<strong>for</strong>e use individual paymentcards, increasing the risk of fraud.Source: CWT <strong>Travel</strong> <strong>Management</strong> InstituteWho can benefit most from open booking?While hard evidence of benefits is still lacking, a number of factors may come into play:The size and complexity of the travel program. Smaller companies may be more suited to open booking.The traveler population. Tech-savvy, younger travelers and road warriors may be more at ease with an open approach thanother employees.<strong>Travel</strong> patterns. Any upfront savings on domestic airfares may be undermined by more expensive international bookings,compared to negotiated discounts.Company culture. Open booking may be best suited to companies with a “light” culture of control (e.g., those who do notimpose mandates on their travelers).<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 65
How best to go about open booking?According to the TRX/BTN survey, close to 80 percent of travel managers have no plans to pilot open booking. However,12 percent have already done so, 9 percent are planning to conduct a pilot in <strong>2013</strong> and 2 percent are considering how to makea pilot work. For companies considering open booking, CWT offers the following advice:Define clear processes <strong>for</strong> gathering and distributing real-time in<strong>for</strong>mation to ensure travelers’ safety.Consider the value of TMC services in emergency situations and <strong>for</strong> day-to-day service with complex bookings.Do not assume open booking will automatically generate savings. Consider the total cost of travel, not just ticket prices orrates, and weigh any cost reductions against negotiated value (including airline status upgrades, access to hotel amenities,car rental insurance, etc.).Consider the impact on service levels, given the loss of SLA management.Monitor the effects on employee productivity and satisfaction.Address data privacy issues.Evaluate the available tools <strong>for</strong> capturing data and the need <strong>for</strong> technology developments in-house.Consider the challenges of implementing new processes and retraining travelers, as well as staff involved in travel bookingsor travel management.Start with a pilot be<strong>for</strong>e implementing wide-scale changes.More in<strong>for</strong>mation will be available in a report on open booking and managed travel by the CWT <strong>Travel</strong> <strong>Management</strong>Institute, due out in mid <strong>2013</strong>. This in-depth research will feature surveys of travel managers and travelers, as well asinterviews with experts and case studies, and is aimed at better understanding if and how open booking could be an acceptablesolution <strong>for</strong> companies in the future.66
V differentisa regulations will be relaxed in some countries butstill require vigilance by business travelers to meet the<strong>for</strong>malities.Compliance<strong>Travel</strong> policySafety & securityWhether by changing the rules, introducing online applications or opening new consulates, many countries have introducedchanges that will simplify or speed up red tape <strong>for</strong> travelers.What’s new?Here are just some examples of the recent changes:China now enables passport holders from 45 countries to benefit from a visa-free stay in Beijing and Shanghai <strong>for</strong>up to 72 hours, a move that will benefit travelers traveling through on stop-over flights as well as those on quick visits.(Previous rules concerned Shanghai only and limited visa-free stays to 48 hours <strong>for</strong> visits and 24 hours <strong>for</strong> flight transfers.)Among countries covered by the new rules are, <strong>for</strong> example, Australia, the United States and most European nations exceptNorway. Nationals of Brunei, Japan and Singapore can continue to enter the country visa-free <strong>for</strong> up to 15 days.Russia has eased <strong>for</strong>malities <strong>for</strong> U.S. citizens by extending visa validity to three years, during which time businesstravelers and tourists multiple can make multiple entries and enjoy stays of up to six months. The new visa costs US$180.Applicants must still submit a letter from a Russia-based company and surrender their passport during processing, which isexpected to take 20 business days. <strong>Travel</strong>ers can also apply <strong>for</strong> an expedited 30-day visa, as be<strong>for</strong>e.United Arab Emirates authorities have introduced a multiple-entry visa <strong>for</strong> business and leisure travelers, which willfacilitate travel by nationals from many countries. Citizens of 32 countries will continue to enter UAE with no advance visaarrangements, obtaining at immigration a free 30-day visa, which can be extended <strong>for</strong> an additional 30 days at a charge.Citizens of the Gulf Cooperation Council (GCC) nations of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia do not requirea visa. All other citizens must apply <strong>for</strong> a visa be<strong>for</strong>e traveling and can do so online through emirates.com. In addition,UAE imposes a departure tax which varies between airports and is payable in local currency (in cash if credit cards are notaccepted).The United States has admitted Taiwan to its Visa Waiver Program (VWP) as its 37th member. This development inDecember 2012 means that Taiwanese nationals can now stay in the United States <strong>for</strong> tourism or business reasons withouta visa <strong>for</strong> up to 90 days, as long as they receive prior authorization through the Electronic System <strong>for</strong> <strong>Travel</strong> Authorization(ESTA).The U.S. Department of Homeland Security has also announced its attention to establish a visa waiver workinggroup with Brazil. In the meantime, the U.S. is taking steps to speed up visa processing with plans to open its 5th and6th consulates in Brazil (Belo Horizonte and Porto Alegre). Its objective is to process 40 percent more visas and reduce itsbacklog. In the past, it has taken up to 100 days to schedule an appointment at one of the consulates <strong>for</strong> a visa, which costsUS$140.<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 67
The U.S. Electronic System <strong>for</strong> <strong>Travel</strong> Authorization: useful to knowRequired <strong>for</strong> all trips to or transit through the United States with the Visa Waiver ProgramValid <strong>for</strong> multiple trips <strong>for</strong> two years or until the traveler’s passport expires, whichever comes earlierApplications must be made on the U.S. Government’s official web portal (https://esta.cbp.dhs.gov) at least 72 hoursbe<strong>for</strong>e departureApplicants must have a return or onward ticketRegistration involves an administrative fee (US$14 in January <strong>2013</strong>)Visa checklist <strong>for</strong> travelersTo find out whether a visa is required <strong>for</strong> travel and select the right type, travelers need to consider four main criteria:CitizenshipCountry of destinationCountries entered en route (e.g., on stopover flights)Frequency/duration of required entries<strong>Travel</strong>ers need to be vigilant and carefully review the passport and visa requirements on their itinerary. Be<strong>for</strong>e booking, theyshould check visa application processes and the availability of fast-track services if necessary to ensure that a visa can beobtained in time.It can also be useful <strong>for</strong> travelers to renew their passports well be<strong>for</strong>e the expiry date, since immigration rules commonlyrequire validity until at least six months after the date of entry.68
ell-being: increased awareness of traveler stress maylead some companies to reinvent their travel policiesWto improve satisfaction and the work-life balance.Compliance<strong>Travel</strong> policy<strong>Travel</strong>er experienceStress has been called the “global epidemic of the 21st century” and a major threat to well-being by the United Nations InternationalLabor Organization, which estimates that 30 percent of the world’s employees suffer from work-related stress. At the same time,there has been a sea change in people’s expectations from work, with well-being and personal development playing a key role injob satisfaction alongside social status and income. As companies address these issues, they are increasingly aware of the potentialstress caused by business travel and the need to design policies that balance traveler needs with cost savings.Changing traveler expectationsThese days, travelers expect more adaptive travel policies than in the past. Tech-savvy younger employees and road warriors inparticular may want features such as:Higher com<strong>for</strong>t classes <strong>for</strong> frequent travelers (those taking more than a specific number of flights per month or year)Communication that is tailored to specific traveler segments and more transparent <strong>for</strong> all travelers, <strong>for</strong> example, bydemystifying policy exceptions <strong>for</strong> senior managementTips and tricks <strong>for</strong> better traveling, such as how to avoid jetlag, maintain a work-out schedule, eat healthily or ensure personalsecurity when on the roadUser-friendly tools and processes <strong>for</strong> booking, trip management and expense filingToward more adaptive, traveler-centric policiesIn response, travel managers are moving away from a “one-size-fits-all” approach and making travel policies more traveler-centric.In addition to managing spend, ensuring safety and security, and limiting C0 2emissions, they are increasingly seeking to:Better understand the company’s traveler community by identifying different segments and their prevalence within thetraveler population. The most commonly identified segments are frequent and VIP travelers, but travel managers may also takeinto account a whole range of other variables such as traveler, purpose of trip, trip duration, working hours, project timelines,culture, family environment and mobility.Tailor services to the requirements of different traveler segments. This approach can impact every area of the travelprogram, from policy (e.g., authorized service classes and maximum trip duration) and trip preparation (e.g., destinationin<strong>for</strong>mation and fear-of-flying training) to assistance during travel (e.g., airport assistance and homecare services).Empower travelers to make the right travel choices, by providing the right in<strong>for</strong>mation and tools along with the flexibility tomake responsible, user-friendly decisions.Give travelers a voice, <strong>for</strong> example through internal surveys and social feedback that can lead to policy changes and improvedconditions with suppliers. (See Page 61.)This greater focus on traveler well-being will not only improve traveler satisfaction but also help companies to manage their dutyof care to employees and the associated risks. (See Pages 32-33.)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 69
X-YGen X-ers take note! Generation Y businesstravelers are by nature social, mobile and keen tomanage their travel and expenses while on the go.Compliance<strong>Travel</strong> policy<strong>Travel</strong>er experienceOpinions may differ as to when Generation Y starts and ends, 26 but there is plenty agreement on the characteristics of thislatest generation to enter into the work<strong>for</strong>ce. As the numbers of Gen Y business travelers grow in <strong>2013</strong>, travel managers (oftenGen X-ers) would do well to consider their different habits and expectations.A new breed of travelersOn the whole, Gen Y travelers…Expect customized services. Generation Y has been raised on personalization, with everything from Facebook profiles to Pandoraradio reflecting their individuality. As a result, they expect to be treated uniquely and may be resistant to standardized offers. They alsoexpect their work environments to be filled with choices. This generation is famously less loyal to brands than to convenience.Are tech-savvy. Generation Y quickly buys into new concepts and adopts new technology. Compared to older segments who show astrong preference to booking through travel counselors, these travelers are more at ease with online booking tools and mobile apps.Are social. Growing up with social media, these travelers are used to giving and receiving immediate feedback and are much morelikely to rely on their peers’ advice when making decisions. In an Embassy Suites Hotel survey of U.S. travelers, 27 already in 2010 nearlyhalf of all travelers aged between 21 and 34 said they consulted their Facebook friends be<strong>for</strong>e making work trip decisions—twice asmany as older age groups.Embrace change. Generation Y-ers are said to be more adaptable and used to a fast pace of change. These travelers may prefernovelty over com<strong>for</strong>t and will likely favor flexible, adaptive travel policies over more rigid ones.Are more com<strong>for</strong>table with travel. The CWT <strong>Travel</strong>er Stress Index 28 indicates that younger generations find long-haul flights lessstressful than their older colleagues, with a 15-point difference in stress levels between the youngest and the most senior age groups.Similarly, younger travelers consider stays in lower hotel categories less stressful (a 7-point difference).Value work-life balance. More than any other generation, these travelers emphasize life first and would like companies torecognize the responsibilities and roles they play outside the office. For them, work—including business travel—needs to fit intotheir lives rather than the other way round.Where now <strong>for</strong> the travel program?Ideally travel managers take into account the expectations of multiple generations when designing the travel program, communicatingpolicy and looking at ways to drive compliance. CWT recommends:Allowing customization where possible. For example, when introducing new tools or services, it can be useful to test themamong some of the more tech-savvy travelers, who can customize them and provide feedback on what best suits their needs.This group of “super-users” can lead the way in identifying features to become part of a standard offering in the future.Introducing mobile apps and services accompanied by clear guidelines. To boost compliance while enhancing the travelexperience, travel managers need to communicate on which recommended tools are available <strong>for</strong> mobile use, and whichactions are authorized. Mobile technology can be used to support the travel program in numerous ways, from providingtargeted in<strong>for</strong>mation (e.g., traveler itineraries and destination in<strong>for</strong>mation) to locating and contacting travelers in emergencies.26The definition used by CWT is the generation born between 1978 and 1994.27Embassy Suites Hotels’ second annual nationwide Business <strong>Travel</strong> Survey (2010)28Visit ww.cwt-solutions-group.com <strong>for</strong> more in<strong>for</strong>mation.70
Creating a policy or guidelines on social media and leverage social tools when they support the travel program. Socialtools specifically designed <strong>for</strong> travel management are coming onto the market, helping to raise travelers’ awareness of preferredsuppliers and promote compliant bookings. (See Pages 39-40.)Exploring new communication styles and channels, using online, social and mobile tools where appropriate.Understanding the needs of different populations of travelers within the company and ensuring that the travel programprovides the best possible fit. For example, when choosing preferred hotels, CWT research 29 has shown that a convenientlocation is by far the most important selection criteria <strong>for</strong> most travelers and a more important driver of satisfaction than thehotel category. Gen Y travelers may attach even less importance to com<strong>for</strong>t than practical features (location, Wi-Fi access, etc.).Generation Y: a growing populationBy 2020, Gen Y should far outnumber any other generation in the U.S. work<strong>for</strong>ce, accounting <strong>for</strong> more than 40 percentof employees, according to according to data from the U.S. Bureau of Labor Statistics.Right now, the proportion of Gen Y-ers among the business travel population already reaches 45 percent in Brazil and58 percent in India, according to CWT data on the age group born between 1978 and 1994. The figure is lower globally(27 percent) and in other countries (23 percent in the United States, and 26 percent in France and the United Kingdom).Figure 36Generation Y already accounts <strong>for</strong> 27 percent of business travelers worldwidePercentage of all business travelersGlobal 2773IndiaBrazilFranceU.K.U.S.58 4245 5526 7426 7423 770 20 40 60 80 100 %Gen Y*Older generation7.0%6.0%5.0%4.0%3.0%2.0%1.0%0.0%Gen YPercentage of all business travelers/age17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79AgeGlobalIndia Brazil France U.K. U.S.* Note: Born between 1978 and 1994.Source: CWT Global transaction data29CWT <strong>Travel</strong> <strong>Management</strong> Institute, Room <strong>for</strong> Savings: Optimizing Hotel Spend (2009)<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 71
<strong>Travel</strong> <strong>Management</strong> <strong>Priorities</strong> <strong>for</strong> <strong>2013</strong> | 73
CWT <strong>Travel</strong> <strong>Management</strong> InstituteThe CWT <strong>Travel</strong> <strong>Management</strong> Institute conducts in-depth research into effective travel management and meetings andevents (M&E) practices to help clients worldwide derive the greatest value from their travel and M&E programs. Drawingon the global resources of <strong>Carlson</strong> <strong>Wagonlit</strong> <strong>Travel</strong> (CWT), the institute provides a regular flow of business intelligence andbest practices, offering actionable insights into the eight key levers to effective travel identified by CWT.To this end, the CWT <strong>Travel</strong> <strong>Management</strong> Institute publishes original research, white papers and case studies, as well asa global periodical CWT Vision. Research publications include: Mastering the Maze: a Practical Guide to Air and GroundSavings (2012), Business <strong>Travel</strong>er Services: Finding the Right Fit (2011), Meetings and Events: Where Savings MeetSuccess (2010), Room <strong>for</strong> Savings: Optimizing Hotel Spend (2009), Playing by the Rules: Optimizing <strong>Travel</strong> Policy andCompliance (2008), Global Horizons: Consolidating a <strong>Travel</strong> Program (2007) and Toward Excellence in Online Booking(2006).All research published by the CWT <strong>Travel</strong> <strong>Management</strong> Instituteis available onwww.carlsonwagonlit.comScan the QR code <strong>for</strong> direct access to our online section.
Copyright © <strong>2013</strong> CWT<strong>Carlson</strong> <strong>Wagonlit</strong> <strong>Travel</strong> is committed to promoting environmental sustainability.This document was printed on FSC-certified paper from sustainably managed <strong>for</strong>ests.We used no-glue binding <strong>for</strong> cleaner production.
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