Buyers predict healthy outlook for business travel spend in 2017

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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

 

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

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