Seven Major Trends Reshaping the U.S. Corporate Travel Landscape
PhoCusWright’s U.S. Corporate Travel Distribution Fourth Edition identifies seven key trends driving fundamental change across the corporate travel landscape. These seven forces are driving a realignment of resources and services among corporate travel programs and travel management companies (TMCs), and leaving almost no facet of travel management untouched.
“We have identified seven essential trends with the potential to shake corporate travel management to its core,” said Susan Steinbrink, PhoCusWright’s senior research and corporate market analyst. “Ranging from the environment to videoconferencing, supply chain management, mobile services and more, these trends are poised to impact the amount spent on travel, alter corporate purchasing priorities and touch every player in the corporate travel landscape, including suppliers, TMCs, technology providers, credit card companies, and of course the corporate traveler.”
The top seven trends affecting the U.S. business travel market through 2011
1. The 3Ps of Corporate Travel: Balancing the Triple Bottom Line
2. Travel & Expense: Putting the “E” Cart Before the “T” Horse
3. Business Travel Goes Retail: Supply Chain Management
4. Traveler-Centric vs. Trip-Centric Buying
5. Going Mobile
6. Videoconferencing: Traveling Without the Trip
7. SMEs Become Big Business
Trend 1: The 3P’s of Corporate Travel: Balancing the Triple Bottom Line
Triple bottom line accounting expands the traditional financial reporting framework to include the environmental and social performance of a company as defined by profit (working capital), people (human capital) and planet (natural capital or a firm’s sustainability practices).
Since T&E represents the second largest controllable expense (after payroll) and air travel alone accounts for 7% of worldwide carbon emissions, C-level decision-makers are now charging procurement to evolve the sourcing, compliance and efficiencies of business travel with an increased focus on social and environmental consciousness.
Trend 2: Travel & Expense: Putting The “E” Cart Before The “T” Horse
Corporate buyers have long sought an integrated presentation of travel data, or the “single truth,” in order to reconcile booked vs. ticketed vs. pre-trip vs. spend vs. reconciled (or post-trip) travel data. It is only in 2008 that the drive for expense integration has moved from program priority to strategic mandate. This ongoing wave of travel and expense alliances and acquisitions has created an amalgamation of non-proprietary partnerships that should seamlessly integrate the booking and the expense reconciliation processes and bring the industry closer to the elusive “end-to-end” solution.
Trend 3: Business Travel Goes Retail: Supply Chain Management
Economic conditions are forcing companies to examine the performance of suppliers and partners as never before. This shared visibility into data, key performance indicators (KPIs) and scorecards will breed a higher level of integrated collaboration across the business travel supply chain. It will also spur the use of risk-reward incentives to compensate for exceeding goals or penalize for shortfalls.
Trend 4: Traveler-Centric vs. Trip-Centric Buying
Historically, the travel industry has been a transaction- or event-centered industry. This meant providing services that support and facilitate a trip or travel purchase. The Internet has enabled the selling and purchasing of business travel components and services in a traveler-centric model, which incorporates a richer view of the traveler – their profile, preferences, historical behavior and more – in the selling process.
Trend 5: Going Mobile
With seven in 10 frequent business travelers using smartphones, mobile is now an integral tool for the business travel marketplace. The rapid integration of mobile capabilities to plan itineraries, track flights, receive travel alerts and approvals and serve as a boarding pass is making mobile devices indispensable to business travelers and their companies. Over time, next-generation mobile technology will enable multimedia transmissions to facilitate informed decisions, enable self-service and paperless travel purchases, and provide for e-wallet payment capabilities and data capture for submission and reimbursement wherever a business traveler is located. The convenience of mobile services will enable travelers to be more productive by having just-in-time data pushed to them based on situational circumstances and geographic location.
Trend 6: Video Conferencing: Traveling Without The Trip
Video conferencing and telepresence have developed considerably since the 1980s. Today’s business, economic and social climates position them as a viable alternative to business travel. Video conferencing has disruptive potential for business travel and corporate meeting spend.
Trend 7: SMEs Become Big Business
Small and mid-sized enterprises (SMEs) have often fallen under the radar of TMCs, booking tool providers and suppliers. Individually, these companies have been difficult to reach and monetize. With more than six million small business employers, SMEs represent a huge market. Typically, travel in these firms hovers between US$3-15 million in global air spend and is managed by a non-travel procurement buyer looking for spend visibility but has little time for data analysis. The economy is forcing small and medium-sized companies to re-evaluate travel spend and the internal processes used to track it. Plagued by the same process inefficiencies and compliance issues of larger companies, SMEs are looking for hosted and integrated travel booking and expense reporting solutions scaled to their needs and pocketbooks.