London -- New figures
show that tough trading conditions across Europe are forcing many firms to
making even tougher financial decisions -- particularly when it comes to their
travel budgets.
Paul Tilstone, the managing
director of the Global Business Travel Association (GBTA) in Europe, says it's
not surprising that companies are slashing spending on business trips.
"What we're seeing are
companies putting in place critical-only travel plans and that has a knock on
effect," he added.
"It's not about growth
now for a lot of companies -- it's about survival. Unless something is
considered critical to the running of the business, then it won't be
authorized."
With travel expenditure
often one of the biggest expenses within a business it becomes fundamental to
reduce budgets. So where are the cuts being made?
Hotels that were once
perceived as cheap are now viewed as adequate and comfortable. The days of
expensive flights are also long gone.
Businesses want more
bang for their buck.
"The standard now, is
people travel in economy rather than business class," said Tilstone.
"When trips are authorized, companies want more out of them. They want
more bang for their buck."
Latest figures from the
GBTA show varying levels of growth and decline across five critical markets in
Western Europe in 2012: Germany, UK, France, Italy and Spain.
Together they make up
nearly 70% of business travel across the continent -- but Germany is the only
nation where an increase has been reported. Spending there will have grown by
1.6% by the end of the year.
Elsewhere, the picture
isn't as rosy. In the UK spending has flat-lined, while in France it will have
dropped by 2.2%. The situation in the south of Europe is worse still, with
spending on business travel in Spain and Italy dramatically decreasing.
Overall it means a
reduction in spending of 2.2% across Western Europe -- and paints an even bleaker
picture than the projections issued by the
GBTA during the spring.
"The spring 2012
outlook was formulated in May and since that time conditions in Italy, Spain,
Greece, and France, among others, have worsened," said Tilstone.
"The debt crisis may
have been moved to the media's and stock market's back burner at the moment,
but the crisis is still problematic and has caused economic conditions to
worsen."
For some companies, it's
obvious that cutbacks are a necessary evil. But what kind of effect do they
have on productivity?
"I take dozens of
trips a year, and around 30 to 35 of those are international," added
Tilstone. "If I had to travel in economy all the time it would take its
toll on my well being. It's about finding a balance. You don't want your
employees becoming less productive individuals."
Stewart Harvey says he's
not surprised by downgrading of the figures by the GBTA. As the commercial
director of British corporate services provider HRG he specializes in ensuring companies make the most of
their travel arrangements. He says a growing number of firms are exercising caution
around their travel budgets.
"Businesses are not
out to stop traveling," he said. "But there's a lack of confidence
and they're putting controls on what they are spending.
How on earth would we know that? We don't
have a crystal ball with that assurance.
"They want to record
the purpose of the trip. Why are their employees going and who are they going
to see? Is it external or internal? Are they going after a customer or
extracting more business?
"People are being
conservative and cautious because they are thinking about their whole business
and they don't know what's ahead."
Although the GBTA's
projections for 2012 are bleak, particularly for southern European countries,
its outlook for next year makes for slightly more pleasant reading.
The association predicts a
1.4% bounce back in 2013, which it links to job growth and any likely increase
in GDP.
Is this a barometer for the
region's wider economy?
"There is
coloration," said Tilstone. "There are suggestions that there's a one
quarter time lag between growth in business travel and growth in economies.
"But with lingering
debt challenges and continued austerity measures, the European economy is
likely to continue to be challenged for years to come. The GBTA's fall report
therefore remains cautious."
But Harvey isn't convinced
the projections for growth next year will come to fruition.
"How on earth would we
know that? We don't have a crystal ball with that assurance," he said.
"In our experience,
most companies aren't looking that far ahead. Planning for the long term is now
viewed as three to four months in advance."
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