Buyers predict healthy outlook for business travel spend in 2017
The number of business travel buyers with flourishing budgets is on the increase for the first time in four years. The results of the seventh annual Business Travel Show forecast* reveal that 32 per cent of buyers will have more money to spend in 2017, compared with 29 per cent last year. This follows successive annual drops since 2013. Airline budgets will also rise for 40 per cent of buyers, the highest number for the last three years.
The pressure to cut costs while maintaining quality remains the biggest challenge facing buyers for the second year and may explain the significant increases in the use of low cost and budget airlines, Uber and car rental services, and mid-range and budget hotels.
Chart 1: How budgets will compare between 2016 and 2017 including historical research data:
| 17 vs 16 | 16 vs 15 | 15 vs 14 | 14 vs 13 | 13 vs 12 | 12 vs 11 | |
| Budgets | 32% bigger
21% smaller 47% same |
29% | 32% | 37% | 39% | 39% |
| Airline budgets | 40% greater
15% smaller 45% same |
33% greater
24% smaller 43% same |
33% greater
21% smaller 46% same |
39% greater
37% same 24% same |
||
| Accommodation budgets | 32% greater
14% smaller 54% same |
38% greater
21% smaller 41% the same |
30% greater
27% smaller 43% the same |
30% greater
43% same |
||
| Number of trips managed | More – 48%
Same – 37% Fewer – 15% |
More – 44%
Same – 37% Fewer – 19% |
More – 45%
Same – 41% Fewer – 14% |
More – 48%
Same – 31% Fewer – 22% |
More – 57%
Same – 22% Fewer – 22% |
AIRLINE SPEND
85 per cent of buyers will have the same or more to spend on airline travel in 2017, compared to 76 per cent last year. Budgets will increase for 40 per cent of buyers, compared to 33 per cent both in 2016 and 2015. Just 15 per cent expect budgets to shrink, compared to 24 per cent in 2016.
- The use of low cost carriers remains unchanged for the third year running at 86 per cent.
- In 2016, 81 per cent of buyers used low cost airlines more, compared to 26 per cent in 2015.
- 73 per cent used more budget airlines.
- 38 per cent of buyers booked fewer business class flights, the same as last year.
- 10 per cent of buyers have switched carriers because of DCC (distribution cost change).
- 17 per cent have experienced price increases as a direct result of DCC.
- Just 11 per cent agree/strongly agree that DCC has been a good thing.
Chart 2: Compared to the last 12 months, are you using the following more or less?
| More | Less | Do Not Use | |
| Private jets | 3 | 14 | 83 |
| First class | 7 | 25 | 68 |
| Business/premium | 38 | 48 | 14 |
| Low cost airlines | 81 | 15 | 4 |
| Budget airlines | 73 | 16 | 11 |
Chart 3: DCC questions
| What impact have you seen from the DCC (distribution cost change)? | % |
| We have switched carriers | 10 |
| Our prices have increased | 17 |
| Our prices have decreased | 3 |
| More transparency with pricing | 20 |
| Our TMC keeps us up to date | 24 |
| Don’t know | 26 |
| DCC has been a good thing. | |
| Strongly agree | 1 |
| Agree | 10 |
| Disagree | 24 |
| Strongly disagree | 10 |
| I don’t know | 55 |
ACCOMMODATION SPEND
One third of buyers (32 per cent) will have more to spend on accommodation in 2017, and fewer (14 per cent compared to 21 per cent) will have smaller budgets. The use of budget and mid-range hotels rose sharply, with 60 per cent and 87 per cent of buyers increasing their use of suppliers in these markets. While 77 per cent of buyers still do not use Airbnb, 17 per cent did spend more money with them in 2016.
Chart 4: Compared to the last 12 months, are you using the following suppliers more or less?
| More | Less | Do Not Use | |
| Five star hotels | 15 | 41 | 44 |
| Airbnb | 17 | 6 | 77 |
| HomeAway | 3 | 1 | 96 |
| One Fine Stay | 3 | 1 | 96 |
| Veeve | 1 | 1 | 98 |
| Magicevent | 1 | 1 | 98 |
| Serviced apartments | 39 | 15 | 46 |
| Mid-range hotels | 87 | 8 | 5 |
| Budget hotels | 60 | 13 | 27 |
Chart 5: Compared to 12 months ago are you using the following more or less?
| More | Less | Do not use | |
| Chauffeur driven cars/limos | 23 | 41 | 36 |
| Taxis | 61 | 35 | 4 |
| Uber | 56 | 4 | 40 |
| Car Rental | 52 | 41 | 7 |
| Car pool services | 17 | 7 | 76 |
| Zip car | 11 | 6 | 83 |
| Trains | 84 | 13 | 3 |
TOP ISSUES FACING BUYERS IN 2017
38 per cent of buyers expect their total travel costs to rise over the next 12 months and 48 per cent will be planning more trips, which may explain why cutting costs while maintaining quality has retained its spot as the biggest issue facing buyers in 2017. Duty of care has risen moved up the table from fourth to second, while compliance has dropped from second to sixth. Brexit makes its debut at number four, with UK buyers concerned about the impact the strength of sterling will have on prices. Traveller choice and happiness also appear for the first time, and mobile had dropped out completely.
Chart 6: Top 20 issues facing buyers in 2017 (plus historical data)
| 2016/2017 | 2015/2016 | 2014/2015 | 2013/2014 | |
| 1. | Cutting costs while maintaining quality | Cutting costs while maintaining quality | Airline pricing – increases, lack of transparency and negotiation concerns | NDC |
| 2. | Increased focus on duty of care and security | Increasing compliance | Controlling costs and managing spend | Travel management 2.0 |
| 3. | Rising airfares | GDS content | Enforcing compliance | Data |
| 4. | Brexit | Risk management vs costs savings | Increased hotel rates | Sustainability |
| 5. | Enforcing compliance | Increasing hotel rates | Traveller safety | Meetings management |
| 6. | Price variations between booking channels | Airline pricing | Cost savings | Mobile apps |
| 7. | Integrating one TMC across the whole business | Supplier negotiations | Ancillary fees | Technological developments |
| 8. | Hotel rate management | Securing value for money | The role of the TMC | Free Wi-Fi in hotels and on airlines |
| 9. | Keeping costs down and compliance up | Online adoption/booking | Online adoption | CSR |
| 10. | Data and how to use it | Mobile apps | Cost increases | Terrorism |
| 11. | Traveller tracking | Data and how to use it | Balancing traveller needs while staying within budget | Gamification |
| 12. | Supplier consolidation | Russia | Online vs TMC pricing | Relaxation of policy |
| 13. | Integrating direct booking | Changing traveller profiles | Sustainability | Airline bankruptcy |
| 14. | Traveller happiness | Global purchasing responsibility | GDS content | Integration of social and travel tools |
| 15. | Airline pricing structures – ancillary fees vs unbundling | Cost increases | Supplier consolidation | Ancillary fees |
| 16. | Traveller choice | Supplier consolidation | Mobile technology & solutions | Airline consolidation |
| 17. | Airline distribution inc. NDC | NDC | Airline consolidation | Risk management |
| 18. | Last minute v advance bookings | Discovering new destinations | Availability and variety of low cost leisure tools | Virtual meetings |
| 19. | Stakeholder management | Last minute bookings | The move towards traveller management | Fuel increases |
| 20. | Train travel | Stakeholder management | Stakeholder management | Less reliance on TMCs |
*178 travel buyers took part in the seventh Business Travel Show annual survey in November 2016. 61 per cent of respondents worked in the UK, 37 per cent in continental Europe.
Respondents’ travel budget: %
Less than £150k/€185k 18
£151k-£500k/€186k-€625k 10
£501k-£1m/€626k-€1.3m 6
£1m-£3m/€1.3m-€3.75m 13
£3m-£10m/€3.75m-€12.5m 15
£10m+/€12.5m+ 38
Number of travellers responsible for: %
Fewer than 50 21
51-100 10
101-500 6
501-1000 13
1000+ 15
N.A. 38
