Corporate Travel: 2013 in figures

I would like to begin this blog by wishing all our partners, customers and blog readers a Happy New Year on behalf of everyone at Conferma.

The turn of the year marks an opportunity to reflect on another successful year for Conferma and in particular the trends emerging in corporate travel. 2012 saw us extend our virtual card technology into the US for the first time, and it is a study from the other side of the Atlantic that I’ve chosen to look at, in the form of PhoCusWright’s U.S. Corporate Travel Report.

In 2012 there was over $100bn of corporate travel booked in the US. That’s a mere £62.1bn. Or €76.3bn.

Since gross bookings fell 26% during the recession in 2009, the corporate travel industry has been revitalised; figures have now surpassed pre-recession levels. That’s in stark contrast to other sectors who continue to suffer from the economic downturn. Business travel now represents 33% of the total travel market share, with the remainder accounted for by leisure travel and unmanaged business travel; a ratio that is edging gradually closer to 50:50.

Respondents to the survey cited ‘increased cost savings, enhanced spend under management and increased use of online corporate booking tools’ as their top three strategic priorities for 2013, whilst the top technology priority was the ‘automated capture of travel expense.' At Conferma, our innovative settlement and reconciliation products are fully automated to ensure our TMC and banking partners can reduce their administrative and operational costs significantly. Similarly, our state of the art virtual card technology enhances spend visibility and provides corporate clients greater control of variables such as credit limits, payment card validity dates and even the merchant category code.

The study hints at an ‘online penetration.’ Not something you’d want to Google. No, it refers to the increasing tendency to book travel online. This was one of the few metrics that did not decrease during the recession, instead hovering at around 50%. By 2013, 56% of gross travel bookings are now booked online. Early indications in January suggest Conferma is on course to record unprecedented levels of bookings made via Hotel Booker, our corporate hotel booking tool, whilst our virtual payment solutions are embedded in some of the world’s largest online booking platforms. Our virtual cards cover hotel, air and car rental, which were voted as the three largest areas of corporate travel expense. Indeed, air and hotel bookings account for more than 70% of corporate travel dollars spent.

96% of travel buyers indicated that their companies now use one or more online booking tools. The primary reason? You guessed it; cost. Corporates cited online booking platforms as the least expensive booking method, whilst also ‘facilitating integration with automated expense processing.’

I’ve already mentioned the corporate desire to automate capture and visibility of spend. The report revealed that miscellaneous expense now represents 21% of all corporate travel expense. Hotel extras, meals, excess baggage. In our experience, this significant chunk of ancillary spend is often unaccounted for, ultimately costing money and leaving companies’ spend policies susceptible to employee initiated fraud and misuse. Our fully automated solutions allow travel managers to rein in ‘rogue’ purchases, whilst rendering the data reconciliation process far more time and cost-efficient than chasing invoices from hoteliers and manually collating receipts.  

A quick word on our TMC partners. We continue to value our partnership with some of the industry leaders in travel management, especially in light of the fact that intermediaries now handle more than 75% of all corporate travel bookings. The dominance of intermediaries is particularly pronounced in the online corporate arena, where TMCs rely increasingly on the use of online booking tools and payment methods to further reduce costs.

Your list of New Year’s resolutions may be populated by the usual suspects. However if 2012 is anything to go by, make sure you place automated, virtual card technology for settling and reconciling travel expense at the top of your list.

*All figures from PhoCusWright’s U.S. Corporate Travel Report: Market Size and Technology Trends