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Issue 2001-5 - Wesnesday, March 28, 2001

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  Business travel: faced with an economic slowdown, companies re-examine their travel policies for airline companies, but also hotels and car rentals  

The NBTA, National Business Travel Association, that represents 2.000 corporate travel managers worth $130 billion in sales, conducted a few surveys from January to March 2001 and their results all match. These surveys tend to show that if business fares do not decrease, business travellers will have no choice but modify the way they consume accordingly.

75% of NBTA's members have already reduced costs in air rates, 64% in hotel rates and 46% in car rental rates.

The strategies that are being used to reduce business travel expenses appear interesting for several reasons.

First of all, 71% of the business travellers polled no longer hesitate to book flights on discount airlines, 55% use alternative airports to find better prices and 40% require senior-level executives to

In the hotel industry, 64% of the companies report hotel expenditure increases between 5-10% in 2000. 66% reported they planned on reducing the number of rooms nights purchased in 2001 by at least 5%.

To that matter, 43% of the companies reported that they started to reduce their travel budgets for hotels as soon as 2000. And of that 43%, 74% reported they have already reduced their travel budgets for hotels by nearly 10%.

In addition to these specific budgetary strategies, we also observe a modification in the way business travellers behave and this trend might well last for a long time.

Indeed, 77% of the companies plan to counter the economic slowdown by reducing travel or by renegotiating corporate and group rates (69%).

Please also be aware that 54% of the companies reported they have been reducing the number of meetings and individual travellers.

Faced with an economic downturn that will no doubt keep on getting worse, the only solution for professional travel managers seems to consist…in cutting prices.

Indeed, 68% of the companies reported that a reduction in business fares would lift current policies restricting business travel. And yet, 58% of the survey respondents report that airline companies would have to reduce negotiated fares by more than 10% for corporations to lift current policies reducing travel.

What's more, 38% of the companies that were surveyed declared that if fares were to be renegotiated by more than 10%, they might increase travel by 5%.
22% reported that such a move would bring business travel movements back to normal.



These reactions might well be the result of the economic slowdown that can be noticed in the United-States, and yet one should also be aware that the Internet has quite an impact on these behavioural changes.

The fact that companies resort to discount airlines constitutes the first big change. This whole set of surveys proves that the bargain hunting behaviour might well spread to companies and, as a result, would no longer be used by private individuals only.

By allowing these companies to compare offers in just a few mouse clicks, Internet could well initiate a whole new business travel approach, that would have been unthinkable a few years ago.

It also proves easier, in this hyper connected world, to avoid costly business travels, and replace them with virtual meetings, videoconferences and other virtual chats.

It goes without saying that virtual meetings cannot always replace human contacts, especially when your customers are concerned. And yet, for internal meetings held in companies whose premises are geographically apart, the virtual world makes it possible to save a great deal of money, as well as a great amount a time.

Things do not look too good for professionals involved in business travel; indeed, these behavioural changes will no doubt last, and the present economic slowdown that can presently be seen in the United-States could get much worse.

Source: NBTA
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