Industry heavyweights at The Business Travel Show discusssed a wide range of issues.
Industry heavyweights came together at The Business Travel Show to discuss a wide range of issues from the credit crunch to no-frills airlines.
The second edition of The Business Travel Show Dubai 2008 took place from October 20-21 at the Madinat Arena, Jumeirah, Dubai, featuring around 70 exhibitors and attracting 2116 visitors compared to 50 and 2064 respectively in its first year, 2007.
Running alongside the event were a series of seminars and keynote speeches, but one of the biggest drawcards in terms of educational events, was a VIP panel session hosted by Arabian Travel News and its sister publication, Meetings Industry Middle East.
The ITP publications brought together a panel of high-profile industry professionals in a bid to debate current issues impacting the corporate travel market.
Although the number of corporate buyers in attendance was fewer than anticipated, the venue was packed with the audience comprising professionals from the travel and corporate world.
The session was led by ITP Business Publishing senior group editor Gemma Greenwood and led to a debate involving both the panel members and those in the audience who were keen to ask them questions. Highlights of the session are documented below:
What are the biggest challenges facing the corporate travel world today and how is your business adapting to these challenges?
Amit Arora:Everybody knows of the challenges. How to tackle them though is really going back to the basics. We've just launched a new brand and what we've done is thorough market research to understand what the consumer wants. One concept that we've started is the 24-hour stay; if you check in at 8pm, you have meetings all day and your flight doesn't leave until 11pm - you don't have to check out at 10am. People want to use the room until they have to leave the hotel.
Darroch Crawford:The fact is that as times get tougher, people look around for value for money and that's what Premier Inn is all about. Our research shows that when there's a recession, Premier Inn occupancy actually increases, so we feel that we're coming to the market at just the right time.
Abdulla Tawakul:I think going forward, it's very important for TMCs to work closely with their corporate accounts. I don't think there will be a big drop in the number of travellers because Dubai is still enjoying a good economy. The government has taken various initiatives to pump money into the financial institutions. I think it's important now to work very closely with the corporates to see where we can get value for money.
Derin Cameron:I'd like to concur with Abdullah but I think it's a little too early to make that prediction. The hike in fuel prices and the economic downturn has certainly had some effect on the industry.
The airlines are hurting, hotels have reason to be concerned and I think the corporates are all being mandated to tighten their belts. The first thing they are going to look at is possible savings on travel. Leisure I think is going to be the first industry that's going to disappear. So we really need to be a little bit conscious about what's around the corner.
This is a wait-and-see period for all of us and I feel it is prudent to be prepared.
Phyllis Koessler:I have an opposing view. I know that there's a lot of doom and gloom out there about corporate travel, but a client said to me, ‘I am using this time to train my staff and I'm expanding around the region' - so there is good news out there.
Guy Epsom:I think the market is actually quite stable at the moment and we have a big opportunity to react before the curve. To use someone else's phrase, we're insulated but not isolated here. The oil revenues are certainly making sure that the corporate side and the expansion of Dubai will continue, but I think the area that we need to watch is the leisure side. We have lots of reasons for people to still come here, although they may come for shorter trips or cut back their trips.
Jochen Emmerich:We haven't seen much of an impact on [hotel booking] behaviour yet, especially in this region. There is definitely no need to get nervous - the psychological impact is deeper than the real impact.
Paul Starrs:We are calling it "the perfect storm", created by the global economic slowdown and the previous high oil prices. For the aviation industry we really are in a completely unprecedented trading environment.
We're seeing considerable softening of our corporate revenue, particularly in the North Atlantic, but at the same time as revenue has softened in one area, we've seen it strengthen in another area - we've seen a lot more of that financial business from the US starting to come to the Middle East.
Jo Lloyd:Our figures (at Qatar Airways) are bearing out the fact that corporate travel is still strong. However, there is a lot of additional capacity coming into the Gulf at the moment. So I think the issue is what happens with all of those extra seats on those great big airlines that are being ordered. Is the market going to be there, because the corporate market won't sustain all that growth? There was a recent statement that there were quite a large number of travel bans being put in place in Europe,and clearly they're most likely to be imposed by the corporates. Has this happened in this region?
DC:We're seeing memos going around within the corporations to limit travel to what is absolutely necessary. Whether this is a precaution that is not going to take real effect, we don't know. With regard to the local market we have to understand that last year's industry growth was 18%, so if you fall down to 15% you're still in a very good place. Relatively speaking we're sitting in a very lucky part of the world, but I definitely see a tightening of belts within the multi-national community.
GE:I think this region is seen as a bit of a saviour for some of the other parts of the world. This is where people are able to make money at the moment. I cannot believe that they are all going to put travel bans on people who are actually coming here to build projects.
JL:What I've noticed over the last few months in the European market is that instead of stopping travel, procurement people are trying to manage it. Perhaps if there is a travel policy where there have been instances of non-compliance, they are being a lot stricter in complying with their travel policy.
Will corporates switch to no-frills airlines and hotels and what impact will have on full-service operators?
PS:We've actually learnt quite a lot from no-frills carriers. We've taken a lot of the principles that those airlines use to manage their inventory and we use that on a long-haul basis. So we now offer our most attractive fares year-round in all cabins through ba.com, so if you want the best fares, you go online and you book in advance. What we've tried to do is offer more choice to customers in terms of price points, so that's been our response.
JL:I think one of the things that we, as a full service airline have, is the network and a lot of those regional flights are feeders into the long-haul for us. What the low-cost carriers did in the US and Europe was unravel a lot of the complicated pricing methods that airlines used and I think there's space in the market for everybody. You get what you pay for really.
As long as you feel that you're getting value for money, whether it's a full service or low cost carrier, if it's a solution for you, then that can only be a good thing for the market.
DC:The limited-service hotel industry is very much in its infancy. If you look at the US, about 30% of suppliers are in the limited service sector. In Europe it's 15-20% and here it's about 1%, so there is plenty of room for growth.
People are looking to save costs. I think there's potential in this region for the limited service hotel sector to get to 10% of the market. It'll take another five, six, maybe 10 years to get there, but it will get there. The demand is enormous right now.
AT:The low-cost carriers target different segments to the full-service carriers. They target the retail customer or the leisure customer, not the corporates. It's not all about cheaper fares; the availability plays a big role. Time is money for people.
Do you think this will change once the low-cost carriers start to increase their frequencies in this market?
AT:Yes, but with the number of frequencies and the type of aircraft they operate at present, I think it is many years ahead.
PS:It's probably a myth that you distinguish between airlines as low cost and full service, because our experience on short-haul from the UK is that we now compete very effectively with those no-frills carriers.
It's probably a better term to use ‘bundled' or ‘unbundled' and what our customers are telling us all the time is that actually it is easier and simpler to buy a fare on ba.com than it is to go and buy a fare where you can check in, carry one bag, buy some food and by the time they've worked all that out they're actually paying more. People prefer a one-size-fits-all price model.
JL:Low-cost carriers, by design, operate on a very tight model, so when things go wrong, there's very little support or backup. Very often you're at secondary airports so it's not so easy to switch and be put on another carrier. In terms of the requirements of the corporate traveller, I don't think the infrastructure is as conducive as a full-service carrier.
DC:Don't underestimate the potential of limited-service hotels and low-cost carriers to generate new business. It's not stealing business from full service; it's actually generating new business, new demand.
GE:We love all the airlines because people can fly cheaply and trade up in accommodation.
Audience:We're consultants in the region and have noticed corporates don't use online booking tools. Does the panel concur?
AT:Dnata launched online booking tools last year and we've had a very good response.
GE:We've been particularly active in the online business and we've introduced a number of online tools to help the corporate traveller, such as the one-click widget.
AA:We've just opened a hotel and within three weeks, 16% of the bookings came from online. It's very quick to activate.
JE:There is no other way than online in the future. Reducing direct costs is key as most corporates don't really realise how much money they spend in offline transactions. Audience:I read that it's cheaper to book a hotel room in Dubai from the rest of the world than in Dubai. Is that true?
AA:We practice real time availability; our strategy is to have a best available rate' Whether you book directly, go online or through an agent or tour operator, you should always get the same rate. GE:We also operate a best rate guarantee policy, which means we guarantee that you get the best rate online. We're working towards having the same rate sold to everybody, whatever medium you go through.
DC:There is a very simple solution - book Premier Inn. Every guest pays the same price. There is no corporate rate, no travel agency rate and it doesn't matter if you're staying one night or a year - it's always the same price.
PS:As online evolution has happened we've really struggled as third party players to work out what our distribution strategies are. It's taken us a few years to work out what the best approach is. Our strategy is absolutely about channel neutral, however when you add in the complexity of a global market it becomes even more difficult.
PK:In countries like Japan for instance, it's very agency specific. So the airlines or the hotels will give specific agents special rates. In those countries it's very difficult to load them on to a global GDS system. Why are the service levels provided by TMCs in this region not on par with those in more mature markets? Is it about getting the right people on board or the relationships between TMCs and corporate clients?
DC:The lines between corporate travel and leisure travel or any other kind of travel have not been clearly drawn in this region. We traditionally refer to corporate travel as travel that is paid for by a company.
However, a lot of corporations tend to give cash or vouchers to their employees, so really you don't know how large corporate travel is because it's not measured.
In the past three or four years there has been a lot of interest in the region, so there's an influx of multi-national corporations coming here and trying to do business in this part of the world and there is a visible effort to if not globally consolidate your travel, then at least regionally consolidate your travel.
They put these travel policies in place but they have huge resistance from within their own organisation because the change management requirement is not being tackled. So it's a challenge.
We're a little far away from using a self booking tool for the purpose that it's meant to be used for. There are very advanced corporations that have their own self booking tool, but if you have an SBT, you want a high adoption rate, because it increases the number of touchless transactions, otherwise you're defeating the purpose and paying twice.
Should the industry be regulated?DC:In a service industry, the only regulation you need is the customer.
If the customer is willing to differentiate between the type of service that they want and the price they're willing to pay for it, the industry regulates itself.
JL:What's needed in the region is for all of the stakeholders - the corporate buyers, the travel management companies, the airlines and the hotels - to come together and form a community. I think there are many things that need to happen in this region before you can start looking at issues like online adoption. The initial issues are managing a corporate travel programme.
Once you start getting to manage a corporate travel programme then you can look at enhancing it, but right now, as an emerging market, we all need to come together as a community and ask what this region really needs.