Business Travel and Financing

European Corporate Travel Decision Makers Expect Their Travel Budget to Rise in 2019

Seven in ten European corporate travel decision makers (CTDMs) anticipate their travel budget will increase in 2019, with 16 percent saying they expect their budget to significantly increase, according to a recent study by Cvent entitled, “The European Travel Manager in 2019.”

25 percent of CTDMs said their budget would remain unchanged, while only 6 percent foresee a year-over-year decline. German CTDMs are especially optimistic about their budgets, with 21 percent expecting a significant increase in 2019.

The study found that more than seven in ten (73 percent) of CTDMs across Europe say they source accommodations at least once a year, while one in five CTDMs source once every two years (in UK and Germany this increases to one in four CTDMs). This is good news for hotels vying for corporate travel business and getting ready for the 2019 sourcing season.

CTDMs face challenges when it comes to how they spend those budgets which include rising hotel and airline costs (UK travel decision makers highlighted rising hotel costs as a primary issue and rising airline costs was the third biggest challenge overall and the second biggest challenge for UK travel decision makers), and the pressure to maximise the value of their travel investments.

In addition, CTDMs enter the hotel sourcing process with not only concerns about price increases, but also a lack of transparency from hotels in the negotiation process, slow or incomplete responses to request for proposals (RFPs), and chain account managers (CAMs) failing to provide crucial information from the company to individual hotels. Safety and security were regarded as less of an issue compared to rising hotel/airline costs and overall value although this was more of an issue and priority for French and German CTDMs.  

Additional highlights of the research include:

  • ·       Location is the top consideration in hotel selection for CTDMs. When booking accommodations, location is the top consideration for all CTDMs across Europe, followed by venue rates and amenities, such as Wi-Fi or breakfast included. Hotel loyalty programmes are not a primary consideration.
  • ·       Europe remains the top booking region. Outside the CTDM’s own country, European countries are considered the top destination for a majority of their travellers (57 percent), compared to 14 percent for North America and 9 percent for Asia Pacific.
  • ·       Chain hotels preferred. More than half (53 percent) of CTDMs prefer chain hotels for their travellers and more than one-third (36 percent) book mid-scale or independent hotels.  CTDM preference for accommodations within the sharing economy such as Airbnb is low, though younger CTDMs are more likely to book their travellers into these accommodations.
  • ·       Brexit’s impact greater for German and French CTDMs than for UK CTDMs. More German and French CTDMs consider Brexit a viable concern on corporate travel than their UK counterparts, who are more concerned with rising costs and the pressure to maximise travel programme value.
  • ·       Challenges with negotiation include rate increases, lack of transparency and incomplete RFP responses. When CTDMs were asked about their biggest challenge negotiating with hotels more than a quarter (26 percent) of CTDMs across Europe cited rate increases that were above city or benchmark averages. In Spain and France, this was raised as an even bigger issue with 37.5 percent and 35 percent respectively responding that this was their biggest challenge.

o   Whilst lack of transparency was raised as the second biggest challenge (18 percent) across the board, this was cited as the top issue for UK CTDMs (24 percent). 

o   16 percent of CTDMs across Europe revealed that bid submission is not in accordance with corporate requirements set out in the RFP document. In contrast, this was the biggest challenge for German CTDMs (24 percent). 13 percent of CTDMs highlighted the poor, slow or incomplete response from hotels as a challenge.

Karla Pearce, Marketing Manager Europe, Cvent Hospitality Cloud comments, “2019 offers a tremendous opportunity for hotels to capture new business given the vast majority of European CTDMs anticipating increased budgets and looking to book accommodations outside their home country. In order to capitalise on these opportunities, hospitality professionals need to address key CTDM pain points in the negotiation process. Hoteliers who respond to CTDMs quickly and completely, provide transparency around their offerings, demonstrate their programme value, will be well positioned to win a larger share of the growing corporate travel industry.”

Click here for “The European Travel Manager in 2019” research brief.

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