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 1616 vs 1515 vs 1414 vs 1313 vs 1212 vs 11
Budgets32% bigger

21% smaller

47% same

29%32%37%39%39%
Airline budgets40% greater

15% smaller

45% same

33% greater

24% smaller

43% same

33% greater

21% smaller

46% same

39% greater

37% same

24% same

  
Accommodation budgets32% 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 managedMore – 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?

 MoreLess Do Not Use
Private jets31483
First class72568
Business/premium384814
Low cost airlines81154
Budget airlines731611

  

Chart 3: DCC questions

What impact have you seen from the DCC (distribution cost change)?%
We have switched carriers10
Our prices have increased17
Our prices have decreased3
More transparency with pricing20
Our TMC keeps us up to date24
Don’t know26
  
DCC has been a good thing. 
Strongly agree1
Agree10
Disagree24
Strongly disagree10
I don’t know55

 

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?

 MoreLess Do Not Use
Five star hotels154144
Airbnb17677
HomeAway3196
One Fine Stay3196
Veeve1198
Magicevent1198
Serviced apartments391546
Mid-range hotels8785
Budget hotels601327

 

Chart 5: Compared to 12 months ago are you using the following more or less?

 

 MoreLess Do not use
Chauffeur driven cars/limos234136
Taxis61354
Uber56440
Car Rental52417
Car pool services17776
Zip car11683
Trains84133

 

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)

 

 2016/20172015/20162014/20152013/2014
1.                  Cutting costs while maintaining qualityCutting costs while maintaining qualityAirline pricing – increases, lack of transparency and negotiation concernsNDC
2.                  Increased focus on duty of care and securityIncreasing complianceControlling costs and managing spendTravel management 2.0
3.                  Rising airfaresGDS contentEnforcing complianceData
4.                  BrexitRisk management vs costs savingsIncreased hotel ratesSustainability
5.                  Enforcing complianceIncreasing hotel ratesTraveller safetyMeetings management
6.                  Price variations between booking channelsAirline pricingCost savingsMobile apps
7.                  Integrating one TMC across the whole businessSupplier negotiationsAncillary feesTechnological developments
8.                  Hotel rate managementSecuring value for moneyThe role of the TMCFree Wi-Fi in hotels and on airlines
9.                  Keeping costs down and compliance upOnline adoption/bookingOnline adoptionCSR
10.               Data and how to use itMobile appsCost increasesTerrorism
11.               Traveller trackingData and how to use itBalancing traveller needs while staying within budgetGamification
12.               Supplier consolidationRussiaOnline vs TMC pricingRelaxation of policy
13.               Integrating direct bookingChanging traveller profilesSustainabilityAirline bankruptcy
14.               Traveller happinessGlobal purchasing responsibilityGDS contentIntegration of social and travel tools
15.               Airline pricing structures – ancillary fees vs unbundlingCost increasesSupplier consolidationAncillary fees
16.               Traveller choiceSupplier consolidationMobile technology & solutionsAirline consolidation
17.               Airline distribution inc. NDCNDCAirline consolidationRisk management
18.               Last minute v advance bookingsDiscovering new destinationsAvailability and variety of low cost leisure toolsVirtual meetings
19.               Stakeholder managementLast minute bookingsThe move towards traveller managementFuel increases
20.               Train travelStakeholder managementStakeholder managementLess 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

 

You can register to the Business Travel Show at: wwwbusinesstravelshow.com/register

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