2009 the year of consolidation and value: FCm Travel Solutions

Dec. 3, 2008 - PRLog -- Based on recent client activity, FCm predicts the next 12 months will see companies increasingly turn to travel management consultancies (TMCs) and consolidation strategies to achieve cost reductions.

FCm managing director India, Rahul Nath, said clients were primarily focused on increasing the value of their travel spend. “Companies are recognising that the only way to achieve savings is with strategic direction from a consultancy that has the industry insight, the supplier relationships, and the commercial focus to drive efficiencies,” Mr Nath said.

There is now more consolidation of travel bookings through one TMC to achieve tighter policy control. Companies are also working with their travel consultancies to negotiate better volume-based rates with fewer suppliers, and using reporting and data to keep their own travel performance in check.

According to Mr. Rahul Nath, “Consolidation and savings will be positive outcomes of the policy review process that is now occurring among many of our clients. We have seen a lot of companies already tightening their policies to cut costs and we expect this will continue at least until the second quarter of 2009. There is also now a stronger emphasis on demand management within companies, to ensure their travel patterns and consumption are better aligned with their commercial goals. The upside is that these processes will give companies more effective policies, an improved travel culture, and more competitive rates and fares.”

Mr Nath said FCm had seen the following trends emerge in the corporate market over recent months and expected these to prevail during 2009.

-   Lower demand – corporate travel volume is already down approximately 10% to 15%, with many companies likely to continue to reduce their travel spend well into the first half of 2009.

-   Cost-cutting measures - companies will aim to cut costs by placing restrictions on international travel, non-essential travel, and travel that cannot be on-billed to their clients.

-   Flexibility – companies and travellers will become more flexible in attaining cost effective flights (eg. taking non-direct flights; using non-flag carriers; booking more restricted fares; using longer stop-over times).

-   Class changes - the ‘class shift’ already occurring in travel will continue to see the middle and rear sections of planes fuller than before. In the air, travellers are flying Economy and Premium Economy instead of Business Class. Companies are also more likely to book low cost carriers, and may also extend the number of hours required on a flight to book Business Class (eg. eight hours instead of four). On the ground, companies are booking less expensive hotels, and standard rooms instead of deluxe suites. They are also asking more employees to share rooms.

-   Air fare reductions – air travel costs are currently holding firm in India, however, prices are expected to come down in 2009 as capacity outweighs demand. There will also be ongoing adjustments in services and schedules, and airlines may continue lowering their fuel surcharges.

-   Hotel savings – accommodation rates are likely to hold steady during India’s peak tourism season, but are expected to decrease in 2009 as demand falls.

-   MICE - travellers will be encouraged to combine meetings where possible, to reduce their number of trips. There may also be a change in spend in non-essential conferences and incentives.

-   Alternatives – for short-haul travel of 12 hours or less, many companies have already moved to rail travel and will continue to do so.

Mr Nath said corporates would be seeking value at all levels of their travel management, and TMCs would need to focus on driving measurable savings.

“Generating value demands a holistic approach, and that is what we are what we are here for – to be a true consultancy and manage every aspect of our clients’ travel. Value does not simply come from cheaper air fares. It involves reviewing each company’s travel policy to achieve efficiencies, educating their people on the policy’s benefits, negotiating regularly with suppliers to ensure year-on-year savings, and controlling costs with effective technologies and reporting,” he said.

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1.Is the first Asia-Pacific based global corporate travel management consultancy
2.Blends global presence with local, flexible and personal service, and provides end-to-end corporate travel and expense management solutions
3.Has a regionally focused global network that ensures in-depth understanding of each client's local business culture and travel environment
4.Creates travel savings for companies of all sizes, in all market sectors.