Survey shows dip in business trips will continue 

With national unemployment levels high and a general sense of malaise still permeating U.S. and global economies, business travel is coming under the microscope.

The results of an annual business travel survey by RPMG Research Corp. may make travel industry professionals nervous. It looks like business travelers who are using corporate travel cards in 2010 are in for a bumpy ride.

If 2009 was bad, then this year will be worse for travel budgets because of the uncertain economy, says Richard Palmer, co-author of The 2009 Corporate Travel Card Benchmark Survey. “Everyone keeps saying the economy is getting better. Our survey says it isn’t getting better at all.”

At best, Palmer says, the business travel economy is stagnant. In 2009, an estimated $140 billion was spent using corporate travel cards. That same estimate is expected in 2010. Many companies are surviving on government contracts, but state and federal government travel spending will be way down, according to the survey.


Fewer employees making trips

The annual corporate travel card report presents data and analysis from a large sampling of travel card users nationwide. It is based on 824 responses from travel card-using organizations that are customers of 14 major card issuers, which represent each major card brand in the market – American Express, Diner’s Club, MasterCard, and Visa.

Palmer says the U.S. economy is in a precarious state in 2010, which could have a negative impact on business travel and the use of travel cards. The current economic crisis, he says, has challenged the value propositions of many businesses, organizations, and government agencies.

“If you look at travel card spending in relation to GDP [gross domestic product], it has been heading down while purchasing cards are heading up,” he says. “Fewer employees are making business trips. Alternative technologies such as virtual meetings, webinars, and teleconferences are seen as substitutes for business travel, especially among small businesses.”

According to the survey, roughly 18 percent of public and private sector employees travel on business in any given month. Travel cards are widely used among this group to pay for travel services and manage travel expenses. The cards are primarily used to pay for goods and services in traditional travel categories such as airfare, lodging, auto rentals, and dining.

Smaller companies, according to the survey, are more likely to report a higher percentage of travel card spending for non-travel-related goods and services. 


Is travel necessary?

What if money is so tight that travel spending becomes too much for a small company to absorb? Is travel really necessary to facilitate business?

“Travel is a discretionary item, not a necessity,” Palmer says. “But I don’t think I’ve ever talked to a businessman or woman who did not want to have a face-to-face encounter with a customer. There is so much information at stake. Much more information can be gathered in person, even with the improvements with webinars and other online meeting technologies. It’s just a huge difference.”

Incentives for travel, offered through the card-issuing companies and affiliated businesses, can net great rewards for business travelers, which makes travel cards popular – and sometimes mandated by employers. Travel card programs include an enhanced ability to identify suppliers with whom companies can negotiate deep discounts. This allows for better control of cash flow and reductions in reimbursement cycle times, petty cash accounts, and the amount of cash advances.

Palmer suggests the popularity with travel card programs comes through convenience and cost savings, and that’s why he predicts business travel will eventually rebound.

“There is just no way travel is going to go away for good,” he says. It’s just not possible. It may be scaled back at lower levels of the organization, such as events or training, but it won’t go away: No way, no how.”

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TIPS: SAVING MONEY WITH CORPORATE TRAVEL CARDS

Obtain a lower class of service
• Book lower-category auto rentals.
• Control cost of travel management administration.
• Fly using lower-category airline tickets.
• Stay in less expensive hotels and less expensive rooms.

Leverage travel dollars
• Consolidate air travel to a few select airlines and take advantage of loyalty programs.
• Increase ability to obtain discounts by sharing data across travel and entertainment management systems.
• Consolidate hotel stays. Share a room with a colleague if appropriate.

Source: The 2009 Corporate Travel Card Benchmark Survey Results 

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TRAVEL CARD SPENDING IN NORTH AMERICA

2004: $120 billion
2006: $143 billion
2009: $140 billion
2010: $140 billion*
2011: $227 billion**

*predicted in 2009
**predicted in 2006

Source: Travel Card Benchmark Survey by RPMG Research Corp., www.RPMGresearch.com