Cost of business travel proving problematic for some organizations
Monday, May 13, 2013
As numerous studies have shown, maintaining spending on business travel is one of the best ways for companies to promote growth and expansion, even in the midst of a challenging economy. While alternatives to corporate suites at chain hotels such as serviced apartments can offer organizations competitive pricing and the quality that executives expect, other aspects of business travel can prove challenging, particularly airfare. According to Buying Business Travel, many firms in the U.K. are struggling to manage the rising costs of corporate travel, which could have a negative impact on the nation's economic recovery.
The news source reports that professionals in the U.K. took 10 percent fewer trips overseas on business during the first quarter of 2013 compared to the same period last year. In Q1 of 2012, U.K. executives took about 1.68 million trips abroad, compared to 1.51 million excursions this year. This indicates that although many parts of the world have begun to emerge from the prolonged recessions triggered by the global economic crisis of 2007, the U.K. seems to be experiencing lasting difficulties.
While the number of trips made by British executives fell during Q1, the same cannot be said for professionals visiting the U.K. from around the world. Data from the Office for National Statistics indicates that the number of people traveling to the U.K. actually increased by 7 percent between January and March. However, some analysts believe the timing of the Easter period, which occurred in March instead of April, could account for the substantial reported growth of international visitors.
The reasons for the decline in foreign travel among British professionals are complex, but the rising cost of corporate airfare is likely one of the most predominant. According to Gaebler, a news source for entrepreneurs, initial airfares are just the starting point for many companies, and concealed surcharges and fees are having a detrimental impact on business travel around the world.
"Today, the fare is just the down payment," Michael Boyd, chairman of Boyd Group International, told the news source. "It's estimated that ancillary fees for services such as first-bag check, early boarding [and] 'preferred' seating, on average adds approximately 15 percent to the base fare of a one-way trip."
Although large organizations have been affected by the rising cost of corporate airfare, small businesses have borne much of the brunt. Typically operating with smaller budgets and limited resources compared to bigger companies, small to medium-sized enterprises face a challenging future when it comes to international air travel.
One man's loss...
The rising cost of business travel is a thorny topic for some organizations, but to others, it represents a significant growth opportunity. According to International Meetings Review, business travel itself is one of the hottest verticals in the private sector, driven by heightened demand from consumers and an increasingly competitive market.
North America and Europe still account for much of the world's business travel industry, but emerging markets such as Brazil, Russia, India and China (BRIC) are becoming increasingly alluring destinations for firms seeking to establish themselves in regions with resilient economies. Approximately 10 percent of European executives make frequent trips to BRIC nations, and visits to China have more than tripled during the past three years.
As the landscape of the global economy continues to shift, it is vital that companies utilize every resource at their disposal to maximize return on investment in terms of business travel. Serviced apartments and furnished extended stay units are the ideal alternatives to the often-costly corporate suites offered by chain hotels, and offer the same high quality of service executives expect without compromising corporate travel management policies.