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Majority of European business travel budgets expected to remain stable in 2014

According to the American Express Global Business Travel 2013 EVP Barometer (“the Barometer”), in line with last year’s findings, 64% of European business travel budgets remained the same in 2013 and 72% of budgets are predicted to remain the same in 2014, with an 18% increase in budgets predicted.  This is supported by an increased sense of optimism amongst European countries, with 82% of survey respondents citing that they have experienced a favourable economic situation for the last twelve months  

“In an environment where European business travel budgets are remaining stable, it continues to be important for companies to focus on maximising the budgets that they do have available.  As companies increasingly view business travel as an investment (27% in 2013, compared to 23% in 2012), Travel Management Companies have a role to play in helping to support companies make the most of this investment, by enabling maximum visibility of spend and facilitating cost control”, said Champa Magesh, Vice President and General Manager U.K., American Express Global Business Travel.

Cost Control and traveller security: top priorities
According to the Barometer, implementing measures aimed at controlling costs continues to be the main concern for companies, with 87% citing the issue as a priority, compared to 79% in 2012.  All categories (air, hotel, rail, ground transport and ancillary fees) are being closely monitored by companies and respondents identified 10 key methods for optimising budgets:
1. Seeking the best available price
2. Evaluating the total cost of travel
3. Monitoring unused tickets
4. Purchasing tickets in advance
5. Utilising online tools
6. Renegotiating supplier agreements
7. Implementing/ increasingly using expense management tools
8. Using rail travel as an alternative to air travel
9. Increasingly using audio, video, web conferencing and telepresence

Traveller security continues to be a key concern for companies surveyed with 64% citing this issue as a top priority for 2014, placing it second overall after cost control.  The majority of those surveyed have put measures in place to enable employees to be located (65%) and contacted (81%) at any given time.  However, educating employees on the issue of safety is apparently not on the agenda – with just 23% of companies offering training on this issue.

Focus on best available price
Seeking out the best available price is one way in which companies are keeping costs down at a time when business travel budgets remain stable.  While companies are looking at best available price across all categories, booking with Low Cost Carriers (now accounting for 26% of total air spend of companies surveyed) and moving employees from Business Class to Economy Class are two ways in which companies are trying to achieve this. 

In terms of the categories that represent the share of travel and entertainment budgets, according to those surveyed, the air category now only represents 37% of spend compared to 40% in 2012 and 53% in 2011, while the hotel category continues to increase its share of the total business travel budget.  

“In an environment where low-cost carriers continue to put downward pressure on prices – particularly in the short-haul market – we see that other spend categories are gaining momentum.  In particular, companies are turning their focus to hotel spend and are looking for ways in which to maximise return on their investment in this category.  Indeed, three quarters of respondents cite that guidelines relating to hotel spend are included in travel policies today.”  2014 priorities

With 72% of budgets predicted to remain stable in the year ahead (18% of those surveyed expect budgets to increase) and budgets predicted to increase just 0.8%, cost control is expected to continue to play an important role next year.  Among those surveyed who expect an increase in their 2014 travel budget, 42% cited that travel budgets would be used to develop their business domestically – compared to just 31% in 2013. 

In terms of reasons for travel, companies surveyed are increasingly attending conferences and exhibitions, with 63% citing this as a reason for travel (compared to 54% in 2012).   Fifty-seven per cent of those surveyed cited new business development as a reason for travel (compared to 63% last year).

Survey respondents identified the following five priorities for the year ahead: - Cost control / cost savings (identified by 87% of those surveyed compared to 80% in 2013)
- Improve traveller security (64% compared to 45% in 2013)
- Gain a complete view of travel expenses (56% compared to 41% in 2013)
- Increase traveller satisfaction/comfort (55% compared to 30% in 2013)
- Enforce travel policy (50% compared to 38% in 2013)

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