Business travel in an age of austerity
The Scottish government has struck a deal with easyJet to deliver low cost business trips fares to public sector executives.(AFP/Getty Images)
Flatlining economies and world regions facing prolonged austerity, debt crises and sluggish growth – such as the Eurozone, South Africa and the US – are impacting business travel around the globe, with hotels, airlines, buses and travel operators muscling in on penny-pinching executives.
This year, the Global Business Travel Association (GBTA) is predicting lacklustre growth in the UK and a drop in business travel from France, Spain and Italy, with the Eurozone’s poor trading conditions producing a ripple effect in both North America and Asia. According to the GBTA, international outbound trips from the US stumbled badly in 2012, growing less than 1%.
“Executives are spending less on sundry expenses,” said Hans-Ingo Biehl, executive director of VDR, the German Business Travel Association, speaking about meals, taxis and entertainment. “Levels are back down to what they were in 2007 and trends in accommodation are resolutely to the middle ground.”
According to VDR data, mid-market hotels in Germany are doing well to the detriment of four or five-star properties. Following this trend, Sir Stelios Haji-Ioannou’s easyHotel group launched the first African budget hotel in Johannesburg in late March, with hopes of attracting cost conscious executives to the city.
Discount intercity US coach services, such as Bolt Bus, Megabus and Yo! Bus, are also trying to coax business travellers and cash-strapped entrepreneurs with free wi-fi, power outlets, lots of legroom, leather seats and downtown stop-offs. And it seems to be working. An August 2011 poll by Chicago’s DePaul University showed that one in six bus passengers travelled for business purposes. And services by these city-to-city bus operators surged by more than 30% between 2011 and 2012, accounting for more than 1,000 scheduled routes daily.
“Budget suppliers are improving and adapting their services to the corporate market partly due to the cost pressures on companies,” explained Julie Oliver, managing director at Business Travel Direct, a UK travel management company.
The Scottish government struck a deal with budget airline easyJet in December 2012 to deliver low cost business trips fares to public sector executives travelling between Scotland and London, including the National Health Service, police force, local government and members of parliament.
Airlines are also offering more premium economy seats, seen as a notch down from business, to appeal to the cash-strapped road warrior. Generally premium seats are 65% less expensive than a business class fare, according to seatguru, an airline comparison site. Air Canada will launch a new premium economy cabin for its Montreal-Paris flights in July; Lufthansa plans to roll out premium economy for its intercontinental flights in 2014; and Cathay Pacific introduced a similar product in April last year and is expanding throughout its fleet. There are now more than 20 airlines globally from China to Brazil offering premium economy seats.