Corporate travel to rebound, according to MEED business travel survey

16 April 2010

Companies are resuming spending on business travel this year; an indication that confidence in the regional and global economy is slowing taking hold

Corporate travel bans were imposed throughout the world in 2009 as companies fought to ride out the global financial crisis, but business travel spending is set to resume this year as a fragile economic recovery takes hold. An exclusive survey by MEED of senior management executives at firms with business interests in the Middle East reveals 62 per cent of companies expect to spend more on business travel in 2010 than last year.

Full survey results

See the attached spreadsheet - MEED Business Travel Survey full results.xls

The results from MEED’s Business Travel Survey, which was carried out in early March, provide a unique insight into the prospects for the travel and tourism industry in the year ahead.

The knock-on effect of the worldwide slump in corporate travel in 2009 was profound, contributing to a sharp fall in turnover at airlines and hotels alike. The impact was especially hard in the GCC where business travel-related spending is a key motor of the economy. That travel bans are now being lifted will provide a much-needed boost to region’s aviation and hospitality sectors, particularly as business travellers are often high spending individuals.

Less than 16 per cent of those surveyed by MEED report further cutbacks to travel budgets this year. Almost 22 per cent of respondents say business travel spending will remain unchanged at 2009 levels, but 38 per cent say travel allocations will be more than 10 per cent higher for 2010. A further quarter of those polled say spending allowances have been increased by up to 9 per cent.

Naturally, the amount a company spends on travel is influenced by the number of employees it has, but 35 per cent say their firms will spend $50,000-$200,000 on corporate travel this year, while a further 17 per cent of those polled expect the figure to be even higher.

The majority of companies surveyed expect to make up to 25 visits to countries in the Middle East and North Africa (Mena) region during 2010. Of the GCC countries planned to be visited, the UAE ranks the highest, followed by Saudi Arabia and Qatar. This reflects the fact that these countries have the largest economies in the region, and the highest number of projects under way.

Travel bans now being lifted will provide a much-needed boost to region’s aviation and hospitality sectors

Some 75 per cent of respondents expect representatives of their company to visit the UAE for business this year. By contrast, less than 40 per cent think trips will be made to Bahrain, Kuwait and Oman, with Kuwait the least likely to be visited.

In the wider Mena region, Egypt comes out on top, with 48 per cent of respondents expecting that country to feature in their or their colleagues’ business travel itineraries this year. Perhaps surprisingly given the difficulties in obtaining entry visas, Libya is named second, closely followed by Jordan. Despite the security issues plaguing the country, 15 per cent of those surveyed say visits to Yemen are likely.

The survey also asked the senior executives about their firms’ general corporate travel policies. Despite the ease with which flights and hotels can now be booked using the internet, 61 per cent of those surveyed say their company still uses a corporate travel agent. Flexibility of schedules and prices are highlighted as the most important element driving business travel choices rather than loyalty programmes.

The majority of respondents say their company prefers to use four-star hotels rather than five-star or three-star accommodation. The survey also reveals most board members chose to fly business class, while other senior managers are equally as likely to fly economy class. Budget airlines, meanwhile, are rarely used for business purposes, despite their recent proliferation in the region.

Whenever the global economy takes a turn for the worse, the first reaction of any company is to impose a ban on all but essential travel. Corporate belt-tightening is usually an indication that redundancies and restructuring measures will follow. But similarly, as soon as an improvement in the business climate is detected, travel budgets are quickly reinstated, with staff sent out to client meetings and conferences long before hiring resumes.

The findings of MEED’s Business Travel Survey that spending is set to rise this year can be seen as further indication that confidence in the global and regional economy is finally returning, and companies are gradually getting back on their feet after challenging 18 months. The benefits may still take a while to filter through to the travel industry, but the outlook is certainly much brighter for 2010 than last year.

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