“Europe is one of the largest trade and travel zones and is critical for the worldwide economy,” says Bob Diener, co-founder of Hotels.com and Getaroom.com. “Business is improving in Europe and we are seeing increasing demand and rates at hotels. We expect this trend to continue for the next couple of years and more.”
In it’s most recent Business Travel Index Outlook – Western Europe, the Global Business Travel Association analyzed the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain, and determined that this collective represented the lion’s share of business travel in the region and all were showing positive increases year over year.
“Continued signs of strength and progress in the European economy and gathering momentum suggest that 2014 will be a transition year,” says Catherine McGavock, GBTA’s regional director for Europe. “At long last the 2012-13 recession appears to be over and the European economy is on a more solid footing. While challenges remain, this is very positive news and bodes well for business travel growth as business confidence rises across the region.”
According to the report, 2014 is expected to be first year since 2010 that all five business travel markets witness gains in business travel spending. In fact, business travel spending among the five markets is expected to hit $186.5 billion in 2014 and projected to grow further to $198.6 billion in 2015, dwarfing 2013’s numbers by approximately 7 percent.
A Resurgent Outlook
The report goes on to predict that companies will spend more money on business travel this year, with a renewed focus on foreign destinations. Spending on outbound travel from the US is expected to jump a hefty 12.5 percent in 2014 to $36.7 billion, marking the first time there’s been double-digit growth in years. Steady improvements in the Eurozone are to thank for the growth forecasted for the coming year.
To meet the growing demand, Diener says Hotels.com and Getaroom.com have put more resources in Europe of late and are adding most European languages. Its new mobile booking engine is expected to go live next quarter, which will have thousands of hotels with mobile rates available.
“We are seeing more frequent travel, more international travel, more activity on cell phones and tablets,” he says. “Europe has embraced technology advancements early and many now use their cellular device to plan and book travel as well as check-in to save time. In the travel space, many companies have opened or expanded offices in Europe.”
Sean Worker, CEO of BridgeStreet Global Hospitality, says from a hospitality perspective, and a serviced apartment view in particular, the European economy remains a vibrant market.
“The predictable, high-density markets, like London, Frankfurt, Munich,
Paris and Zurich, continue to do very well. And some of the secondary markets are developing in the serviced apartment segment as manufacturing has moved toward eastern borders of Europe, following its trend of sourcing cost-savings,” he says. “Other markets have ignited, like in Romania and Bulgaria, and Europe is neither critical nor is it in distress; it is simply a market that will have ongoing business long-term as a significant trading partner to Russia, Asia and America.”
Christophe Renard, vice president, CWT Solutions Group, the consulting division of Carlson Wagonlit Travel, says a large number of clients have their headquarters based in Europe, or have European hubs.
“In terms of business travel, Europe represents a significant portion of our business where clients are either based or traveling to and from,” he says. “Global businesses are carrying on investing and working in Europe and this is reflected in the figures we see in business travel. Meetings and events are a good indicator in the overall business recovery of a region or country and at CWT we’re expecting moderate growth in Europe in 2014.”
With confidence in Europe growing, CWT expects to see increased investment in transportation and city infrastructure as well as hotel development.
“An increase in businesses connecting to key markets also drives positive business growth, competitive pricing and more options for travelers,” Renard says. “By working with a global travel management company, risks are much lower as we are able to take a more holistic world-wide approach and guide our clients to use the innovative tools and options which are best suited to their business.”
For Fortune 500 companies, it’s not a question of resurgence, but a plan for scalability. These companies can scale now for the markets they are in, or can scale into markets they want to be in.
Corporate Travel Issues
In recent years, travel managers have expressed concern with out-of-policy bookings as they’ve watched travelers turn to new technologies offering a more consumer-like user experience. Travelers going outside of the program impacts not only overall travel spend but raises safety and security concerns as well.
“Global businesses continue to look at their operations for continued consolidation and operational efficiencies within travel management,” says Doug Payne, ALTOUR’s senior vice president of sales. “As business continues to grow, global businesses will examine their programs more carefully and require consolidated data that can help in supplier negotiations as they continue to grow.”
Renard says CWT is working on new ways to help travel managers achieve their money-saving objectives, while at the same time exceeding traveler expectations, with solutions such as door-to-door booking and expense management, and everything in between.
“It’s no surprise then that travel managers indicated that their top priority in 2014 was finding innovative ways to generate savings,” Renard says. “Traveler experience is also top of mind as technology offers new opportunities for tailored, user-friendly services that support the managed travel program.”
Many issues can arise when employees travel internationally on business, from the minor inconvenience of a canceled flight or a lost travel document to more serious life threatening emergencies resulting from an accident or political unrest.
“When traveling overseas, even to historically safe countries in Western Europe, challenges can arise should an emergency occur,” says Dominick Zenzola, vice president and employee benefit manager for Chubb Accident & Health. “For the majority of employees who travel overseas, their top concern is what will happen should there be a medical emergency. Will they be transferred to an appropriate hospital that can treat their condition? Will their primary medical insurance cover the expenses? Who, and how, will their family be notified if they are personally unable to call?”
Beyond medical risks, travelers also face security risks. If political hostilities develop in the city or country where they are traveling, travelers must consider how they can safely evacuate the country. If a natural disaster occurs, where should they go and who can help?
“There are online web portals that offer country specific information that can help travelers with pre-trip planning and also provide advice should an issue arise while on the ground,” Zenzola says. “The online tools provide details such as travel tips for employees, approved transportation suppliers, preferred hotels, restaurants, healthcare quality information, as well as background on the country’s political climate and whether it’s safe to travel. Most are available as a mobile app, so travelers can easily access this information while they are on-the-go.”
The Right Tools for the Job
The growth of technology is playing a major role in significantly increasing travel activity to the major financial cities, according to Nigel Parkinson, ALTOUR’s senior vice president of global sales, who is based in London. Parkinson says he anticipates a slow steady growth in travel to and in the countries which are the Europe’s economic drivers, with technology as the linchpin.
“The apps available and mapping facilities on smartphones have transformed travel and made it far easier for the business traveler,” he says. “Ensuring they are accessing the local market airfares is very important in some European countries such as the UK. Language, currency and culture can also affect decisions around travel.”
The rise of consumerization has created traveler expectations for immediate and constant access to information in all parts of their lives – business travel included.
“US travel managers have great servicing options for their local travelers either offline through local and regional service centers, plus online self booking technology is gaining momentum in other European countries,” Parkinson says. “Travelers have more tools at their disposal such as expense management tools as well as traveler security. We often see travelers monitoring their own flights and travel arrangements using several different apps. These allow incredibly fast and useful data at their fingertips.”
CWT is addressing this new reality by taking steps to control its digital destiny Renard says, moving from a technology integrator to technology owner/ developer in the parts of the travel ecosystem where it can deliver the most value and create meaningful differentiation.
“With technology becoming increasingly central to people’s lives, it’s important that TMCs and other businesses in the corporate travel space embrace the digital world,” he says. “The successful businesses will be the ones who adapt to the new ways of working, using online booking tools and industry-leading insights.”
By creating a mobile experience for travelers, CWT can support clients and help them to interact at all stages of the travel continuum.
“We envision a future where the user has one single point of access for the whole of their journey,” Renard says. “The ultimate goal is to provide an app which not only gives relevant and real time information to the traveler as he/she leaves the office, catches a flight or hails a taxi, but also suggests and offers bespoke and customized information. This could be anything from important issues around safety and security, weather or flight statuses through to relevant entertainment and geo-specific restaurant offers.”
Challenges Ahead?
While projections from the media are mostly upbeat, there are some worries that the Continent still faces pitfalls that could turn things sour again. The Ukrainian crisis is having some impact on the region, but it’s mainly isolated to that area only. The sovereign debt crisis is far from over, oil prices are constantly in flux given the potential for supply interruptions, and currency risks in emerging markets have the potential to generate financial shocks.
The general consensus among economists is that there’s little reason to fear another major downturn anytime soon. Recent actions by the European central banks have shown a certain maturity in their views on how they intervene in the region’s sovereign economies, the many moving parts that make up the whole of Europe. Bankers are concerned about deflation and are indicating two things – that they’re going to keep interest rates very low, and that in the event they see a deflationary environment, they’ll step in.
“The main risk is currency risk and so we recommend booking in travelers’ home currency,” Diener says. “If located in the US, confirm rates in US dollars so you won’t be affected by the whim of currency changes.”
A lack of credit card acceptance in some European countries can present a challenge at times, Parkinson adds. Many more hotels and other travel providers are connected now to major OTAs and GDS central booking systems to help alleviate some of these problems.
“What BridgeStreet sees from client patterns, movement is occurring. Corporations are moving trans-Atlantic at a pattern that is up year-over-year,” Worker says. “For the near term, it seems to be business is growing and optimism from a travel standpoint, and a supply standpoint, continues to be encouraging.”
Another indicator is building permits. Since 2010, the building of commercial and multi-use buildings is more common, which is good for supply. There is no negative indication that building is slowing; it is more an issue of site availability and a city’s change in attitude about mixing business and residential.
The issue for travel managers is to validate compliance to their own internal customers. With so much choice, there is greater uncertainty for internal compliance and cost management.
“While an employee may think it is far less costly to go online and book corporate travel themselves, the travel manager’s job is to point out it is a better decision for the company, leveraging the purchase,” Worker says. “The biggest challenge for the travel manager is how to ride compliance into a highly transparent organization and world.”
