Looking Ahead to 2011

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As 2010 draws to a close, it is time to look ahead and prepare for what the next year holds. Chana Boucher speaks to the industry about what they are expecting for 2011.

 This year has definitely been a memorable one, not only for the local corporate travel industry, but for the global travel industry. It has seen severe cutbacks, unusually high and then unusually low passenger numbers, and has required quick thinking and adaptability from travel companies. For some companies it has been the toughest year ever, while others have thrived throughout the busy year.

“Off the back of a very difficult 2010 I believe it would be naive to think that the market will recover substantially. However, we are likely to see bookings increase in the corporate market considering that for some companies it has been two years and now the impact of their ‘no travel’ policy may well be being felt negatively,” says Asata CEO, Robyn Christie.

Marketing Manager for Corporate Traveller, Michelle Jolley, says she expects to see further recoveries from the recession with an increase in corporate travel. This, she says, is backed up by the 16% increase in premium travel through IATA’s figures. “At Corporate Traveller we are also expecting increased travel into Africa as trade relations and development keeps expanding,” she adds. According to Jim Weighell, Corporate Manager, Sure Travel, a gradual recovery is expected to commence during 2011, but corporate budgets are not expected to ‘spring back’ to 2008/2009 levels quickly. He adds: “There has been a significant drop off during 2010 and we could expect to see that drop reduce by 50% in 2011.”

“Even though the economy is in the upturn, most corporates remain vigilant with regard to their travel programmes,” says Simon Phage, Vice President Operations – Africa and Middle East, Wings Corporate Travel. He adds that he anticipates an increase in travel as the corporate market stabilises, and companies that ceased travel all together will begin travelling again.

“2011 looks to be a very positive year for both inbound and outbound travel,” says Rod Rutter, XL Travel Chief Operating Officer. He adds that with the global economy showing signs of recovery, the corporate industry will be travelling to secure new business and retain existing relationships. “Traffic into Africa will increase significantly as it is anticipated that GDP growth into Africa will reach 4,2%. With travel restrictions being relaxed in China we foresee a significant swing in business travel away from Europe into Asia,” says Rutter.

According to Claude Vankeirsbilck, Chief Sales and Marketing Officer, Tourvest Travel Services, the corporate travel industry will be under as much pressure to reduce expenditure as was seen in 2010. “Travel buyers will continue to focus on savings and added value products. More pressure will be placed on suppliers and TMCs to improve process efficiencies by incorporating process and travel technology products,” he adds. Furthermore Vankeirsbilck says there will be significant pressure on those who do not look at implementing some form of technology either in the form of online booking tools or through some form of end-to-end travel management products. “There is a distinct sign of recovery in the corporate travel environment as a whole, and that is encouraging. The industry as a whole is sitting on a knife-edge, however, hoping we have seen the end of the recession with travel picking up in a measured way,” he says.

Mike Gray, CEO of Uniglobe Travel Sub Saharan Africa, says: “I expect we will still see double digit growth and a return to profitability in business travel – resulting mainly from expansion into African markets and growth of business with Asia and South America.” He adds that corporate will continue to look for more efficiency and professionalism from their TMCs ,and online travel management will grow even faster.

Sharon Richards-Lund, National Sales & Marketing Manager, ITMSA, believes corporates are going to remain cautious with the need to travel into 2011, but adds that 2011 will definitely prove to be a buyer’s market. She adds: “Corporates should be wary not to do damage to existing supplier relationships. Should corporates take advantage of, for example, low hotel rates, they will end up with travellers who have five-star expectations when they return to their three-star properties, and jeopardise their existing supplier relationships when prices stabilise later on.” Richards-Lund advises: “Rather look at negotiating free value-adds with your existing suppliers.” British Airways, says spokesperson, Stephen Forbes, has seen some improvement in corporate business but it has not yet returned to previous levels. “Corporates are still cautious with travel budgets and have strict cabin policies in place. We don’t expect this to change even with a stronger rand and a possible cut in interest rates.”

Keep in mind

Christie says some of the issues to look out for next year include regulation, legislation and the emergence of a more confident consumer. “The National Consumer Protection Act launched April 1 and we can expect an increased amount of threats and opportunistic legal practitioners to feature heavily in all sectors dealing with the consumer,” she explains. Jolley says: “Travel management companies need to ensure that they are focused on travel management in its totality with an eye on assisting clients to develop sound travel policies. She adds: “Companies have to keep in mind that they have a Duty of Care towards their employees and this should ideally be worked into the travel policy.”

Next year, Rutter says the travel industry will see an increase in inbound travel as a legacy of the Soccer World Cup. He also says hotel prices will remain soft, airfares could increase in line with passenger numbers increasing, and airlines will increase capacity with aircraft such as the A380.

Vankeirsbilck predicts that things to look out for next year include the potential of the airlines operating in South Africa to follow the trends in Europe and the US where there has been significant changes to pricing strategies. Other issues include ancillary purchasing adding costs to a trip, further alignment of meetings and transient spend, mobile technology, the Consumer Protection Acts effect on the purchase of travel, further focus on Duty of Care for corporate and the further expanding role of a travel manager becoming more of a ‘mobility manager’. According to Gray, there will be increased risk and inconvenience to travellers from climate change, visa requirements, and security and health issues. He adds that it will be difficult to get and keep competent travel staff with agreeable attitudes able to adjust to the demands of the new environment.

Predicting trends

Jolley believes more and more companies will move away from the call centre approach towards a more personal touch where the travel manager has intimate knowledge of the client’s business. Rodney James, 1time CEO, says: “We believe the corporate market will continue to move from legacy carriers to low-cost carriers, especially as we see legacy carriers pull off key routes, like we’re seeing with the Durban – Cape Town route.”

“Within the corporate customer market, we are hoping to see a more educated and empowered corporate market emerge on the back end of the recession, and taking this into account we predict a lot more focus on technology and reporting capabilities,” says Phage. He adds that within the travel industry, he hopes to see a more competitive travel market materialise, where suppliers no longer manipulate specific regions/markets.

Rutter says in 2011, the Consumer Protection Bill will influence certain trends, the Gautrain will alleviate transportation problems to Pretoria and Johannesburg, airport security issues will be tightened and maintained, visas costs and airport taxes will be increased to generate additional revenue for Governments, and home-based ITCs will realise that their income is not being realised and will begin to migrate back to agencies.

Gray predicts even greater and faster take up of online travel management tools from self-booking tools to MIS reporting and quality/fare improvement systems. He also says there will be even more opening up of Africa to low-cost carriers and more frequency into key destinations like Angola, Nigeria, East Africa and Sudan. He adds: “Online teleconferencing/training will continue to grow as bandwidth improves and gets cheaper and will replace unnecessary, wasteful travel.” For the airline industry, Forbes predicts more consolidation as the airlines seek greater efficiencies and deliver increased value to customers.

Danny Bryer, Director Sales and Marketing, for Protea Hotels says the market in some areas of the country, Cape Town in particular, has seen massive expansion over the past couple of years in terms of new hotel openings. This creates an environment which is highly competitive due to there being an oversupply of hotel rooms compared to the current market demands. He also says: “The online environment will play a far greater role in travel and tourism into the future as consumers have great accessibility and ability to
research destinations and products, book packages and last minute deals and review consumer feedback on existing products. Consumers will continue to be value-driven, whereby bite-sized luxuries are appreciated in the sparse times.”