Downturn erodes business travel budgets

11th Feb 2009

Companies are radically cutting back on business travel as a way of aggressively cutting costs to cope with the recession, according to three new surveys.
Some 47 per cent of the UK-based executives will be travelling less in the next 12 months, according to the Economist Intelligence Unit. The Business Travel Show came up with similar findings, showing 38 per cent of business travel buyers that they were reducing spending this year.The Economist Intelligence Unit said: “As the economy in much of the world goes into recession, it stands to reason that hotels will find their operating environment tougher. Close to one-half (47%) of the executives in our survey say that they plan to take fewer trips over the next 12 months because of the economic downturn. Of particular concern for hotels is that a sizeable proportion of these (16%) believe that economic woe will mean a drop of over 30% in the number of trips undertaken.”

Meanwhile the Institute of Travel Management sent out an eqally stark warning, saying one in five businesses are to implement a total ban on employees travelling abroad.

In the ITM survey, 47 percent of respondents said they were negative about the future of the global business travel sector in the next one to two years.
“Our clients are still travelling but nearly all of them are looking to save money,” said David Radcliffe, chief executive of business travel company Hogg Robinson.

The research comes as the export industry warns that cutting back on overseas travel could harm UK manufacturing exports.

Hugh Bailey, director of the British Exporters Association, argues that travel bans appeared to be reducing companies’ exports, although the global drop in demand was a more serious issue.


He said: “There are some who are going to the extreme and saying that any travel has to be signed off by a board director, others who are saying that for travel above a certain cost,” he said.

Business Travel Show event director David Chapple said that the slump in business travel was an inevitable outcome of the financial crisis.

He said: “It certainly explains why their focus this year, more than ever before, is on getting the best value possible out of their budget. They need to re-evaluate suppliers, push for more from existing ones and put contracts out to tender.”

In the poll of 170 business travel buyers conducted by the Business Travel Show in London, 41 percent of respondents said they were downgrading accommodation and 18 percent are swapping taxis for the Underground in London. 65% thought that there is another 12-24 months of recession ahead.


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