By Daniel Hunter
Senior Executives in the UK are investing in business travel to stay on top, according to a recent research report by the Economist Intelligence Unit, commissioned by American Express Global Corporate Payments.
The report looks at how the economic downturn has affected corporate travel patterns and how current global business and economic trends are set to transform business travel in the future.
The survey of leading business executives underlying the report reveals that nearly half (48%) of UK companies have increased their business travel compared to three years ago, rising to over two thirds (69%) of UK companies when including those maintaining previous levels of travel. While the number of business trips has increased, companies are keeping a watchful eye on their travel costs, proving that companies are under increased pressure to ‘do more with less’.
The ‘stay at home mentality’ that used to typify weaker economic environments is clearly on the wane with 93% of executives believing that business travel is critical to company profitability and 89% believing that travel boosts sales. This is notwithstanding the defensive travel play deployed by companies to prevent competitors from circling overhead — almost nine out of ten companies (89%) believe that business travel is critical to retaining customers in the current climate.
Within the UK, 91% of executives are travelling monthly and almost half (48%) are travelling every week. Trips within the UK are on the decrease with just 20% of businesses saying the majority of travel takes place within the UK, compared to 32% three years ago. While almost four in ten (39%) respondents said Western Europe accounted for the majority of their business travel, only slightly down on the equivalent figure for three years ago (41%), there is sign of a significant change on the horizon.
The number of businesses who said China accounted for most of their business travel has increased from zero three years ago to 7% today. While the percentage is relatively low, there is a significant indication that this will increase dramatically in the future, particularly as UK companies report that securing internal approval to travel to developing markets is easier than gaining approval to go to developed markets.
Reasons for Travel
Customer acquisition and customer retention topped the list for the reasons why UK companies undertake business travel, but as companies seek to push into new markets in search of higher growth, there is a growing awareness of a need to gain an understanding of the markets companies are targeting. Accordingly, 87% of those surveyed said travel to different markets played a critical part in their executives' understanding and knowledge of local conditions and challenges.
The role of Technology and Travel
Even in the current economic environment, the research shows that executives view advances in communication technology as more of a helpful aide to business travel, rather than as an alternative. While the use of tele-presence is widespread, it is clear that for now companies are using this first and foremost for internal meetings.
Meanwhile, advances in mobile technology have mitigated the effect of the post trip back-log for the UK’s road warriors, with 81% of executives stating that advances in technology and communications have made business travel more productive.
“UK companies have identified business travel as an important catalyst for economic growth," Karen Penney, Vice President of Global Corporate Payments, American Express said.
"Clearly the globalisation of the economy has led companies to prioritise business travel to gain new business. However, the research shows companies will be placing a strategic emphasis on their travel programmes, with a focus on holding down costs to maximise their return on investment.”
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