INSIGHT
4 post-summer hot topics in Europe
The war in Ukraine, inflation and labour shortage. After the pandemic, the list of risks related to business travel and tourism continues to grow to the point of disrupting the recovery of the sector that was initially planned for 2024. According to the GBTA BTI Business Travel Index report, it would take until 2026 to reach or exceed pre-pandemic levels for the business travel industry.
In addition to the human and societal impact, the geopolitical context has also caused significant economic damages, including inflation and the freezing of both air and sea traffic.
According to a report by Statista, the current context does not necessarily have a significant negative impact on business travel in Europe. Although the number of business travellers is not as high as in 2019 yet, the statistics show an increase.
According to the same report, Europe is the top destination for employees. 37% of the business travellers surveyed said their travel was mainly to Europe in 2022, compared to 28% to Asia and 26% to North America. In Switzerland, tourism generated around 6.5% of the GDP in 2021, which is roughly in line with the European average of 6.2%. Those numbers are not surprising, given the number of business centres located in the European Union.
Business travel is not over!
As we come out of the global health crisis, the industry has had a unique opportunity to redefine business travel. Over the past two years, the disruption of travel has reinforced the perception that face-to-face meetings are essential to business success. Without travel and meetings, it is difficult to innovate properly. It is difficult to build relationships and trust. And it is virtually impossible to convey values and build an efficient corporate culture. All of these aspects are essential for businesses to succeed, for the economy to flourish and the society to work.
What are the 4 hot topics of autumn 2022? How to overcome the constant uncertainty business travel is facing in Europe? How can companies achieve their objectives and find a balance in this new era? How can they adapt their business travel strategy? FCM shares its analysis...
Airline strike: a series of cancellations in Europe
France, Italy, England and more recently Portugal have all seen their flights cancelled in Europe this summer as a result of social movements by flight crews. While the number of travellers has almost returned to its pre-pandemic level, strikes have caused chaos at European airports.
According to AirHelp, more than 66 million travellers have been affected by cancellations and delays in Europe. The entire industry has been rallying for months to assist travellers!
Travel policies, which are constantly reviewed, must be adapted to the demands of an uncertain environment in order to ensure maximum security for business travellers. Travel managers, facing the collateral damage of staff shortage and social movements in European airports, has to find alternative travel solutions that are not necessarily in line with company agreements or negotiations with usual suppliers. The company then has to handle a travel management "crisis" which will put a strain on travel budgets if it lasts as the situation won't allow access to attractive prices.
Traveller security has taken a new direction since the start of the pandemic. The notion of safety and risk has been confirmed since 2021 through the ISO 31030 standard. In order to comply, companies are required to carry out assessments and controls as part of their travel policy. A specific focus is placed on the mobilisation and professionalism of travel managers to reorganise business travel and guarantee a safe journey. To this end, the company has to make sure that the context is optimal for a trip. It is therefore necessary for travel managers to put in place measures to prevent incidents but also to be ready to react in case of unexpected events to ensure employees' safety. Anticipation and verification of potential problems are key to support employees throughout their trip.
It should be noted that in the field of air transport, the European Regulation 261/2004 mentions that strikes affecting flights should only occur under exceptional events. "If it is shown that no reasonable measures can be taken to avoid the circumstances of the strike, the company is not responsible for compensating the passenger, to whom it must instead provide assistance and care.
In a press release, the airline easyJet also said it regretted that "the significant damage caused to passengers by the flight crew (...) adds to the current context which is already considered economically and politically difficult".
Inflation: optimising business travel spends
After two years of COVID, the Ukraine war and ensuing sanctions have brought a new level of uncertainty to the business travel industry, though it is still too early to measure the impact.
In July 2022, GBTA surveyed more than 400 business travellers in several regions of the world, including Europe. 73% agreed that inflation has had a significant impact on their business trips. One out of five buyers said that concerns about the economy and the risk of recession had caused their company to completely stop some of their business travels. This is partly linked to the fact that companies are responding to the pressure of inflation by the increase of business travel spends. For accommodation only, the increase almost reaches 34% in 2022!
Altogether, these circumstances are causing travel costs to soar and are reducing companies' budgets for business travel spend. According to a survey conducted in June 2022, 37% of travel suppliers surveyed worldwide considered inflation to be the main obstacle to business travel...
Despite the growth of remote working and the use of new technology tools, the health crisis has put the role of travel manager back at the centre of business travel. Travel management, the implementation of risk management procedures and increased flexibility are factors to be taken into account to fight inflation.
High oil and fuel prices are forcing travel managers to balance costs even more than usual. Budgets reduction are also challenging in meeting the business travellers' needs.
According to a survey conducted by SAP Concur, 43% of European travel managers believe that the current situation is increasing their workload and stress levels. Today, companies and organisations are looking for a new balance in their business travel policies that will provide better flexibility for employees and control costs.
In the light of a highly uncertain and unstable future, travel managers need to rethink the way they manage business travel budgets by:
- Reviewing and adapting supplier contracts. For example, low cost air travel will be preferred, even if it means adding extra stopovers. Travel will be rethought according to its essential nature and tickets will be booked well in advance to benefit from lower prices;
- Using alternative accommodation. There are a growing number of alternatives to hotels that can help keep costs down while ensuring employee satisfaction. Good examples are long-stay flats, boutique hotels, hostels, bed-and-breakfasts and Airbnb;
- Examining the total revenue potential of bookings by analysing spend in real time through reporting. This will enable cheaper booking offering options for employees.
Travel policy automation will make it easier to control all business travel expenses and ensure that employees comply with the company's travel policy. This is achieved through increased internal communication. It is essential for employees to be aware of their own impact and the role they play in the process. The idea is to encourage employees to adopt the travel policy by raising awareness around it so that they can become fully involved, in particular through workshops, seminars or training. In concrete terms, to make the travel policy efficient, the business traveller will need to have much more information and ask the right questions in order to make the right decisions.
It is clear that overcoming travel cost inflation requires some internal advocacy. The key to success is to set targets to reduce spend, ensure visibility of travel costs and improve communication of the travel policy internally to raise awareness.
Environment: the business travel sector's number one challenge for the months and years to come
Drought, fires, heat waves...the effects of global warming are already having a strong impact on both nature and the economy on a European and global level. While everyone is encouraged to limit their carbon footprint by adopting environmentally responsible actions, private jets have been criticised for their harmful effects on air quality for several weeks now. Consequently, several scientific organisations have said that air traffic growth forecasts must be reduced. The "flight shame" has struck again!
According to a report published by the European NGO Transport and Environment, only 1% of people are responsible for 50% of global aviation emissions.
The industry's actors are therefore being forced to rethink their sustainable development strategies. In line with the objectives set by the Paris Agreements, they are all working to reduce their CO2 emissions - at least a 40% decrease by 2030. The aim is to achieve net zero emissions. According to WWF, if every company in Europe reduced their business travel by 20%, 22 million tonnes of CO2 would be saved every year.
Collaboration between the different industry players is therefore essential to achieve business travellers emissions offsetting. The entire ecosystem must rally to build a more sustainable business model. Travel managers have no choice but to make their employees aware of the climate issues so that they can make the right decisions for their business trips. This environmental awareness will only be possible if companies provide clear information to business travellers. For example, instead of stating a CO2 volume in travel policies - which is often considered too abstract - it would be better to highlight good practices and guide travellers towards better choices.
The SAP Concur study shows that not all changes in travel behaviour are due to external influences, such as the war in Ukraine. Business travellers are also adapting their own travel behaviour to reduce their carbon footprint. For example, 1 out of 3 business travellers in the Benelux countries plan to prioritise alternative means of transport such as rail over air.
Tips for reducing your carbon footprint
- Get full visibility on the CO2 emissions of your travellers with detailed and simplified reporting,
- Calculate the impact of travel emissions in real time using a carbon offset calculator
- Source suppliers who are acting in favour of sustainable development. To help, the company can set up an indicator relating to sustainable development and the CSR commitments of suppliers, such as a responsible supplier label. This will allow the establishment of an objective ranking that meets the criteria set.
ETIAS: the new electronic travel authorisation for travelling in Europe
In discussion since 2016, the ETIAS visa will soon become mandatory for business travel within the Schengen area. It is the equivalent of the American Esta, an authorisation to enter European territory for travellers from visa-exempted countries. Scheduled to be operational by the end of 2023, ETIAS will significantly change the way some foreign nationals travel in Europe. The main objective is to increase security within the European Union. The system will allow travellers to be checked-in before they arrive and will allow authorities to prevent people identified as threats to the public from travelling.
As a result, any third country national planning to travel to Europe for less than 90 days will have to apply for an ETIAS visa. Passengers will simply have to fill an online form before their departure. This visa or rather - this electronic travel authorisation - will be valid for business activities such as attending a meeting, conference or other business-related event. However, it cannot be used for paid employment in a European country. In this case, a work permit issued by the European country in question will be required.
Experts find it difficult to predict how the current context will develop. It is clear that the longer the conflicts continue, the greater the impact on European tourism. To address these difficulties, it is important for companies to rethink their business travel strategy and take advantage of this "recovery" to align with the priorities of this new world. The objective is to reduce and limit the repercussions of the crisis linked to the geo-economic context.