29 September 2008
The challenges for buyers in the business travel market will intensify next year.
A study by American Express Business Travel (AEBT) found companies will be balancing the need for critical business travel - essential to increasing company revenue and growth - with rising costs.
"It's important to cut the fat out of travel spend without cutting into the muscle," said Frank Schnur, vice-president, global advisory services at AEBT.
The firm said buyers will find it harder to deal with challenges presented by the industry, such as rising fuel costs and accompanying surcharges, consolidation of operators, leading to less competition, and capacity cuts.
But there will be opportunities for buyers to reduce costs and get more out of their travel spend. Travel procurement managers are looking to downgrade the class of services they use, manage demand for travel more effectively and tighten corporate policies and new areas of spend, such as meetings and package delivery.
But operators such as airlines will also look at corporate agreements with buyers more closely. They will ensure firms are fulfilling commitments on volumes, cutting or removing discounts if they are not.
AEBT also revealed fewer buyers now view travel as a traditional commodity cost - 58 per cent this year compared with 66 per cent in 2007 - and now see the category as an investment for the business.See the Business Travel supplement 2008