CWT Vision - Carlson Wagonlit Travel

carlsonwagonlit

CWT Vision - Carlson Wagonlit Travel

In supplier market, hotels strive

to control more than rates alone

| 4

Tackling mobile technology to

encourage traveler compliance

| 7

Striking a balance between

savings and service

| 9

Airline indicators increase buyers’

infl uence in suppliers’ market

| 11

APAC – In line with other

trends in the region, APAC

meetings booming

| 13

EMEA – Plan now for program

complexity from London Olympics

| 15

NORAM – Past decade has

brought substantial traveler

security advancements

| 16

Insights into Eff ective Travel Management

Q3 2011


Co-Editors in Chief

Christophe Renard

Nick Vournakis

Email

cwtvision@carlsonwagonlit.com

Web

www.carlsonwagonlit.com

CWT contributors:

Brandon Balcom

Mike Bezer

Gregoire Boutin

Charles Brossman

Philippe Chonion

Jodi Cumming

Brent Eisenach

Jason Ellingson

Stefan Fallert

Amit Garg

Emilie Goff art

Doyle Gunnell

Tim Husted

Abhijeet Kar

Aude Kremer

Vincent Lebunetel

Leisha Lindsay

Stephanie Marion

Stephanie Miller

Mike Orchard

Pauline Quere

Karen Rova

Artwork/Photos

Photos: Cover and page 4 © Veer and pages 6, 9, 11, 12, 13, 15 & 16 © istockphoto

All other artwork by CWT

CWT Vision is published quarterly by the CWT Solutions Group, the CWT Travel Management Institute,

and CWT Corporate Marketing & Business Intelligence teams.

31 rue du Colonel Avia

75904 Paris Cedex 15

France

Please consider the environment before you print this publication in part or in full.

All monetary references in this publication denote U.S. dollars.

Copyright © 2011 CWT

Chris Sabby

Amy Sawyer

Julien Verlet

Joel Wartgow

Kari Kesler Wendel

Debbie Westlake

Janet Wheatley

Shauna Whitehead


No time like the present

Christophe Renard

Nick Vournakis

| Q3 2011

At this time of year, especially in our industry, we spend a lot of time looking ahead. We think about

the future as we fi nalize budgets for the coming year, and as buyers and suppliers come back to the

negotiating table to source next year’s programs. So, perhaps not surprisingly, much of this issue of

CWT Vision emphasizes the future, too.

We examine key strategies for achieving the best possible outcomes in hotel and airline negotiations

for 2012 programs, and then continue our forward-looking approach with an examination of the

increasing proliferation of the use of mobile technology in travel programs, which is expected to

continue to grow in the coming months and years. We’re also thinking ahead to next summer with

our look at how the 2012 Olympic Games in London will signifi cantly impact travel to that region, and

what buyers can do now to prepare.

Still, as they say, there’s no time like the present. As the ones who manage your organizations’ travel

programs day-to-day, we know you’re faced with striking a balance between planning for the future

and dealing with the many daily challenges and interruptions that travel brings. That’s why, even in

those articles that focus on events that are months out, CWT Vision helps you live in the moment

by delivering practical advice and recommendations you can use in your program today, as well

as tomorrow.

As you budget for your 2012 travel programs and negotiate new agreements with suppliers, we hope

this issue of CWT Vision will be one you refer back to again and again. To further assist with that, in

several weeks CWT will release our fi rst global forecast with 2012 price projections for airlines, hotels,

ground transportation providers, and meetings and events suppliers. We look forward to sharing this

important information with you, and as always, remain at your disposal for questions or comments

about any and all of the business intelligence we provide to you.

Until next time!

Christophe Renard, Co-Editor in Chief Nick Vournakis, Co-Editor in Chief

Vice President, Corporate Marketing Vice President, CWT Solutions Group

& Business Intelligence

3


4

Copyright © 2011 CWT

GLOBAL PERSPECTIVE

In supplier market, hotels strive

to control more than rates alone

In the world of managed hotel program negotiations, 2011 was the year

hoteliers took back some of the pricing power they had lost for 2010

programs, and unfortunately for travel buyers, 2012 is shaping up to be the

year hoteliers not only retain, but further exert, that power. Not only are hotel

rates expected to increase worldwide, but CWT anticipates hotel suppliers

will tighten their grip on other contractual benefi ts and traveler perks, and

hold organizations increasingly accountable for their performance against

volume targets.

The supplier’s market of today appears to be here to stay, at least for

now; however, even in a tough negotiating environment buyers are never

powerless. Following are CWT’s expectations for the many important hotel

program components that fall outside of the negotiated rate, and advice for

obtaining the best possible outcome for each.

LAST ROOM AVAILABILITY

Last room availability, or LRA, is a highly coveted clause that ensures hotels

will honor the corporation’s negotiated rate for a particular type of room, even

if only one more room is available for the night. In these situations, the hotel

is near full capacity and in the absence of LRA, the remaining rooms could be

sold at a premium. Given that reality, along with the fact that high occupancy

rates in many cities make this scenario a more regular occurrence at many

properties, hoteliers are increasingly reluctant to award LRA, while buyers are

increasingly interested in obtaining it.

Organizations will fi nd it much harder to get LRA in 2012, with hotels likely

only willing to grant it to the largest corporate spenders at their property.

Companies that are not increasing their room nights at a given hotel year

over year will have an even harder time, and market-wide resistance should

be expected in high occupancy markets like Paris, London, Seoul, and others.

In every region of the world, LRA comes at a price typically ranging from

USD $20-40 above the negotiated rate. In high occupancy markets, where

locating a remaining hotel room would be logistically diffi cult and incredibly

expensive, many organizations fi nd the extra LRA charge worth the price. As

with any negotiated item, organizations with strong volume can make a case

for lower LRA pricing.


Advice:

More properties vs. fewer properties. Consolidating to fewer preferred hotels in a market can yield desirable

contract terms and pricing by enabling a company to become a “bigger” client to those properties. At the same

time, buyers should consider adding several properties to their preferred program for additional coverage in markets

with high occupancy, especially in the absence of LRA. In either case, buyers who can demonstrate their ability to

eff ectively shift travelers’ booking behavior toward the use of preferred properties will be seen as more credible by

hotels.

Watch for blackout dates. Even worse than not obtaining the negotiated rate on the last available room is not

obtaining the negotiated rate on any room based on blackout dates, where the hotel states upfront it will not honor

any corporate rates. Sporting events and other cultural occurrences are a large driver of blackout dates each year (see

“Plan now for program complexity from London Olympics” in this issue). Hotels should know about most of these

events well in advance, and should be able to disclose most, if not all, during annual negotiations. CWT recommends

clients accept no more than 30 total blackout dates per year from preferred hotel suppliers.

AMENITIES

| Q3 2011

Hotels are seeking incremental revenue by charging for amenities that in the recent past were likely included in the negotiated

rate. For example, many hotels in Europe, the Middle East, and Africa (EMEA) earlier this year began charging for hot breakfasts

that were previously complimentary (click here for more on this topic). Depending on the supplier, buyers may need to be

prepared to choose between:

1. A lower rate increase for 2012, with acceptance of additional charges for amenities, like internet access and breakfast, that

were previously complimentary, or

2. Accepting higher rate increases with complimentary amenities still included.

The value buyers place on certain amenities, and subsequently, the focus on amenities in negotiations, varies by region.

Throughout Latin America, free breakfast tends to be valued more than free internet, though buyers there and in some parts of

the Asia Pacifi c region can have a diffi cult time persuading hotels to include it in the corporate rate. In EMEA and Asia Pacifi c,

it can be diffi cult to convince hotels to include free internet because they typically pay a third party vendor for it. Meanwhile,

in North America, hotels are moving toward the exclusion of free amenities, but internet access and breakfast can still be

successfully negotiated by many buyers with their preferred properties.

Advice:

Ask travelers what they want. Survey travelers on which hotel amenities they actually use, and how often – the

results may be surprising. Seek to identify regional trends and any other specifi cs that can be used in negotiations.

Focus on total cost of stay. Consider amenities and room rate as part of the total cost of stay. Depending on market

trends and pricing, it may be more benefi cial for a buyer to accept a higher rate increase with free amenities in one

market, and more advantageous to agree to a lower rate with unbundled amenities at an additional charge in another.

Also, don’t forget traveler safety when going after good deals – location, brand reputation, and user reviews are critical

indicators anywhere, and particularly in locations where civil or political unrest and/or crime are prevalent.

Consider regional hotelier nuances. LRA is not the only hotel pricing component that varies geographically. In Asia

Pacifi c, hotels charge diff erently for a single occupancy room than for a double occupancy room. Since most employees

travel alone for business, buyers should ensure they are negotiating on – and receiving – single occupancy rates.

5


6

CANCELLATION POLICIES

Copyright © 2011 CWT

| Q3 2011

While hotels used to allow travelers to cancel reservations without penalty until the evening of the day of check in, many hotels

worldwide are extending the cancellation window anywhere from 12:00 noon on the day of check in, to 24 or even 48 hours

in advance. The standard penalty for cancelling after the allowable timeframe remains one night’s room charge. As the advance

notice requirement widens, hotels generate additional revenue from an increase in canceled reservations that incur the penalty fee.

Advice:

Minimize the impact. Buyers should continue to advocate for travelers to be allowed to cancel their reservations

without penalty up until early evening of the check-in day. If the hotel is adamant about adjusting the cancellation

window, remember there is still room for negotiation to secure the least impactful option available. For example,

if the hotel is pushing for 24 hours’ advance notice, suggest meeting in the middle by setting the deadline at

10 a.m. or 12 noon on the check-in day.

DYNAMIC PRICING

Hotels in every region continue to push buyers to accept dynamic pricing, which constitutes a fl oating discount off the best

available rate (BAR) of the day, rather than a fi xed rate. To date, buyers continue to resist adopting dynamic pricing as their

primary hotel sourcing strategy, based on the diffi culty it presents for their budgeting processes, and given hotels’ limited ability

to provide success stories from satisfi ed clients. Even so, suppliers have been advocating for dynamic pricing for years and are

not likely to give up anytime soon. While buyers say dynamic pricing makes it impossible for them to budget for hotel costs for

the coming year, that argument may get increasingly diffi cult to make, given buyers long ago accepted the exact same pricing

model by airlines related to corporate discounts.

Advice:

Implement where benefi cial. While buyers should continue to secure fi xed negotiated rates for the majority

of their hotel footprint, dynamic pricing can be benefi cial in secondary or tertiary markets where the organization

does not have enough room nights to negotiate a fl at discount. This can be achieved by signing a chain-wide

discount with one or more hotel suppliers that service those cities where the organization travels less frequently.

2012 hotel negotiations will be challenging for travel buyers,

but there are a number of ways to ensure the outcomes are as

balanced as possible, with some areas of mutual benefi t for both

buyers and suppliers. The hotel industry is nothing if not cyclical

– while suppliers have the upper hand right now, just two short

years ago buyers were in the driver’s seat. There is no telling what

tomorrow might bring, so both parties should remain focused on

being good business partners to one another, for both the short

and long term.


Tackling mobile technology to

encourage traveler compliance

When it comes to mobile applications for travel, there are literally thousands of options available globally, and all claim to make

travelers’ lives easier in one way or another. While this may be true on some level, many of these “apps” also lure travelers away

from their organization’s managed travel program, compromising travel policy compliance in the process.

Given the use of smart phones by travelers appears here to stay (in fact, a recent PhoCusWright study found 75% of travelers

who take fi ve or more business trips a year use their smart phones when traveling), travel buyers cannot aff ord to ignore mobile

as an increasingly critical component of their off erings to travelers. The good news is, while there are certainly challenges and

complexities to overcome, today more than ever mobile truly can support, rather than erode, a managed travel program.

Balancing traveler vs. travel

buyer needs

Travelers frequently indicate the

mobile services they value and use

most are those that increase their

convenience and effi ciency during

trips. For example, in a recent CWT

survey of more than 2,000 travelers

worldwide, the ability to use

electronic boarding passes was the

highest ranked mobile feature, with

36% of respondents evaluating

it as the most important. Access

to itinerary information and fl ight

status updates were the next most

popular, ranked as number one by

35% and 22% of respondents,

respectively. All of these functions

ultimately increase the traveler’s

productivity on the road, which is a

GLOBAL PERSPECTIVE

Travelers’ ranking of mobile services by importance

Travel management

company contacts

Maps 5 22

26

32 9 4 2

21 25

21

18 8 4 3

Tourist information 61 27 7 211

0 20 40 60 80 100

Respondents (%)

key objective of many managed travel programs. Even mobile perks that may seem like extras, such as applications that locate

restaurants and share customer reviews, contribute to overall employee productivity during a trip.

The challenge, and the headache for travel buyers, is that many of the mobile products and services that enable travelers to

accomplish these tasks also steer them away from the travel program, linking them to external sites, including many social

media channels, that suggest options available from non-preferred vendors, enable reservations to be made or modifi ed directly

with suppliers rather than through the company’s travel provider, and more. Important to note is that most travelers do not

realize they are doing anything wrong by taking these actions.

Average

ranking

Itinerary information 1

4 9 19 31 35

2.2

Flight status updates 1 13

7 33 33 22

Electronic boarding passes 33 5 11 21 21

36

Safety and security alerts 6 20

35

22 10 5 2

Least important

Source: CWT Travel Management Institute

Based on a survey of travelers (2,043 responses)

7

6

5

4

3

Most important

2

1

2.4

2.5

4.6

4.7

5.1

6.5

7


8

Copyright © 2011 CWT

| Q3 2011

So, how can travel buyers extend the many benefi ts of mobile services to their travelers while ensuring preferred suppliers and

negotiated rates are used, travelers are able to be located and assisted in an emergency, etc.? The following tips off er advice for

programs at varying stages of mobile use:

Don’t ignore mobile. If a company issues mobile devices to some or all of its employees, it certainly cannot fail to

provide guidance on how those devices should be used, including related to travel. Employees likely are also accustomed

to using their personal devices for various business purposes, perhaps including travel. Either way, failure by the travel

program to address mobile does not mean it isn’t being used, it just means the program is missing out on the opportunity

to positively infl uence traveler behavior through this channel. While implementing mobile technologies comes at a price,

travel buyers must also weigh the costs of program leakage that result from lack of a mobile strategy.

Learn what travelers really want. While much attention is paid to some of the more sophisticated functions mobile

devices can execute, as already mentioned, business travelers most frequently express interest in practical functionalities

that help them manage the logistics of travel before, during, and after a trip. Survey your travelers to learn what mobile

features they currently use most often, what particular needs are currently being met through the use of their mobile

device, and what functionalities they’d like the company to off er.

Determine organizational support. Diff erent travel programs will want to approach mobile in diff erent ways based on

company culture, traveler demographics, travel patterns, internal infrastructure, and more. Buyers should work with their

TMC and other suppliers to determine which options best serve the unique needs of their program.

Consider regional nuances. Challenges can arise across geographies when using mobile for travel, in terms of availability

of some mobile applications, their coverage, and the associated costs. As with many aspects of managed travel, global

programs must take into consideration regional nuances when determining a mobile travel strategy.

Establish clear guidelines. As mobile becomes integrated into the travel program, travel policies must increasingly

address acceptable mobile use to the extent possible. It should be clear to travelers which applications are preferred and/

or allowed by the organization, which travel functions the company does and does not support occurring through a mobile

device, and the repercussions for failing to abide by the rules for mobile use.

Ensure integration. To eff ectively support the travel program rather than detract from it, the mobile capabilities selected

for use by the organization must be integrated and fully compliant with existing protocols and processes, such as pre-trip

approvals, safety and security requirements, data privacy and security concerns, reporting capabilities, and more. While this

can add complexity to mobile initiatives, it is worth the eff ort to maintain the integrity of the travel program.

While mobile represents a relatively new way of communicating for many, travel buyers must begin to consider it as yet another

way to make the travel program available to travelers, anywhere they are. Only a little more than a decade ago, online booking

was a new phenomenon that seemed to threaten managed travel; today, most travel buyers could not imagine their programs

without an online component. In another decade, mobile is likely to experience similar widespread adoption, and travel buyers

who embrace it sooner than later will be best positioned for future success in an increasingly mobile world.

CWT makes available to its clients the following mobile off erings:

CWT Market – aggregates popular travel applications and mobile websites into one central application for easy

traveler access, with additional applications added regularly. Available worldwide on the BlackBerry, iPhone and

Android platforms.

CWT To Go – a mobile application that provides travelers access to secure, automated travel itineraries on their

mobile devices, with functionality that enables fl ight status verifi cation, mobile check-in, research of alternate

fl ights, dining options, destination information, etc. The North American launch on BlackBerry took place in

September, with a global roll out planned later in the year. CWT To Go will be available on the iPhone, BlackBerry,

and Android platforms.


The latest research from the CWT Travel Management Institute, Business Traveler Services:

Finding the Right Fit, provides guidance to help travel buyers balance the need to drive

further cost savings while ensuring traveler comfort, safety, and productivity. The study was

conducted from September 2010 through April 2011 and included a survey of more than

200 travel buyers and nearly 2,500 travelers and travel arrangers worldwide, in addition

to interviews with industry experts and analysis of CWT clients’ transactions and programs.

The full report is available via CWT’s global website; meanwhile, below are the key fi ndings.

Online booking tool customization is key

Online booking tool (OBT) use is commonplace today at many organizations, with survey participants indicating an average of 52%

of their transactions are handled online, for those companies that have implemented OBTs. Organizations that are most advanced

in online booking achieve adoption rates as high as 90%. While such success is worth striving for, CWT’s research illustrates that

buyers need to consider a number of factors when attempting to increase OBT use by travelers. For example, they need to evaluate

the number of simple trips that can be easily booked online vs. more complex trips that could benefi t from the assistance of a travel

counselor; the specifi cs of each company’s culture, such as employees’ comfort level with technology, the availability and reliability

of a given OBT in the geographic areas where the bookings will occur, the organization’s ability to infl uence traveler behavior and

implement changes; and more.

Travel buyers must clearly explain to travelers the benefi ts the company receives through OBT use, including ticket prices that

are 7% lower on average, reduced booking costs based on automation, increased visibility of all options to travelers at the time

of booking, etc. At the same time, buyers must seek traveler feedback on OBTs and manage the challenges that can arise. For

example, 41% of traveler participants in this research said they feel they receive a decreased level of service when using an OBT.

In addition, companies need to closely monitor their eff orts when implementing OBTs, as online booking becomes much less

effi cient if a high proportion of transactions involve errors or queries that must be handled manually.

Confi gurations must address

company and traveler needs

A variety of service confi gurations are

available for managed travel programs,

including onsite dedicated support; fullservice

support with either dedicated

or designated counselors; standardized

service centers; and multinational

service centers. The best confi guration

for each company will depend on its

travel patterns, traveler expectations,

and overall program goals; and the

resulting savings for choosing an

effi cient and eff ective confi guration can

reach 0.5-1% of total travel spend.

GLOBAL PERSPECTIVE

Striking a balance between

savings and service

Overview of available service confi gurations and key features

On-site service center

Full service center

with dedicated team

Full service center

with designated team

Standardized service

center

Multinational service

center

Source: CWT Travel Management Institute

Local content

& cultural proximity

Personalization

Standardization

Driving online

adoption

Cost savings

Service quality

Centralization

9


10

Copyright © 2011 CWT

| Q3 2011

Of course, a key consideration in selecting a service confi guration is satisfying traveler needs. The travelers participating in CWT’s

research indicated they most value a simple, fast booking process, and 24/7 access to service and support. They also highly value

the ability to book at times that are most convenient for them, access the lowest rates, and book all components of their trip via

one channel.

Enhance the travel experience

where possible

Many of the travel program components

that improve the traveler experience

also benefi t the organization through

increased compliance and improved

employee productivity. Among these

are web-based traveler portals, traveler

profi le tools, emergency assistance and

risk management, high-touch service

as appropriate and unused ticket

management solutions. Additionally,

mobile services are increasingly important

for keeping travelers connected to the

program during their travels (see Tackling

mobile technology to encourage

traveler compliance in this issue), and

social media use for similar purposes is

expected to increase in the future.

Travelers’ ranking of benefi ts off ered by mobile services

Enhanced safety and security 31 36 21 10 3

Expense reporting is a critical component

A well-managed travel program must include an eff ective expense management system to help enforce policy compliance and

prevent fraudulent activity. In tightly regulated industries it is even more imperative to have such a system in place. An expense

management strategy should begin with the travel policy, specifying which traveler expenses are reimbursable and providing cost

thresholds where necessary, such as for meals. The policy should also outline how expenses are fi led and paid.

After policy, processes must be established to reconcile, approve, and reimburse for expense reports, handle any reclamation of

value added taxes (VAT), and audit reports for accuracy. Finally, the company must choose an optimal expense reporting system,

which may include a web-based approach, hosted software, or manual handling via spreadsheets. Travel buyers participating in

CWT’s research largely look to their TMC for assistance with expense reporting, with 47% of respondents stating they feel TMCs

should include expense management as part of their service off ering.

While the options for selecting business traveler services in a managed travel program are truly endless, travel buyers can navigate

the myriad options by remaining focused on delivering the products and services that keep travelers safe, happy, and productive,

while delivering cost savings and effi ciencies that provide the organization the best possible return on its travel investment.

0

Least important

20 40 60 80 100

Respondents (%)

Most important

Average

ranking

Time savings 1 6 16 28

49

1.8

Convenience (e.g., information

2 9 17 40

about cancellations, delays or crises) 32

Savings 28 29 20 17 6

Better communications/networking 37 20 26 13 4

Source: CWT Travel Management Institute

Based on a survey of travelers (2,016 responses)

5

4

3

2

1

2.0

3.6

3.7

3.8


GLOBAL PERSPECTIVE

Airline indicators increase buyers’

infl uence in suppliers’ market

In an environment where airlines are continually raising prices, travel buyers can be challenged to demonstrate the value of their

negotiating eff orts, especially to procurement leaders who often value actual cost savings far more than cost avoidance. Still,

travel buyers must educate their management and continue to demonstrate the value of their eff orts to ensure the organization

understands the contributors to price increases, and the overall value achieved by negotiations beyond price alone. To assist

travel buyers with this never-ending task, following are some of the most important metrics and key performance indicators

(KPIs) the CWT Solutions Group recommends its clients monitor and leverage with airline suppliers.

11

Coverage and overlap

Coverage addresses the amount of the organization’s

overall travel footprint on which a preferred airline

off ers service. Within that preferred carrier coverage

area, overlap addresses the number of city pairs where

more than one preferred carrier off ers service. Travel

buyers must understand how much coverage a given

carrier off ers them to ensure they are negotiating with

the right airlines. Also, in overlap markets, buyers must

be careful about not over-committing on market share

to any one airline. Assuming suppliers must compete

harder for business in overlap markets, buyers may have

an opportunity to drive further benefi ts by consolidating

more volume with one airline. This will require a

demonstrated ability to infl uence traveler behavior and

shift market share.

Market share

Airlines have become increasingly sophisticated about tracking and enforcing organizations’ performance against market share

commitments. In this supplier’s market, companies that have not met their contractual obligations with an airline will fi nd it very

diffi cult to improve or even maintain their current discount levels.

Further, airlines have a keen understanding of the amount of market share they receive by default based on their level of service

on a given city pair. As mergers, acquisitions, and alliances create further consolidation among airlines, some are getting creative

about driving corporate market share by off ering deeper discounts with partner airlines. Also, in order to secure discounts,

airlines will continue to push organizations to commit incrementally more market share than the carrier would automatically

receive. For example, if Airline A operates 43% of the seats fl own between Singapore and Hong Kong, it could count on

receiving about that much of a company’s business without having to off er any discounts, simply based on the available supply

of fl ights between that city pair. Therefore, Airline A obviously will expect a market share premium resulting in a commitment of

more than 43% from an organization before being willing to off er a discount.


12

Copyright © 2011 CWT

| Q3 2011

Average ticket price (ATP)

This metric calculates the average fare an organization pays for an airline ticket after discounts have been applied to the everfl

uctuating published fares. Based on that, ATP may seem out of a buyer’s control; however, organizations can signifi cantly

infl uence ATP by taking a number of internal measures via travel policy establishment and enforcement, including: increasing

advance purchase to at least seven days before departure and ideally 14+ days; requiring the purchase of nonrefundable

fares vs. more expensive fl exible tickets; restricting the use of premium classes of service to certain types of travel or to certain

travelers; pushing more transactions to the company’s approved online booking tool; and reducing the overall number of fl ights

taken by restricting same-day fl ights or encouraging alternatives like videoconferencing when appropriate.

Net eff ective savings rate (NESR)

Understanding the value of preferred carrier discounts is also an essential metric to air travel program management. This metric

highlights the total fare savings percentage generated by a corporate airline contract by calculating the savings resulting from a

preferred carrier agreement divided by what the organization would have spent with the airline using published, non-discounted fares.

Buyers can use NESR to demonstrate the value of their negotiations even in the face of fare increases, and it can also be used to off er

comparative analysis against competing airlines being considered for inclusion in the program. Tracking the savings and savings rate of

preferred carriers is essential for ongoing eff ectiveness of preferred supplier value and industry trending comparisons.

Total cost of fl ight

In addition to higher prices and tighter management of discounts by airlines, other factors are contributing to overall increases in

the total cost of a fl ight. Ancillary fees continue to drive billions of dollars of revenue for airlines around the world, representing

a price increase for business travelers on products and services they often need, such as checking a bag. Meanwhile, as oil

prices have increased substantially, many carriers also impose fuel surcharges that, depending on the route, can rival the price

of the fare itself.

While discounts on fares often get the most attention in negotiations, buyers must understand the total cost for travelers to

use one airline over another, and negotiate accordingly. While carriers to date have not been willing to discount ancillary fees

outright, CWT clients have been successful at advocating for greater fare discounts based on the fact that ancillaries drive up

the total cost to fl y. Additionally, some organizations have negotiated an increase in elite status designations for more of their

travelers, which includes waived baggage fees and some other complimentary services. Similarly, carriers have not yet been

willing to negotiate a discount on fuel surcharges, though this technically should be possible given these charges are assessed

at the point of sale.

Airline negotiations in today’s environment are tough on travel buyers and ultimately, on the resulting airfares they procure for

their organizations. Price increases are inevitable for now, but buyers can use the metrics and KPIs above to their advantage as

much as possible, enabling them to make the best of a challenging situation.


REGIONAL SPOTLIGHT: Asia Pacifi c

In line with other trends in the

region, APAC meetings booming

As the Asia Pacifi c region leads the world in economic

growth and subsequent business travel volumes,

meeting and event volumes have been no exception

to the upward progress. CWT has seen an 8% increase

in the number of meetings and events held by clients

in the fi rst half of 2011, with average meeting spend

growing by 5%. China and Hong Kong have led the

way, at 34% and 30% increases in total numbers of

meetings and events respectively, while Singapore saw

an increase of 20%.

The building and infrastructure boom, particularly related

to the construction of hotels, venues, and exhibition

spaces in many cities, has resulted in unprecedented

availability of brand new, state-of-the-art facilities for

meeting planners to use. Strong inter-region business

has helped fi ll the gaps left by a decrease in meetings

held by western countries that were hit hardest by the

economic diffi culties of the past few years.

A number of factors are having the most signifi cant infl uence on the meeting and events market in the Asia Pacifi c region today:

Increased focus on participants’ safety and security. Events like the earthquake and tsunami in Japan this past spring,

and the resulting nuclear concerns, have only reinforced organizations’ continued recognition of the importance of safety

and security, including the availability of medical and emergency facilities at a destination. Due to its rapid growth and the

fact that a number of countries in the region continue to be classifi ed as emerging markets, Asia Pacifi c still represents

unfamiliar territory for many participants from western countries, making safety and security measures even more important

for meetings held there.

Technology is advancing quickly. This is enabling the advancement of strategic meetings management (SMM) programs

by providing true visibility into meetings spend and other data, and helping demonstrate return on investment. It also helps

to mitigate risk by facilitating the establishment and enforcement of a carefully designed meeting planning process, and by

providing online registration, website support, and social media marketing to support meetings and events worldwide. While

technology is an area that in the past was considered non-essential, meeting buyers now recognize it as a highly important

and necessary component of SMM.

13


14

Inter-region infrastructure is strong. The meetings

business in Asia Pacifi c is still predominately led by domestic

and regional meetings: Asia accounts for 16% of total meetings

worldwide. Meeting within Asia Pacifi c is easily accessible,

diversely attractive, and provides value for the money being

spent. A recent report by Pacifi c Asia Travel Association (PATA)

documents that must-have credentials to be an attractive

destination for meetings and events include easy access

by air, road or rail; at least one good quality Convention or

Congress Center; a suffi cient supply of three- to fi ve-star

hotels; an attractive destination and surroundings; value for

money; adequate marketing muscle; and a good range of local

professional conference organizers.

Volatile global economic climate is limiting M&E budgets.

Therein lies the potential for growth, particularly in Asia, of

international meeting volumes, given that planners can get

more for less money in Asia as compared to more developed

worldwide destinations. That said, planners should be mindful

to book meeting space well in advance, as occupancy and rate

value may be compromised due to demand.

Copyright © 2011 CWT

REGIONAL SPOTLIGHT: Asia Pacifi c

Tips for holding meetings in Asia Pacifi c:

APAC’s highest occupancy markets will pose

challenges for M&E and corporate travel alike

85.8%

Kuala Lumpur

Source: Smith Travel Research, July 2011 data

1. Research passport and visa requirements well in advance, as many countries have strict guidelines and

policies regarding entry clearances, particularly for business visas.

2. Look into tourism or government incentives for group travel to a particular country. Some Asia Pacifi c

countries, such as Thailand and Singapore, provide lucrative tax rebates or value-added off ers for a wide

variety of groups.

3. Site inspections are a must. If meeting planners have not been to the region before, they should set up

an in-person visit prior to booking any meeting or event, as product and service standards may vary in

Asia Pacifi c, even among globally recognized suppliers.

4. Leverage local relationships. Business in Asia Pacifi c is very relationship oriented; knowing someone on

the ground can be very benefi cial when doing business in that location.

5. Plan well in advance – capacities are very limited in specifi c Asia Pacifi c markets like Seoul and Brisbane,

where occupancy levels are at about 85%, according to Smith Travel Research.

Jakarta

82%

Hong Kong

85.5%

Seoul

83.9%

Brisbane

86.8%


REGIONAL SPOTLIGHT: Europe, the Middle East, and Africa

Plan now for program complexity

from London Olympics

The 2012 Summer Olympic Games in London are less than a year away, and buyers

who have not yet begun to plan ahead for the impact to their travel program should

begin doing so right away. Availability of supply for fl ights, hotels, ground transportation,

dining options, and other services will be signifi cantly limited while the Games take

place July 27 – August 12, 2012, as well as in the weeks immediately before and

after. While the best strategy for most organizations may be to avoid London during this

time, following are some recommendations for those organizations that must continue

to visit London during the Olympic Games for business or meetings:

Determine the approach. Based on the needs of the business, a travel buyer

may choose to ban travel to London during the Olympic Games, restrict it to some

degree, or continue operating “business as usual.” When determining the approach,

it may be helpful to examine historical travel levels to London during the July-August

timeframe, using reporting available from the travel management company.

Manage traveler expectations. Based on the approach chosen, travelers will need clear communication explaining

the added complexity of traveling to London during the Games, including anticipated congestion for transportation and at

restaurants and local attractions, premium prices for most products and services, additional penalties for cancellations, etc.

Understand Olympic hotel contracting. Many London hotels have already contracted the majority of their hotel rooms

to the London Organizing Committee of the Olympic and Paralympic Games (LOCOG) to be sold to sponsors, media,

participants, and other individuals directly involved with the Games. In April 2012, 60% of any unsold rooms contracted to

LOCOG will be released and available to the public, then in May 2012, 30% of any remaining unsold rooms will be released.

While this schedule will apply to many of London’s larger hotels, some small chains and independent hotels have made no

commitments to LOCOG and will be selling rooms on a fi rst-come, fi rst-served basis, as always.

Leverage existing partnerships. Hotels and airlines must balance the short-term surge in demand generated by the

Olympics with the long-term business that corporate clients provide. While keeping expectations realistic, buyers should

leverage their total London travel volume when speaking with their partners about what they need during this time period.

Give suppliers the opportunity to be part of the solution by asking what they can do to help mitigate the disruptions the

Olympics will cause to the travel program.

Read the fi ne print. During and surrounding the dates of the Games, buyers should expect an increase in restrictions and

other terms and conditions not typical in their corporate agreements, especially with hoteliers. These could include increased

blackout dates, pre-pay/deposit requirements, extended cancellation windows and/or penalties, minimum night stay thresholds,

etc. Be prepared to discuss these with suppliers and advocate for as few changes to the corporate agreement as possible.

The London

Olympics

by the

numbers:

7

number of cities

where Olympic activities

will take place

26

number of sports

being played

200

number

of countries

participating

17,000

number of

athletes competing

20,000

number of

journalists covering

the Games

63,000

number of staff

involved in staging

500,000

number of

spectators

15

9,000,000

number of tickets

expected to be sold


16 REGIONAL SPOTLIGHT: North America

Past decade has brought

substantial traveler security

advancements

While safety and security is an accepted part of

any successful managed travel program today, a

decade ago it was on the radar of relatively few

travel buyers compared to the status it occupies

now. The art and science of protecting travelers

has become increasingly ingrained in corporate

travel following a wide range of security-related

incidents, natural disasters, and other travel

disruptions that seem to continually arise year

after year.

As travel buyers consider their safety and security

plans for the upcoming year, following are

some key changes from the past 10 years that

have contributed to this area of managed travel

becoming what it is today, followed by CWT’s

expectations for what it might look like in the future.

“Duty of care” becomes a common phrase

An employer’s obligation to provide a reasonably safe working environment for all employees, including when

they are traveling on company business, is known as duty of care. This concept has received increasing attention

over the past decade, driven by the wide range of security-related incidents, natural disasters, and other events

that have occurred around the world.

TODAY: Duty of care is legally enforced in some

countries such as the United Kingdom, while in many

others it is a commonly held expectation of businesses

and their employees. Because the extent of enforcement

varies greatly between countries, travel buyers must

understand their obligations in every country to which

their organization sends people on business.

Copyright © 2011 CWT

TOMORROW: In addition to further proliferation of duty

of care in countries that have not yet adopted it, “duty

of loyalty” is expected to gain prevalence as well. This

concept addresses the responsibility that employees have

for their own well being, including an obligation to use the

resources the company makes available for their safety.

For travel, this includes keeping traveler profi les current,

booking through approved channels, using preferred,

company-vetted suppliers, etc. An employee who fails to

execute their duty of loyalty will have a much harder time

holding the company liable if something goes wrong.


REGIONAL SPOTLIGHT: North America

Traveler tracking now considered essential

While it is hard for most in the travel industry to even recall the days before traveler tracking was considered

a necessity, only a decade ago capabilities were much more limited for organizations and their suppliers to

continually track and quickly locate employees during their travels.

TODAY: Travel management companies and other

suppliers have developed technology that provides travel

buyers instant, real-time access to detailed information on

their travelers’ whereabouts, enabling all parties to assist

more quickly than ever before in an emergency. While this

capability may have been seen as a diff erentiator between

suppliers, today best-in-class programs consider it a basic,

foundational (though no less critical) off ering.

Policy and compliance become primary enablers

A clear, comprehensive travel policy, and the enforcement of compliance to that policy, can drastically impact the

safety and security of traveling employees. Policies must stress the importance of booking all trip components

(not just air) through approved channels so that complete, accurate data on each trip is available if needed.

Policies should also mandate the inclusion of personal contact information in traveler profi les, including mobile

phone numbers and emergency contact information.

TODAY: Additional caution is primarily paid for trips

to destinations that are known to be high-risk. Additional

pre-trip approvals are often required, and extra information

and traveler advice is often provided.

The fl ying experience changes forever

TOMORROW: Countless incidents have proven that

safety and security related events happen anywhere, at

any time, meaning travelers may fi nd themselves in a

familiar place but in need of assistance. More and more,

organizations need to think creatively about how to best

assist travelers when common communication channels,

such as mobile phones and websites, are unavailable.

The past decade has brought countless changes to the process of fl ying, both in airports and onboard planes.

Increased security, ever-changing checkpoint screening procedures, and limitations for what can be carried

onto a plane are just a few examples. In fact, the U.S. Transportation Security Administration, now a fi xture at

thousands of U.S. airports, did not even exist 10 years ago.

TODAY: Travelers are required to arrive earlier for their

fl ights to accommodate security processes. As a result,

airports and airlines have invested heavily in the pre-fl ight

experience, with a signifi cant increase in the availability of

shopping, restaurants, and other amenities.

TOMORROW: As mobile technology becomes essential

for doing business, travel buyers will expect traveler tracking

functionality to be available on their mobile devices,

allowing them to respond to a crisis from anywhere.

TOMORROW: The additional time required to travel by

air, and the associated challenges related to security, can

make alternatives like rail travel or telepresence attractive

for some types of trips. The airline industry, governmental

bodies, and others must continue to address these

challenges by streamlining the security process for air

travelers to the extent possible, while continuing to take

necessary safety and security precautions.

17


18 INDICATORS

Europe, Middle East & Africa - Percentages indicate the variation of Q2 ’11 vs. Q2 ‘10

US$

1200

1000

800

600

400

200

0

US$

1400

1200

1000

800

600

400

200

0

2010 Q2

2010 Q2

AVERAGE TICKET PRICE

2010 Q3

ECONOMY

2010 Q4

2011 Q1

2011 Q2

BUSINESS

Domestic Continental Intercontinental Continental Intercontinental

ECONOMY

+7%

+5%

+7%

Source: CWT client data, worldwide on top 20 round-trip routes

Domestic = travel within any given country

Continental = travel originating in any given region to international destinations within that same region

Intercontinental = travel originating in any given region to destinations outside of that region

Top 20 round-trip routes: 20 most frequently purchased round-trip routes per category (domestic, continental, intercontinental) & per region, based on 2010 and 2011 CWT ticket sales

Values have been recalculated using fl at exchange rates, versus previous editions of this publication, to eliminate artifi cial price variations.

Copyright © 2011 CWT

US$

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0

2010 Q2

North America - Percentages indicate the variation of Q2 ’11 vs. Q2 ‘10

2010 Q3

2010 Q4

2011 Q1

2011 Q2

+13%

+9%

+7%

2010 Q3

2010 Q4

BUSINESS

2011 Q1

Domestic Continental Intercontinental Continental Intercontinental

US$

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q2

+3%

+6%

+9%

+5%


| Q3 2011

Asia Pacifi c - Percentages indicate the variation of Q2 ’11 vs. Q2 ‘10

US$

1200

1000

800

600

400

200

0

US$

1200

1000

800

600

400

200

0

2010 Q2

2010 Q2

AVERAGE TICKET PRICE

2010 Q3

ECONOMY

2010 Q4

2011 Q1

2011 Q2

BUSINESS

Domestic Continental Intercontinental Continental Intercontinental

ECONOMY

+4%

+9%

+10%

Source: CWT client data, worldwide on top 20 round-trip routes

Domestic = travel within any given country

Continental = travel originating in any given region to international destinations within that same region

Intercontinental = travel originating in any given region to destinations outside of that region

Top 20 round-trip routes: 20 most frequently purchased round-trip routes per category (domestic, continental, intercontinental) & per region, based on 2010 and 2011 CWT ticket sales

Values have been recalculated using fl at exchange rates, versus previous editions of this publication, to eliminate artifi cial price variations.

Copyright © 2011 CWT

US$

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0

2010 Q2

Latin America - Percentages indicate the variation of Q2 ’11 vs. Q2 ‘10

2010 Q3

2010 Q4

2011 Q1

2011 Q2

+2%

+14%

+14%

2010 Q3

2010 Q4

BUSINESS

2011 Q1

Domestic Continental Intercontinental Continental Intercontinental

US$

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q2

19

+11%

+3%

+2%

+4%


20 INDICATORS

%

50

45

40

35

30

25

20

15

10

5

0

Copyright © 2011 CWT

BUSINESS & FIRST CLASS USAGE

Europe, Middle East & Africa

%

50

45

40

35

30

25

20

15

10

5

0

2010 Q2

2010 Q2

2010 Q3

Continental Intercontinental

2010 Q3

2010 Q4

2010 Q4

2011 Q1

2011 Q1

Continental Intercontinental

2011 Q2

2011 Q2

%

50

45

40

35

30

25

20

15

10

5

0

%

50

Source: CWT client data, worldwide

Continental = travel originating in any given region to international destinations within that same region

Intercontinental = travel originating in any given region to destinations outside of that region

North America

45

40

35

30

25

20

15

10

5

0

2010 Q2

Asia Pacifi c Latin America

2010 Q2

2010 Q3

2010 Q4

2011 Q1

Continental Intercontinental

2010 Q3

2010 Q4

2011 Q1

Continental Intercontinental

2011 Q2

2011 Q2


%

80

70

60

50

40

30

20

10

0

%

80

70

60

50

40

30

20

10

0

2010 Q2

2010 Q2

Source: CWT client data, worldwide

Continental = travel originating in any given region to international destinations within that same region

Intercontinental = travel originating in any given region to destinations outside of that region

Copyright © 2011 CWT

AIR BOOKINGS MADE 14+ DAYS IN ADVANCE

Europe, Middle East & Africa North America

2010 Q3

2010 Q4

2011 Q1

2011 Q2

Domestic Continental Intercontinental

Domestic Continental Intercontinental

%

80

70

60

50

40

30

20

10

0

%

80

70

60

50

40

30

20

10

0

2010 Q2

Asia Pacifi c Latin America

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2010 Q2

2010 Q3

| Q3 2011

2010 Q4

2011 Q1

2011 Q2

Domestic Continental Intercontinental

2010 Q3

2010 Q4

2011 Q1

2011 Q2

Domestic Continental Intercontinental

21

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