Friday, June 27, 2008

Corporate Companies : Travel Only When Necessary

Businesses have begun clamping down on travel as a slowing economy threatens to decimate corporate bottomlines.

In Hong Kong, agents say major multinationals have begun implementing changes to their travel policy after a review earlier in the year.

Changes include a trading down from first to business class, travel only when necessary and approval must be given for travel to different offices.

A corporate ticketing agent who declined to be named said: “All our major global multinational accounts have made changes to their travel policy in response to the deteriorating economic environment.”

Agents declined to name companies cutting back on travel but said these were mainly financial institutions, which have taken a beating in the US subprime crisis, and technology companies. The last time multinationals made significant changes to their travel policy was in the aftermath of the 9/11 attacks on New York which, combined with the dotcom bust, precipitated the last economic downturn.

That policy change lasted for about three years, and agents worry they are now at the start of another downward cycle, which this time around also has to deal with rocketing fuel surcharges adding to cost pressures.

The ticketing agent said: “Business and leisure tra­vel from Hong Kong are starting to come down a little. We have been seeing signs of a slowdown since May.”

Regional travel management companies (TMCs) based in Singapore are also noticing some cutbacks.

Carlson Wagonlit Travel (CWT) noticed some cutbacks in the banking and financial sector in the last three to six months, owing to the US sub prime crisis, but American Express Business Travel believes no single industry is more affected than another.

CTW executive vice-president for traveller & tran­saction services and president Asia-Pacific, Mr Berthold Tren­kel, said: “A number of banking clients are down 10 to 30 per cent in terms of their activity levels compared to last year. These are however shortterm ‘travel freezes’, and we expect this to bounce back in particular in Asia-Pacific.”

American Express Business Travel vice-president and ge­neral manager, head of business travel, ASEAN, Ms Irene See, said: “People are more prudent in their travel budget. They are not cutting back completely on their travel expenses, but are merely finding ways to stretch their dollar. ”

Singapore-based companies told TTG Asia they were reviewing business class travel, cutting down the size of the travelling team and choosing non-direct flights, which are cheaper than direct services.

Emerson Network Power marketing manager South-east Asia, Ms Merene Ong, said: “We are more likely to cut the number of staff who will fly to the event than to downgrade the hotel or venue chosen because we must maintain a certain standard for our brand, especially when key clients are present.”

Corporate travel agents such as Prime Travel & Tour are noticing policy travel changes. Prime’s corporate sales ma­na­ger, Ms Masriah Ruslan, said: “We noticed more clients are raising the requisites for granting business-class flights. Most MNC travel policies allow senior management employees to fly in business class should their flight last more than four or five hours. These companies are increasing the flight time, and thus reducing the need for business-class seats.”

Mr Trenkel said: “Often we see that companies will start with less drastic measures such as reducing travel to non-essential events and conventions, drop some internal meetings, or discourage day trips; followed by reviewing travel policies with regard to business versus economy flights. In addition, we have also seen an increased focus by clients on compliance to travel policies, ie, people travelling in the right class of travel, staying at the right hotel, using the preferred air, hotel and car supplier – and reminding those who do not do follow policy.”

Source : TTG
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