Large firms looking to slash travel budgets

Corporations with an annual travel budget approaching £1 billion are poised to unveil plans to slash their travel spending.

The Institute of Travel Management is in talks with eight major companies on a detailed commitment intended to cut costs and reduce corporate carbon footprints.

The initiative follows the lead of home-furnishings giant Ikea which aims to cut its travel spending this year to two-thirds of the level of 2007 and reduce it to half that amount by 2011.

The company is questioning the rationale for any trip and substituting phone, web and video conferencing wherever possible as it aims to transform travel management into “global meetings management“.

If taken up widely, the proposals threaten to entrench reductions in corporate travel caused by the recession into something longer term, suggesting business travel will not recover to its former level when the economy rebounds.

That would have implications for leisure travel, with the economy seats on many airlines in effect subsidised at present by business travellers paying premium fares.

The ITM believes the trend is inevitable and at its annual conference this week voted to change its name to the Institute of Travel and Meetings in recognition of a shift away from travel as the only way to facilitate a business meeting. Some delegates were even prepared to pronounce travel management dead.

ITM chief executive Paul Tilstone estimates corporate travel across the institute’s members is down by one-quarter to one-third this year on 2008. He said: “If the recession goes into 2011 you will be talking about a two-year period of change in the way companies travel. People are open to challenging every reason for having a meeting. The longer it goes on, the more change will stick and for a travel supplier that could be bad news.”

However, Nigel Turner – director of industry affairs at leading travel management company Carlson Wagonlit Travel – downplayed the significance of the trend. He said: “We have always faced change. Ikea is at the leading edge. Companies with mature travel programmes can perhaps move to this ‘interaction management‘. But for the rest, travel management is not dead.”

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