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Published on : Tuesday, November 5, 2013
A potent cocktail of contradictory forces is driving change in the European corporate travel space – along with intense competition for market share. According to PhoCusWright’s European Managed Travel Distribution, Market Sizing and Trends, European companies have emerged cautious and frugal from the recent economic downturn, and are keeping a tighter-than-ever rein on their managed travel programs. Never before has corporate travel planning and booking been subject to such intense scrutiny and, in many cases, restrictions and cutbacks. However, a new breed of business traveler is advocating change in the marketplace. These younger, tech-savvy travelers demand more flexible, efficient and convenient ways to purchase track and manage their trips.
A Fine Balance
But European companies must balance travelers’ quickly evolving expectations against the need to tightly control their travel programs. And with no shortage of new technology solutions that promise significant efficiencies and improvements, suppliers and intermediaries are often at cross-purposes as they vie for a piece of the managed travel market. “Suppliers are beefing up their services and incentives in an effort to drive direct business with corporate customers and rein in their distribution costs,” said Norm Rose, senior technology and corporate market analyst with PhoCusWright. “At the same time, global distribution systems are pushing in the other direction, aggregating content in a play to provide a single, unified booking environment for all travel products.”
With economic pressures, changing traveler profiles, and emerging technology, Europe’s managed travel marketplace bristles with both challenges and opportunities. Companies that anticipate, understand and leverage these frequently contradictory forces will be most successful in capturing market share in the years to come.
Moving On … And Up
Modest growth is projected for Europe’s managed corporate travel market, with gains in the 2-4% range through 2014, when gross bookings will exceed €41 billion. However, volumes vary widely between countries, and the market remains highly fragmented in terms of how travelers book different products. While telephone, TMCs and GDSs are still commonly used, hotel websites, HBAs, and airline and rail websites are each gaining share and influence.
Mobile On The Move
Widespread smartphone adoption and growing tablet penetration are driving the expectations and behavior of European managed business travelers. Ever connected, mobile- and social media-savvy, these travelers expect efficient, relevant and personalized services. Technology is a key enabler – and disruptor – of managed travel booking practices. While the use of mobile in managed travel has been largely limited to itinerary management and notifications, mobile bookings have gained traction in 2013 and will accelerate in the years ahead.
Eye On Expenses
Expense tracking remains a clear focus in Europe’s corporate travel market. Solutions that feature robust expense management and which are tightly integrated with existing corporate financial or ERP solutions will help companies aggregate, monitor and report on their travel expenses and activities.
TMCs dominate online distribution with a 61% share, while supplier websites account for 39%. Online TMCs, which include online transactions from a wide range of online intermediaries, are gaining share at the expense of offline, regional and local TMCs.
In an effort to battle competition from other sources offering their own booking channels, GDSs are integrating new content – from LCCs, rail and independent hotels – in an effort to become one-stop sources for travel content. Major GDSs are investing heavily in their offerings to provide TMCs with powerful travel shopping, booking and services platforms.
What It All Means
Persistent economic challenges, rapid technological advances, changing traveler behavior and fragmentation in the marketplace will continue to test managed travel stakeholders. Companies that understand – and strike a balance between – these often conflicting dynamics will be most successful in this growing marketplace.
Source: WTM London.