European business travel spend is forecast to outpace last year’s growth level with more than two thirds of companies predicting that Brexit will have no impact on the sector.
Travel budgets in Europe grew by 1% in 2016 and are expected to show stronger growth of 2.5% this year.
Growth in travel spend in 2016 was driven by small and mid-size companies, which saw budget increases of 1.8% and 2.1% respectively.
Expectations among respondents to American Express Global Business Travel study “offer cause for optimism” and indicate that European businesses are generally upbeat about prospects for the year ahead.
Geopolitical developments have failed to dent overall confidence with 67% of the 982 travel, HR and procurement professionals across Europe suggesting that Brexit would have no impact on the European business travel market.
Respondents to the European Business Travel Barometer said they expected to see continued, stronger growth in 2017, with a 2.5% increase in spend anticipated.
A shifting corporate perception of business travel is emerging, with most now believing it plays a vital role in fulfilling business objectives.
Instead of viewing it as a cost, almost half of companies consider travel as a form of investment. This proportion has increased by 28 percentage points in three years, according to the research.
The trend is strongest in the UK, Germany and Scandinavia. More than three quarters (76%) of UK companies reported that business travel plays an essential role in facilitating growth. The figure was 54% in Germany and 53% in Scandinavia.
When asked about specific business activities underpinned by business travel, 32% of companies said budgets fund travel to existing marketplaces and retaining customers, while 22% said budgets were allocated against winning new business in new marketplaces.
Small companies allocate the largest proportion of their budgets (69%) to developing their customer base.
Traveller safety remains the main concern, with productivity and employee satisfaction rated more important than cost, albeit by a slim margin.
Focus on traveller safety is reflected by the proportion of companies using traveller locating technology, which now stands at almost two-thirds (64%), up 5% on 2015.
However, cost control remains a fundamental pillar of managed travel.
But when asked if they still had room to optimise travel expense, almost half (48%) said there was either no scope, or very limited scope, to make savings. This number rises to 56% among small businesses.
Consequently, companies are looking at indirect costs – organisational structures and automation – to make savings.
Large companies place greatest emphasis on reducing indirect costs (46% versus 40% of mid-sized companies and 36% of small companies), while a greater proportion of small and mid-size companies believe costs can be optimised by improving traveller comfort and efficiency (20% of small companies and mid-size companies versus 12% of large companies).
American Express Global Business Travel EMEA managing director, Elyes Mrad, said: “The findings of this year’s barometer reflect the positivity we’re seeing in the marketplace.
“Businesses are now looking to corporate travel as an investment to support growth objectives rather than treating it as a cost, with small and mid-sized businesses in particular leading the way.
“This SME sector is the backbone of all European economies; their optimism is good news for entire marketplace.”
Mrad added: “Priorities are changing – duty of care and traveller satisfaction are now at the heart of travel programmes.
“Working together with a travel management company, a company can identify areas for cost-optimisation within their programme, while employing a traveller-centric approach to policy.”