The ‘World Cup Effect’

667

Many South African companies felt or were advised that corporate travel would be almost impossible during the World Cup. Chana Viljoen asks the industry what really happened during the event.

There was a common perception amongst the travel industry due primarily to suppliers leading the travel industry to believe that during the World Cup, corporate travel would come to a standstill because of the lack of flight and accommodation availability. However in the last few weeks prior to the event, suppliers communicated that corporate travel would still be possible and that they had availability.

Some capacity became available due to the release of blocked-off inventory by suppliers such as hotel groups and airlines, SAA in particular released inventory when it became apparent that blocked off inventory would not be utilised. Now that the World Cup is over, suppliers and travellers can assess how the event affected their business and perhaps gain insight into how to handle events of this magnitude. According to Howard Stephens of Nedbank’s Chief Procurement Office, the company implemented a travel freeze and negotiated fixed air travel rates foressential travel. “As we realised that there was more availability we allowed essential travel to occur.”

Overall, says Stephens, Nedbank’s domestic travel decreased by 40%, but returned to normal levels in July. Linda Basson, facilities and services lead for Accenture, said the travel services team was proactive in providing information to  the business as to potential cost of travel and availability of services during the World Cup period. This, she says, enabled management to make decisions regarding what was deemed to be business critical travel and where travel could be avoided by deferring travel, using technology and alternative work arrangements.

“Travel to South Africa did reduce as fares were excessive and as such we did see a drop in inbound travel for meetings,” she adds. According to Basson, one of the most significant challenges during the World Cup was medium to long-term accommodation. “In many cases our longstanding suppliers wanted to benefit from the World Cup and rates were increased by anything up to 500%. As such we had to find alternate accommodation in 100+ apartments in Johannesburg for the three – six month period,” she explains. Stephens says that when Nedbank was entertaining clients, hotels and flights had to be booked in advance for them. He says the restrictions on hotel bookings meant that the company sometimes had to pay for three nights, at World Cup rates, to get one. He adds: “The biggest issue was on the day of the opening when the official buses arrived late and Sandton was gridlocked”.

Making up for lost time

Many experts believed that there would be an increase in business travel in the periods before and after the World Cup to ‘catch up’ on any work that had to be re-scheduled. However, Basson says that currently there hasn’t been a noticeable increase. Stephens says corporate travel has gone up slightly but that this is not necessarily due to the World Cup disruption. “This could be ascribed to increased business after the recession,” he adds.

Basson says that lessons taken from the event include the need for good planning and communication – ‘proactively manage expectations by providing access to information’. She also says that the World Cup led to the identification of new suppliers and service offerings which in some cases exceeded previous suppliers’ delivery capabilities. Another opportunity that stemmed from the event was the increased usage of technology like Telepresence, RoundTable and Office Communicator instead of physical meetings requiring travel. Stephens says the World Cup proved that guidelines need to be set so that travellers can understand consequences and costs. He adds: “You do need to negotiate with your key suppliers so that they can match your requirements with them and understand that corporate travel will always be there.”

What the suppliers say

South African suppliers seem to have mixed feelings about the overall impact that the Soccer World Cup had on corporate travel. SAA Group Corporate Affairs told Business Traveller the airline experienced dwindling numbers of corporate travellers over the World Cup period as corporate travellers were advised to – where possible postpone their travel plans over this time.

The airline says: “There was also the belief that visitors would flock to South Africa and take up flights, accommodation and hired vehicles and leave corporate travellers stranded. However, the reality was a different story as the number of foreign spectators was far less than expected and SAA found that corporate travel policies were already fixed, with reduced interest in travel during the event.” While SAA says it has seen corporate travel picking up, it is not yet at the levels the airline would like, and is in fact less than the same time last year.

“The effects of the worldwide recession on travel combined with the corporate travel restrictions over the World Cup period can still be felt.” The airline believes that corporate travel was negatively impacted on by the World Cup due to perceptions of corporate travellers. However, SAA says many lessons were learnt. “The events preceding and during the World Cup event taught us for one that the market needs to be comforted well in advance and continuously reassured to ensure that corporate representatives continue to travel.” Desmond O’Connor, Commercial Director for 1time, says there was a massive decline in corporate travel around the World Cup. What was unexpected, he says, was that the decline started a lot earlier than anticipated, around the first week in May and the slump continued until after the event.

“Corporate travel levels have returned to normal, though, but they are not above the numbers that you would normally expect. We haven’t seen any surges or anything like that, but our sales have returned to normal levels and those prior to the World Cup.” Mango spokesperson, Hein Kaiser, says there was a noted decline in corporate travel during the event as the majority of bookings were leisure-related over the period. He adds, however, that the decline in corporate bookings was not as dramatic as initially expected. Kaiser says there was almost an immediate increase in corporate travel after the football tournament concluded.

Avis’ corporate rental days, according to Chief Executive, Wayne Duvenage, reduced by approximately 16% during the five-week period that encapsulated the World Cup, but he says the company was expecting a greater reduction than this. “While the World Cup suppressed direct corporate travel during the event period only, this was far less than what we had anticipated. Corporate travel has bounced back and we do not see the event itself as having a negative impact on this segment at all, but rather a positive one,” says Duvenage. He believes that if you analyse the situation, it was the ‘school holiday factor’ in June that played a greater role in the suppression of corporate travel (comparing year on year) than the World Cup event itself. EuropCar is expecting to see a healthy growth in corporate travel in future, especially in the SME sector. The company says:

“Overall, the tournament was great for our country and certain parts of the economy. The economic benefit that will be felt over time will definitely have a positive effect on the corporate travel segment. The increase in foreign investment and increased infrastructure will contribute to the longterm sustainability of the sector.

Morne Du Preez, CEO of Tourvest Travel Services incorporating major travel management brands such as American Express Travel Services, Seekers Travel, Maties Travel and Cumming Travel, commented that there is no doubt that in all sectors of travel management the WC had a massive negative impact on sales and revenue due to the lack of availability, excessive pricing, perception, or merely an opportunity identified by corporates to institute travel bans. “With an impact of this nature creating severe pressure on margins and profitability for the Travel Management industry, what will the ‘New Normal’ look like?” says Du Preez.