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The Business Travel Market - Market Assessment 2006

DateApr, 2006
Pages0
Price / format€1478 / Electronic

€1 478 

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Abstract:
 This Market Assessment report considers current trends in the market for business travel to, from and within the UK, and reviews the structure of those industries that supply the needs of business travellers in those market sectors. Such suppliers are found in a number of different industrial sectors and include airlines, railway companies, other transport operators, providers of hotel and conference facilities, and car rental firms.

All sectors of the market suffered a downturn in 2001 and the years immediately following. This was the result of a combination of factors, of which the events of 11th September 2001 in the US were the most significant given the deterrent effect these had on the travel plans of business travellers, as well as those travelling for leisure and other personal reasons. This meant that, in all the market sectors dealt with in this report, numbers of business trips made were lower in 2003 than in 2000. Recovery started in 2004 and is now well under way in 2006, although the domestic market appears less buoyant than the market for travel to and from the UK.

The past few years have seen some fundamental changes to the way in which the business travel product is distributed, brought about by an increase in opportunities for direct booking of travel and accommodation services by company travel managers or the business travellers themselves. This trend has been supported not only by the general availability of Internet technology, but also by the aggressive marketing on the part of service suppliers such as the low-cost and other airlines that refuse to pay commission to business travel agents and that aim to maximise Internet sales.

The use of travel agents is far higher for international trips than for domestic trips, for which the use of the private car or rail travel (with tickets commonly being purchased at the time of travel at the rail station) is much more common. However, travellers are now increasingly booking many elements of their international trips for themselves, online. At the same time, business travel agents have responded by placing greater stress on their role as managers of the whole business travel process on behalf of client companies, rather than as mere order-takers.

Technical support for the distribution of the travel product is provided by global distribution systems (GDSs) such as Amadeus and Galileo. These systems had their origin in the airline computer reservations systems (CRSs) developed in the 1960s, but have subsequently been developed to encompass other travel services, and are now accessible to both travel agencies and consumers through Internet gateways. A current issue is the extent to which the deregulation of GDSs, already an accomplished fact in the US, will proceed in the EU, and the impact this will have if it does proceed. The main concern is that deregulation could mean a return to the situation in which an airline GDS supplier will promote its own services, thus reducing the effectiveness of these systems in meeting the needs of travel managers.

This Market Assessment report reviews the international background to business travel, considering the impact of macro-economic influences as well as the competitive and regulatory framework within which the market operates. One recent development that has expanded the supply of services to the business travel market has been the introduction of new low-cost airline operations to and from countries of Central and Eastern Europe (CEE) following their accession to the EU in May 2004.

One unresolved issue is the failure to reach an agreement on a more liberal regime for the operation of transatlantic air services. A key stumbling block has been the failure of the US authorities to agree to the opening up of their domestic market to international competition by allowing non-US airlines to own and control US domestic carriers.

Safety and security issues continue to affect the confidence level of business travellers and to create inconvenience and delays for business travellers. As well as more intensive screening of both people and baggage at airports, visa requirements have been tightened, and it seems likely that many security measures that are common in the air-transport environment will be extended to cover other forms of transport and hotels — although the introduction of advance passenger information (API) systems may reduce such inconvenience in the context of air transport.

Concerns regarding the impact of transport on the environment are likely to intensify, with particular consequences for airline operating costs and hence fares. Proposed measures that would have such an effect include the imposition of taxes on aviation fuel or a requirement for airlines to participate in emissions trading.

This report also analyses the findings of a survey conducted in January 2006 into the extent of business travel undertaken by employed adults resident in Great Britain. This showed that, in 2005, 27.3% of these individuals had undertaken some business travel, either in the UK or abroad, during the year. It also showed that 24.9% of such adults went on domestic business visits, but only 9.8% undertook such visits abroad.

Looking to the future, this report concludes that many of the developments affecting the business travel market will represent a continuation of current trends. Among such trends have been the increases in delays, uncertainties and risks associated with business travel — developments that are likely to provide a stimulus to the use of alternatives to travel, such as Web conferencing, teleconferencing and videoconferencing in situations where face-to-face contact is not essential.

The trend towards online booking will continue, and the success of travel management companies (TMCs) in addressing this continuing threat to their existence is not assured. Low-cost airline operations are here to stay, but the level of take-up by business travellers is not expected to increase significantly over the next few years. Some recovery in the market share of the full-service airlines' business class is expected, while forecast growth in the UK and world economy should support the continued expansion of demand for UK hotels on the part of business travellers.








Table of contents:
 1. Introduction

BACKGROUND

DEFINITIONS

Tourism

Forms of Tourism

Classifications of Tourism Demand

Basic Tourism Units — Categories of Traveller

Published Tourism Statistics

Classifications of Tourism Expenditure

Definition of `Business Travel'

The Supplying Sectors

Transport Services

Accommodation

Business Travel Agents

Other Services

2. Strategic Overview

MARKET DYNAMICS AND SEGMENTATION

Segmentation by Product

Origin or Destination

Duration of Trip

Mode of Transport

Time of Travel

Price of Travel

Class of Travel or Accommodation

Airlines

Accommodation Providers

The Total UK Business Travel Market

Table 1: Business Travel To, From and Within the UK by Volume and Value (000 trips/visits and Јm), 2001-2005

Figure 1: Business Travel To, From and Within the UK by Volume (000 trips/visits), 2001-2005

Figure 2: Business Travel To, From and Within the UK by Value (Јm), 2001-2005

DISTRIBUTION

Overview

Global Distribution Systems

Travel Management Companies

Business Travel Agency Networks

Online Booking

Online Agencies

Principals (Travel, Accommodation and Other Service Providers)

Airlines

Railway Companies

Accommodation Providers

Other Providers

COMPETITIVE STRUCTURE

The Marketplace — An Overview

The Transport Operators

Airlines

Traditional Full-Service Airlines

Airline Mergers

Airline Alliances

Frequent Flyer Schemes

Low-Cost Carriers

Specialist Business Airlines

Business Aviation

Railway Operators

National Rail Services

Eurostar

The Vehicle Ferry Companies

Transport Infrastructure Providers

Airports

Network Rail

Other Infrastructure Providers

The Hospitality Industry

Accommodation Providers

Hotel Loyalty Schemes

Providers of Business Support and Meetings Facilities

Restaurants

Moto

Welcome Break

RoadChef

Travel Management Companies

Credit- and Charge-Card Companies

Car Rental Companies

Providers of IT Services

Providers of Other Goods and Services

ADVERTISING

THE CONSUMER

MARKET FORECASTS

Table 2: Forecast Business Travel To, From and Within the UK by Volume and Value (000 trips/visits and Јm), 2006-2010

3. Business Travel by UK Residents

BACKGROUND

MARKET SIZE

Table 3: Business Travel Taken by UK Residents in the UK and Abroad by Volume (000 trips/visits), 2001-2005

Table 4: Business Travel Taken by UK Residents in the UK and Abroad by Value (Јm), 2001-2005

CONSUMER TRENDS

Table 5: Demographic Profile of British Residents Taking Domestic and Overseas Business Trips Involving a Night Away From Home (% of adults), 2005

MARKETING AND DISTRIBUTION ACTIVITY

ADVERTISING

Introduction

Table 6: Main Media Advertising Expenditure on Airline and Railway Business Travel Services in the UK by Brand (Ј000), Years Ending December 2004 and 2005

Airline Business Travel

Other Air Transport Sectors

Business Travel by Rail

Other Travel Sectors

4. UK Domestic Business Travel

BACKGROUND

MARKET SIZE

Table 7: UK Domestic Business Travel by Volume and Value (000 trips and Јm), 2001-2005

Table 8: Domestic Business Trips and Trip Distance per Person per Year in Great Britain — Trips, Distance, Trip Length and Trip Time (number, miles and minutes), 1999-2004

Season of Travel

Mode of Travel

Table 9: Domestic Business Trips and Trip Distance per Person per Year by Main Mode in Great Britain† — Trips and Distance (number, miles and %), 2004

CONSUMER TRENDS

Table 10: Demographic Profile of British Residents Taking Domestic Business Trips Involving a Night Away From Home (% of adults), 2005

MARKETING, DISTRIBUTION AND ADVERTISING

5. Overseas Business Travel

BACKGROUND

MARKET SIZE

Table 11: Business Travel Abroad by UK Residents by Volume and Value (000 visits, 000 nights and Јm), 2001-2005

Table 12: Business Visits Abroad by UK Residents by Destination Region by Volume and Value (000 visits, 000 nights and Јm), 2001-2005

Table 13: Business Visits Abroad by UK Residents by Broad Destination Region — Average Length of Stay (nights), 2001-2005

Destinations

Table 14: Business Visits Abroad by UK Residents — Top Ten Destinations by Volume and Value (000 visits, 000 nights and Јm), 2004

Season of Travel

Table 15: Estimated Business Visits Abroad by UK Residents by Broad Destination Region by Season by Volume (000 visits and %), 2005

Mode of Travel

Table 16: Business Visits Abroad by UK Residents by Mode of Travel by Volume (000 visits and %), 2001-2005

CONSUMER TRENDS

Table 17: Demographic Profile of British Residents Taking Business Trips Abroad Involving a Night Away From Home (% of adults), 2005

MARKETING ACTIVITY

6. Business Travel to the UK by Overseas Residents

BACKGROUND

MARKET SIZE

General

Table 18: Business Travel to the UK by Overseas Residents by Volume and Value (000 visits, 000 nights and Јm), 2001-2005

Table 19: Business Visits to the UK by Overseas Residents by Region of Residence by Volume and Value (000 visits, 000 nights and Јm), 2001-2005

Average Length of Stay

Table 20: Business Visits to the UK by Overseas Residents by Region of Residence by Average Length of Stay (nights), 2001-2005

Destinations in the UK

Table 21: Business Visits to the UK by Overseas Residents — Top Ten UK Destination Areas by Volume (000 visits), 2004

Season of Travel

Table 22: Estimated Business Visits to the UK by Overseas Residents by Region of Residence by Season by Volume (000 visits and %), 2005

Mode of Travel

Table 23: Business Visits to the UK by Overseas Residents by Mode of Travel by Volume (000 visits and %), 2001-2005

MARKETING, DISTRIBUTION AND ADVERTISING ACTIVITY

7. An International Perspective

MARKET DEVELOPMENTS

Historic Background

Business Travel and the World Economy

Table 24: World Business Travel — Shares of the World Travel and Tourism Market by Value at Current Prices ($bn and %), 2001-2005

Table 25: World Business Travel — Shares of the World Travel and Tourism Market by Value at Constant 1990 Prices ($bn and %), 2001-2005

World Trends in Business Travel by Air

Table 26: The World's Top Ten Business Airports Ranked by Estimated Numbers of Business Passengers, 2005

Table 27: Growth in International Air Passenger Traffic† (%), 2000-2005

COMPETITOR ENVIRONMENT

The Air Transport Regulatory Environment

Major Suppliers

Airlines

Table 28: The World's Top Ten Business Airlines Ranked by Estimated Numbers of Business Passengers, 2005

Hotels

Table 29: Top 20 Hotel Brands by Number of Hotels and Rooms, as at January 2005

Forecasts of World Business Travel

Table 30: World Business Travel — Estimated and Forecast Shares of the World Travel and Tourism Market by Value at Current Prices ($bn and %), 2006 and 2016

Table 31: World Business Travel — Estimated and Forecast Shares of the World Travel and Tourism Market by Value at Constant 1990 Prices ($bn and %), 2006 and 2016

CONSUMER BEHAVIOUR

Reward Programmes

Airline Product Features

Hotel Product Features

8. PEST Analysis

POLITICAL ISSUES

Safety and Security

Air Travel

Surface Transport

Regulatory Framework

Impact on Airline Operations

Impact on Airport Operations

State Aid to Airlines

ECONOMIC ISSUES

Business Travel and the Economy

The World Economy

The UK Economy

Fuel Prices

SOCIAL ISSUES

Corporate Social Responsibility

The Environmental Impact of Air Travel

UK Social and Employment Legislation

Disability Discrimination Act — 1995

National Minimum Wage Act — 1998 (as amended)

Working Time Regulations — 1998 (as amended)

Employment Act 2002

Other Legislation/Regulation

TECHNOLOGICAL ISSUES

General

The Internet

Electronic Ticketing

Web Conferencing, Teleconferencing and Videoconferencing

Wireless Networks

Other Applications

9. Consumer Dynamics

THE UK BUSINESS TRAVELLER — CHARACTERISTICS

Table 32: Extent of Business Travel by the Employed Population of Great Britain (estimated % of employed adults), 2005

Characteristics of Frequent Business Travellers

Table 33: Demographic Profile of British Resident Frequent Business Travellers — Domestic and Abroad (% of adults), 2005

Characteristics of Occasional Business Travellers

Table 34: Demographic Profile of British Resident Occasional Business Travellers — Domestic and Abroad (% of adults), 2005

UK BUSINESS TRAVELLER — CONSUMER PREFERENCES

Choice of Hotel

Choice of Airline

Choice of Rail Company

The Travel Purchase Decision

Use of Technology When Travelling on Business

10. Company Profiles

INTRODUCTION

BAA PLC

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Profitability

Table 35: BAA PLC — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st March 2003-2005

Future Company Developments

BRITISH AIRWAYS PLC

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Distribution

Profitability

Table 36: British Airways PLC — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st March 2003-2005

Future Company Developments

BMI BRITISH MIDLAND

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Distribution

Profitability

Table 37: British Midland PLC — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st December 2002-2004

Future Company Developments

CARLSON WAGONLIT TRAVEL

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Government Travel Group

Client Services

CWT Events

Solutions Group

CWT Connect

CWT@visor

KDS Corporate

Global Alliance Hotel Programme (GAHP)

Hotel Automated Rate Programme (HARP)

Innovations

Appointments

Advertising

Distribution

Profitability

Table 38: Carlson Wagonlit UK Ltd — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st December 2002-2004

Future Company Developments

EUROSTAR

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Distribution

Profitability

Table 39: Eurostar (UK) Ltd — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st December 2002-2004

Future Company Developments

GALILEO INTERNATIONAL LTD

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Profitability

Table 40: Galileo International Ltd — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st December 2001-2003

Future Company Developments

INTERCONTINENTAL HOTELS GROUP

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Distribution

Profitability

Table 41: InterContinental Hotels PLC† — Turnover and Pre-Tax Profit (Ј000), Year Ending 30th September 2002, 65 Weeks Ending 31st December 2003 and Year Ending 31st December 2004

Future Company Developments

SEA CONTAINERS LTD

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Advertising

Distribution

Profitability

Future Company Developments

VANGUARD RENTAL (UK) LTD

Organisational Structure

Corporate Strategy

New Product Development

Brand Development

Innovations

Appointments

Distribution

Profitability

Table 42: Vanguard Rental (UK) Ltd — Turnover and Pre-Tax Profit (Ј000), Years Ending 31st December 2002-2004

Future Company Developments

WHITBREAD PLC

Organisational Structure

Corporate Strategy

Product Development

Premier Travel Inn

Premier Travel Inn Metro

Brand Development

Innovations

Appointments

Advertising

Distribution

Profitability

Table 43: Whitbread PLC — Turnover and Pre-Tax Profit (Ј000), Year Ending 1st March 2003, 53 Weeks Ending 4th March 2004 and Year Ending 3rd March 2005

Future Company Developments

11. The Future

KEY ISSUES FOR THE FUTURE OF BUSINESS TRAVEL

Introduction

Terrorism

Security Concerns

Alternatives to Business Travel

Regulatory Change

Technological Development

The Environment

Economic Overview

SUPPLYING SECTOR PROSPECTS

The Transport Sector

Railway Services

Airlines

Low-Cost Carriers and Other New Entrants

`Full Service' Scheduled Airlines

Transport Capacity Constraints

UK Rail Infrastructure

Airport and Air-Traffic-Control Capacity

Hotels

Travel Management Companies

SUMMARY OF FORECASTS BY MARKET SECTOR

Overview

Forecasts by Volume

Figure 3: Forecast Business Travel To, From and Within the UK by Volume (000 trips/visits), 2006-2010

Forecasts by Value

Figure 4: Forecast Business Travel To, From and Within the UK by Value (Јm), 2006-2010

UK Domestic Business Travel

Table 44: Forecast UK Domestic Business Travel by Volume and Value (000 trips and Јm), 2006-2010

UK Business Travel Abroad

Table 45: Forecast UK Business Travel Abroad by Volume and Value (000 visits and Јm), 2006-2010

Business Travel to the UK by Overseas Residents

Table 46: Business Travel to the UK by Overseas Residents by Volume and Value (000 visits and Јm), 2006-2010

12. Consumer Confidence

METHODOLOGY

KEY FINDINGS THIS QUARTER

THE WILLINGNESS TO BORROW

A Slow Start to 2006

Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (Ј and Јbn), February 2005, May 2005, August 2005, November 2005 and February 2006

The Desire to Borrow Stays Strong

Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), February 2005, May 2005, August 2005, November 2005 and February 2006

THE WILLINGNESS TO SPEND FROM SAVINGS

Spending From Savings Declines

Table C: The Proportion of Adults Without Any Savings (%), February 2005, May 2005, August 2005, November 2005 and February 2006

Table D: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (Ј and Јbn), February 2005, May 2005, August 2005, November 2005 and February 2006

Consumers Increasingly Cautious

Table E: The Average Amounts Adults are Confident Spending to Purchase Expensive Items (Ј and %), February 2005, May 2005, August 2005, November 2005 and February 2006

13. Further Sources

Published Surveys and Other Reports

Trade Associations

Publications

Government and Other Official Organisations

General Sources

Bisnode Sources




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