Globally, the economic recovery has been on track this year. Logically, this dynamism has had a positive impact on business travel. According to an estimate by Concomitance Consulting, which carried out the traditional annual "Barometer" on behalf of American Express Business Travel (AEVA), travel expenditure by French companies should continue the recovery that began two years ago. And even increase by 2.3 % in 2005. With this increase, the total travel budget of French companies should reach €25.4 billion this year. This is the forecast announced at the presentation of this study on 14 November in Paris, at the Espace Voyages Professionnels (EVP) trade fair.
Even if this figure is significantly higher than that for 2001 (25.2 billion euros), we will probably have to wait until 2006 to reach the all-time record of 25.9 billion euros set in 2000. Next year, the business travel market could grow by 2 to 3 %, and pass the 26 billion euro mark. Since 2003, the business travel curve has continued to reverse. This is despite the fact that the rate of increase is much slower than in the golden years of business travel, between 1997 and 2000. During that period, the travel budget of companies in France increased by a healthy 5 to 6 % a year, twice as fast as it is today.
In fact, the change recorded in 2005 is the result of the combined effect of two contradictory trends: the increase in spending on international travel and the decline in spending on travel within France.
More international spending
As far as international travel is concerned, companies reported an increase in expenditure of around 2 % . On the other hand, traffic within France fell by 16.5 % compared with 2000. Also in France, travel expenditure fell by 1.7 % for air travel, but rose by 1 % for rail travel in 2005. The success of rail transport can be explained by the extension of TGV lines, which are competing with airlines operated by both traditional and low-cost companies. As far as international travel is concerned, companies reported an increase in expenditure of around 2 % . On the other hand, traffic within France fell by 16.5 % compared with 2000. Also in France, travel expenditure fell by 1.7 % for air travel, but rose by 1 % for rail travel in 2005. The success of rail transport can be explained by the extension of TGV lines, which are competing with airlines operated by both traditional and low-cost companies.
On the international front, between climatic disasters such as the tsunami, the continuing war in Iraq and terrorist attacks, particularly those that hit London this summer, and the health risks associated with avian flu, 2005 was an eventful year. And even drama. However, the study points out that "the persistence of international events has little influence on the travel policy of the companies surveyed". And companies are making increasing use of risk management techniques. An analysis of trends in travel-related expenditure reveals that these items have increased more in large and medium-sized companies than in SMEs. This is particularly true for companies with a travel budget of between €100,000 and €5 million, where expenditure is up by 3.9 % compared with 2004.
In large companies with more than a thousand employees and budgets in excess of €5 million, spending rose by 4.8 %. In small companies, on the other hand, spending fell by 3 %. More dependent on the sluggish French economy, these companies nevertheless account for more than 25 % of spending in France.
In the industrial sector, spending fell by 1 %, while it rose by an average of 2.5 % in services and trade.
A relatively stable expenditure structure
The structure of expenditure has hardly changed since 2001. The only change is that air transport's share has fallen to 48.5 %, compared with 49 % last year. This slight decline is particularly beneficial to rail transport, which now accounts for 19.5 % of expenditure, compared with just 17.5 % in 2004. This is despite the fact that many companies are tending to opt for second-class rather than first-class travel.
Hotels and restaurants now account for just 16.5 %, compared with 18 % last year. Again with the aim of making savings, companies are recommending accommodation in two-star establishments instead of three-star establishments. Car rental was 9 %, compared with 9.7 % a year earlier.
This stability in expenditure is only apparent, however, as companies are introducing increasingly strict rules on business travel, particularly with regard to hotel accommodation.
A sluggish economy at national level, rising travel prices - all the ingredients are there to tighten business travel budgets. In the hunt for savings, the most expensive items are being targeted: 60 % of companies in 2005, compared with 58 % in 2004, have defined travel rules for air travel, and 40 % compared with 38 % for rail travel.
These rules are, of course, adapted to the nature of the trips: the constraints take into account the length of the trip, the geographical area and the status of the traveller. In 52 % of large companies, compared with only 20 % in SMEs, these rules are accompanied by the introduction of "corporate" cards to contain expenditure. "The formalisation of a travel policy is linked to the visibility and segregation of travel expenditure", says the study. Thus, 76 % of companies with a travel budget in excess of 5 million euros have defined a formal travel policy, compared with 44 % for companies with a travel budget of between 100,000 euros and 5 million euros, and only 27 % for the others.
Costs and safety
There is no doubt that the priority of a travel policy is to reduce costs. 2005 seems to confirm a trend that has been underway for some years, which consists of taking greater account of employees when defining travel rules. Some companies, notably through the introduction of risk management policies, have reconsidered the role of the employee within the company. And security issues (attacks, war) or health issues (yesterday Sras, currently avian flu) are leading companies to reconsider their responsibility towards their employees in their social policy. As a result, the criteria for defining travel rules have changed since 2003: the cost to the company is now only 85 %, compared with 95 %; the employee's professional efficiency is now 78 %, compared with 69 %; taking account of personal constraints is 19 %, compared with 23 %; and comfort is 19 %, compared with 6 %.
In this context, performance-related business motives preside over the implementation of a travel policy. However, the flexibility of this policy varies according to the size of the company: almost 80 % of large companies give their employees little autonomy, compared with 50 % of small companies. In 42 % of cases, the policy is managed internally by purchasing and general services departments.
Control can be a priori and/or a posteriori. To do this, companies use a range of tools, as confirmed by the survey: continuous analysis and monitoring (41 %), analysis of expenditure a posteriori (43 %), annual monitoring of the contract (22 %) and analysis of expenditure a priori (22%) with the use of "pretrip reporting" type tools.
Developed by travel agencies, these tools enable companies to better control their travel policy upstream in order to make savings. These control operations have three main objectives: compliance with the travel policy, the agency's commitment to savings and the ability to consolidate travel expenditure.
In fact, 28 % of the companies surveyed stated that they had introduced criteria to measure their travel policy.
For the first time, the study highlights the fact that companies have implemented online booking tools which are, de facto, less costly than off-line booking. 42 % of large companies are focusing on processes to optimise their travel budget
Transaction fees
In 2005, 80 % of companies paid their agency in the form of a "transation fee". This phenomenon has been accelerated by the abolition of airline commissions and the introduction of online booking. Travel agencies are therefore remunerated for operations directly related to process management, fees for ancillary services and value creation (systems integration, global reporting, travel management).
Companies are relatively satisfied with the quality of their reception, reliability, advice, prices and conditions, and compliance with procedures. Especially as new ways of working with travel agencies are emerging.
Online booking on the rise
Compared with other countries, the use of online booking is still relatively low in France. But companies that have adopted this method of booking are using it more and more, and making savings. In this area, SMEs have taken the lead: 19 % have set up an online tool, generally by choosing a portal-type solution.
On the other hand, only 10 % of large companies have been able to introduce an online booking tool. "As they buy their engines online and have to integrate them into their IT systems, this delay is mainly due to the complexity of switching over to this booking method", analyses Dominique Savart.
While currently 14 % of companies - of all sizes - say they use online booking tools, this proportion is set to rise fairly rapidly to 25 %.
