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Business Traveller - UK - August 2012

“The current issues over waiting times at Heathrow Airport’s border control – often characterised as a particular problem for business, given the travellers who use the airport and concerns over the ‘impression’ that it gives potential investors in the UK’s economy – is a particularly good opportunity for international rail, which can boast far shorter waiting/processing times. Eurostar has until 2015 to profit from this advantage on its own terms, at which point competition, in the shape of German rail operator Deutsche Bahn, comes to the Tunnel – and with that, less control over ticket prices (as the supply/demand equation changes) becomes increasingly likely.”

– Tom Rees, Senior Travel and Tourism Analyst

Some questions answered in this report include:

  • What does the UK’s reliance on the European market mean for business travel?
  • Will videoconferencing encroach further on business travel in future?
  • Will domestic rail continue to be the cost effective option for UK business travellers?
  • How can operators capitalise on business travellers’ love affair with smartphones?
  • How will the growth of an older working population change overseas business travel?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Volume forecast of business travel (overseas & domestic), 2007-17
            • Market factors
              • GTMC sees transactions grow
                • Figure 2: GTMC business travel transactions, 2011
              • Flying climbs slightly in 2011
                • Figure 3: Trend in the number of overseas business trips, air travel vs all, 2007-11
              • Petrol pressure
                • Figure 4: UK petrol and diesel prices, 2009-12
              • Rail fares keep rising
                • Figure 5: Average change in rail fares, 2004-11
              • Business confidence uncertain
                • Figure 6: ICAEW UK Business Confidence Monitor, Q3 2007-Q2 2012
              • Exports up
                • Figure 7: UK export performance, 2006-11
              • euro crisis casts European shadow
                • Figure 8: Quarterly average exchange rates for sterling against euro, 2007-Q2 2012
                • Figure 9: Percentage change in overseas business travel volume, by region, 2009-11
              • Air share up in 2011
                • Figure 10: Overseas business travel, by travel mode share of market, 2006-11
                • Figure 11: Share of domestic business travel by mode, 2006 vs 2010
              • Companies, brands and innovation
                • American Express Business Travel (AmEx BT)
                  • Figure 12: Key financials of American Express for the year ended 31 December 2011
                • Carlson Wagonlit Travel (CWT)
                  • Figure 13: Year on year performance in key financial measures of Carlson Wagonlit UK Ltd, year ended 31 December 2011
                • Hogg Robinson Group (HRG)
                  • Figure 14: Year on year performance in key financial measures of Hogg Robinson Group, year ended 31 March 2012
                • Innovations
                  • The consumer
                    • Over one quarter took a business trip
                      • Figure 15: Business travel in the last 12 months, April 2012
                    • How business travellers travelled
                      • Figure 16: Business travel modes used in year to April 2012
                    • Approach to business travel
                      • Figure 17: Selected key attitudes towards business travel, April 2012
                    • What we think
                    • Issues in the Market

                        • What does the UK’s reliance on the European market mean for business travel?
                          • Will videoconferencing encroach further on business travel in future?
                            • Will domestic rail continue to be the cost effective option for UK business travellers?
                              • How can operators capitalise on business travellers’ love affair with smartphones?
                                • How will the growth of an older working population change overseas business travel?
                                • Trend Application

                                    • Many Mes
                                      • Let’s Make a Deal
                                        • 2015: Old Gold
                                        • Internal Market Environment

                                          • Key points
                                            • Business travel transactions on the rise
                                              • Figure 18: GTMC business travel transactions, 2006-11
                                              • Figure 19: Share of GTMC business travel transactions by category, 2006-11
                                            • Let the train take the strain
                                              • Figure 20: Frequency of rail use for work/business, 2010-11
                                              • Figure 21: Average change in rail fares, 2004-11
                                            • Businesses argue for better air links with emerging economies
                                              • Figure 22: Trips undertaken by air, by purpose, 2011
                                              • Figure 23: Trend in the number of overseas business trips, air travel vs all, 2006-11
                                            • Number of flights
                                              • Figure 24: Number of trips undertaken by air, by purpose, 2010-11
                                              • Figure 25: Trends in number of business trips taken in the last 12 months, 2010-11
                                            • Road users face petrol challenge
                                              • Figure 26: Frequency of car hire for business use in the last 12 months, 2010-11
                                              • Figure 27: UK petrol and diesel prices, 2009-12
                                            • Destination leads mode choice
                                              • Figure 28: Global prices of crude oil, jet fuel, diesel and petrol, 2009-12
                                              • Figure 29: Air Passenger Duty, July 2012
                                            • Rising prices lead to fewer hotel stays
                                              • Figure 30: Frequency of stay in hotels for business, 2010-11
                                            • Virtual business travel – virtually as good?
                                            • Broader Market Environment

                                              • Key points
                                                • UK double-dip recession entrenched, while business confidence does better
                                                  • Figure 31: GDP quarterly percentage change, Q1 2007-Q2 2012
                                                  • Figure 32: ICAEW UK Business Confidence Monitor, Q3 2007-Q1 2012
                                                • Exports up and shifting away from EU
                                                  • Figure 33: UK export performance, 2006-11
                                                  • Figure 34: Top ten UK visible export markets and popularity for business travel, 2009-10
                                                  • Figure 35: Quarterly average exchange rates for Sterling against the euro, Q1 2007-Q2 2012
                                                  • Figure 36: Annual average exchange rates for Sterling, 2007-12
                                                • Consumer confidence sunk
                                                  • Figure 37: GfK NOP Consumer Confidence Index, January 2008-June 2012
                                                  • Figure 38: Employment and unemployment, by gender, 2007-17
                                                • Age requirements
                                                  • Figure 39: Trends in the age structure of the UK population, 2007-17
                                                • AB boost to business travel
                                                  • Figure 40: Forecast adult population trends, by socio-economic group, 2007-17
                                                • Business and broadband
                                                  • Figure 41: Broadband penetration, by working status, 2004-11
                                                  • Figure 42: Mobile phone functions used, 2011
                                              • Competitive Context

                                                • Key points
                                                  • Business travel behind holidays and VFR
                                                    • Figure 43: Overseas and domestic travel market, visits and spend, 2011
                                                  • A tale of two markets
                                                    • Figure 44: Business travel volume, UK vs overseas 2006-11
                                                    • Figure 45: Domestic travel volumes, by purpose, 2006-11
                                                    • Figure 46: Overseas travel volumes, by purpose, 2006-11
                                                • Who’s Innovating?

                                                  • Key points
                                                    • Apps – virtual tickets, travel companion and payment
                                                      • Virtual credit card
                                                        • Travel alerts and tracking
                                                          • Wi-Fi in the sky (and under the sea)
                                                            • Airline innovations
                                                              • Taxis – worldwide and at home
                                                                • Female-friendly
                                                                • Market Size and Forecast

                                                                  • Key points
                                                                    • Domestic volume grows as overseas trips languish
                                                                      • Figure 47: Business travel market, by volume, 2007-17
                                                                    • Expenditure grows – at home
                                                                      • Figure 48: Business travel market, by value, 2007-17
                                                                      • Figure 49: Year-on-year change in average business travel expenditure, 2008-12
                                                                    • An erratic future looks likely
                                                                      • Figure 50: Year-on-year change in overseas business travel volume, June 2011-May 2012
                                                                      • Figure 51: Year-on-year change in domestic business travel volume, April 2011-March 2012
                                                                    • Forecast
                                                                      • Figure 52: Volume forecast of business travel (overseas & domestic), 2007-17
                                                                      • Figure 53: Value forecast of business travel (overseas & domestic), 2007-17
                                                                      • Figure 54: Volume forecast of domestic business travel, 2007-17
                                                                      • Figure 55: Value forecast of domestic business travel, 2007-17
                                                                      • Figure 56: Volume forecast of overseas business travel, 2007-17
                                                                      • Figure 57: Value forecast of overseas business travel, 2007-17
                                                                    • Forecast methodology
                                                                    • Segment Performance

                                                                      • Key points
                                                                        • European fall
                                                                          • Figure 58: Overseas business travel volume by region, 2006-11
                                                                          • Figure 59: Percentage change in overseas business travel volume, by region, 2009-11
                                                                          • Figure 60: Overseas business travel expenditure*, by region, 2006-11
                                                                          • Figure 61: Overseas business travel volume, by country, 2006-11
                                                                        • 1-3 nights away
                                                                          • Figure 62: Overseas business travel volume, by duration of trip and percentage share of market, 2006-11
                                                                          • Figure 63: Overseas business travel volume, share of market, by duration of trip, 2006
                                                                          • Figure 64: Overseas business travel volume, share of market, by duration of trip, 2011
                                                                          • Figure 65: Domestic business travel volume, by length of stay and percentage share of market, 2006-10
                                                                        • Planes, trains and automobiles
                                                                          • Figure 66: Overseas business travel volume, by travel mode and percentage share of market, 2006-11
                                                                          • Figure 67: Domestic business travel volume, by travel mode and percentage share of market, 2006-10
                                                                          • Figure 68: Share of domestic business travel, by mode, 2006 vs 2010
                                                                      • Channels to Market

                                                                        • Key points
                                                                          • Online is on top
                                                                            • Figure 69: Business travel booking methods, July 2012
                                                                          • Half booked themselves direct
                                                                            • Figure 70: How business travellers booked, July 2012
                                                                        • Companies and Products

                                                                            • American Express Business Travel (AmEx BT)
                                                                                • Figure 71: Key financials of American Express for the year ended 31 December 2011
                                                                              • Carlson Wagonlit Travel (CWT)
                                                                                  • Figure 72: Key financials of Carlson Wagonlit UK Ltd for the year ended 31 December 2011
                                                                                • Hogg Robinson Group (HRG)
                                                                                    • Figure 73: Key financials of Hogg Robinson Group for the year ended 31 March 2012
                                                                                  • ATPI
                                                                                      • Figure 74: Key financials of ATPI Ltd for the year ended 31 December 2010
                                                                                    • BCD Travel
                                                                                        • Figure 75: Key financials of BCD Travel UK Ltd for the year ended 31 December 2010
                                                                                      • Capita Business Travel
                                                                                          • Figure 76: Key financials of Capita Business Travel Ltd for the financial year ended 31 December 2011
                                                                                        • Egencia
                                                                                            • Figure 77: Key financials of Egencia UK Ltd for the year ended 31 December 2010
                                                                                          • Expotel
                                                                                              • Figure 78: Key financials of Expotel Hotel Reservations Ltd for the financial year ended 31 October 2011
                                                                                            • FCm Travel Solutions
                                                                                                • Figure 79: Key financials of Flight Centre UK Ltd for the year ended 30 June 2011
                                                                                              • Portman Travel
                                                                                                  • Figure 80: Key financials of Portman Travel Ltd for the year ended 31 December 2011
                                                                                              • The Business Traveller

                                                                                                • Key points
                                                                                                  • Number of business travellers falls
                                                                                                    • Figure 81: Business travel in the last 12 months, 2010-12
                                                                                                  • Home and away
                                                                                                    • Male dominance continues
                                                                                                      • Figure 82: Proportion of men and women taking business trips, by type, April 2012
                                                                                                    • Who are the business travellers?
                                                                                                    • Business Travel Modes

                                                                                                      • Key points
                                                                                                        • Over half travelled by train
                                                                                                          • Figure 83: Business travel modes, 2010-12
                                                                                                        • Car use drops
                                                                                                          • Figure 84: Average UK petrol and diesel prices, Q2 2008-Q3 2009 vs Q4 2011-Q2 2012
                                                                                                        • Gender, age and mode
                                                                                                          • The road warriors
                                                                                                            • Mind how you go
                                                                                                              • Figure 85: Business travel modes by most popular business travel in the last 12 months, April 2012
                                                                                                          • Attitudes Towards Business Travel

                                                                                                            • Key points
                                                                                                              • Recession restrictions
                                                                                                                • Figure 86: Attitudes towards business travel, April 2012
                                                                                                              • Looking for leisure
                                                                                                                • Video-conferencing effectiveness in question
                                                                                                                  • Figure 87: Key attitudes towards alternatives to/restrictions on business travel, April 2012
                                                                                                                • Optimism of the young
                                                                                                                  • Experience doesn’t mean confidence in expenses
                                                                                                                    • Figure 88: Attitudes towards business travel by most popular business travel in the last 12 months, April 2012
                                                                                                                  • Car users stick with business travel
                                                                                                                    • Figure 89: Attitudes towards business travel by business travel modes, April 2012
                                                                                                                • Targeting Opportunities

                                                                                                                  • Key points
                                                                                                                    • Target groups
                                                                                                                      • Figure 90: Business travel target groups, April 2012
                                                                                                                    • Fly Aways
                                                                                                                      • Demographic profile
                                                                                                                        • Marketing message
                                                                                                                          • Strictly Budget
                                                                                                                            • Demographic profile
                                                                                                                              • Marketing message
                                                                                                                                • Ordinary Optimists
                                                                                                                                  • Demographic profile
                                                                                                                                    • Marketing message
                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                        • Figure 91: Total business travel market volume and forecast, best and worst case scenarios, 2012-17
                                                                                                                                        • Figure 92: Total business travel market value and forecast, best and worst case scenarios, 2012-17
                                                                                                                                        • Figure 93: Domestic business travel market volume and forecast, best and worst case scenarios, 2012-17
                                                                                                                                        • Figure 94: Domestic business travel market value and forecast, best and worst case scenarios, 2012-17
                                                                                                                                        • Figure 95: Overseas business travel market volume and forecast, best and worst case scenarios, 2012-17
                                                                                                                                        • Figure 96: Overseas business travel market value and forecast, best and worst case scenarios, 2012-17
                                                                                                                                    • Appendix – Segment Performance

                                                                                                                                        • Figure 97: Domestic business travel volume, by accommodation type and percentage share of market, 2006-10
                                                                                                                                    • Appendix – The Business Traveller

                                                                                                                                        • Figure 98: Most popular business travel in the last 12 months, April 2012
                                                                                                                                        • Figure 99: Next most popular business travel in the last 12 months, April 2012
                                                                                                                                    • Appendix – Business Travel Modes

                                                                                                                                        • Figure 100: Business travel modes by day trip (UK), overnight trip and conference (UK) travel in the last 12 months, April 2012
                                                                                                                                        • Figure 101: Business travel modes, overall class and rail travel, by demographics, April 2012
                                                                                                                                        • Figure 102: Business travel modes, flights and car use, by demographics, April 2012
                                                                                                                                    • Appendix – Attitudes Towards Business Travel

                                                                                                                                        • Figure 103: Attitudes towards business travel by conference business travel in the last 12 months, April 2012
                                                                                                                                        • Figure 104: Attitudes towards business travel by business travel modes – UK rail, LCCs and own car, April 2012
                                                                                                                                        • Figure 105: Agreement with the statements ‘I would extend a business trip to include leisure time’ and ‘I would take a partner or family for all or part of a trip’, April 2012
                                                                                                                                        • Figure 106: Agreement with the statements ‘I/my company tends to choose/makes me choose budget options for business travel’ and ‘I’m confident my company will reimburse expenses for entertainment on business trips’, April 2012
                                                                                                                                        • Figure 107: Agreement with the statements ‘My company was more strict in applying its business travel policies in 2011’ and ‘Video conferencing is just as good as face-to-face meetings’, April 2012
                                                                                                                                        • Figure 108: Agreement with the statements ‘I/my company has increased its use of alternatives to business travel’ and ‘I think that business travel will increase in 2012 compared to 2011’, April 2012
                                                                                                                                        • Figure 109: Agreement with the statements ‘In my experience, business travel increased in 2011 compared to 2010’ and ‘Business travel is at the same level it was before the recession’, April 2012
                                                                                                                                        • Figure 110: Agreement with the statements ‘Environmental considerations play a part in my/my company’s business travel choices’ and ‘I am/my company is prepared to pay extra for premium service’, April 2012
                                                                                                                                        • Figure 111: Agreement with the statement ‘I/my company has lost business because of restrictions on business travel’, April 2012
                                                                                                                                    • Appendix –Targeting Opportunities

                                                                                                                                        • Figure 112: Target groups, by attitudes towards business travel, April 2012
                                                                                                                                        • Figure 113: Target groups, by business travel in the last 12 months, April 2012
                                                                                                                                        • Figure 114: Target groups, by business travel modes, April 2012
                                                                                                                                        • Figure 115: Business travel target groups, by demographics, April 2012

                                                                                                                                    Companies Covered

                                                                                                                                    • Accor
                                                                                                                                    • AIG Group (American International Group Inc)
                                                                                                                                    • Allianz Group
                                                                                                                                    • American Express Company (The)
                                                                                                                                    • American Express UK
                                                                                                                                    • ATP International Group
                                                                                                                                    • Aviva Plc
                                                                                                                                    • Bank of America Corporation
                                                                                                                                    • BCD Travel
                                                                                                                                    • Best Western International Inc.
                                                                                                                                    • BMW (GB) Ltd
                                                                                                                                    • Britannia Hotels Ltd
                                                                                                                                    • British Airways Plc
                                                                                                                                    • BT Group plc
                                                                                                                                    • Capita Business Travel
                                                                                                                                    • Carlson Companies Inc.
                                                                                                                                    • Carlson Wagonlit Travel, Inc.
                                                                                                                                    • Department for Work and Pensions
                                                                                                                                    • Deutsche Bahn
                                                                                                                                    • Deutsche Lufthansa AG
                                                                                                                                    • Etihad Airways
                                                                                                                                    • Expedia.co.uk
                                                                                                                                    • FCm Travel Solutions UK
                                                                                                                                    • Flight Centre (UK) Ltd
                                                                                                                                    • FlyBE
                                                                                                                                    • Foreign and Commonwealth Office [FCO]
                                                                                                                                    • GlaxoSmithKline Plc
                                                                                                                                    • Grupo Santander Central Hispano S.A.
                                                                                                                                    • Hilton Group plc
                                                                                                                                    • Hogg Robinson plc
                                                                                                                                    • InterContinental Hotels Group PLC
                                                                                                                                    • International Business Machines Corporation (IBM)
                                                                                                                                    • JPMorgan Chase & Co
                                                                                                                                    • Liberty Travel, Inc.
                                                                                                                                    • MICE Group Plc
                                                                                                                                    • National Car Rental
                                                                                                                                    • News Corporation (The)
                                                                                                                                    • Novartis Consumer Health UK Ltd
                                                                                                                                    • Porsche Cars Great Britain Ltd
                                                                                                                                    • Portman Travel
                                                                                                                                    • Procter & Gamble UK & Ireland
                                                                                                                                    • Radisson Hotels & Resorts
                                                                                                                                    • Research in Motion Uk Ltd.
                                                                                                                                    • Reuters Group PLC
                                                                                                                                    • Ricoh Company, Ltd
                                                                                                                                    • Société Nationale des Chemins de Fer Français
                                                                                                                                    • Standard Chartered
                                                                                                                                    • T-Mobile (UK) Ltd
                                                                                                                                    • The Capita Group plc
                                                                                                                                    • The London Organising Committee of the Olympic Games and Paralympic Games Limited
                                                                                                                                    • TripAdvisor LLC
                                                                                                                                    • UBS Wealth Management UK Ltd
                                                                                                                                    • Virgin Atlantic Airways Limited
                                                                                                                                    • Virgin Trains
                                                                                                                                    • Volkswagen UK
                                                                                                                                    • Wells Fargo & Company
                                                                                                                                    • Wyndham Worldwide Corporation

                                                                                                                                    Business Traveller - UK - August 2012

                                                                                                                                    US $2,570.96 (Excl.Tax)