Search

Musical chairs in race for travel dollar

THE consolidation of WA’s mining sector has already had an impact on the corporate travel market with big takeovers resulting in significant accounts changing hands and putting other long-term relationships in doubt.

However, the wave of big end merger and acquisition activity in the WA resources sector will have little effect on the composition of the State’s corporate travel market which is already dominated by global giants and the major domestic airlines.

Instead, local players are hoping for a resurgence in oil and gas investment to boost the overall market after a tough year or two.

Debrett’s Travel Services managing director Denise Monk agreed that the past two years have been tough, though there were a few promising areas which tried to make up for the lack of resources business.

“Corporate travel is determined on the economic state of the nation: at this point in time resources is consolidating and, to a certain degree, contracting,” Ms Monk said.

“However, there are a lot of people doing well in the export market with the Australian dollar being very low.

“Certain industries like technology and food and those sorts of areas … there are a lot of opportunities for people who are prepared to get out and work in the overseas market.”

Debrett’s claims to be the leading independent agency in the WA corporate travel market, competing with three massive players, Business Travel International, American Express and Carlson Wagonlit, which dominate along with services offered by airlines Qantas and Ansett.

Smaller national players such as Flight Centre’s Corporate Traveller also have a position in the WA market.

In an example of the corporate musical chairs at the top end of the market, Rio Tinto quickly shifted the travel account of North from BTI’s Melbourne office to Rio’s incumbent agency Qantas after its successful takeover of the Australian mining and forestry group.

With Rio’s absorption of Ashton Mining and the possibility that Woodside could fall victim to Shell, among other takeover activity, further travel business could change hands.

While this is unlikely to alter trends driven by the demands of bigger clients whose main objective is the bottom line – it generally represents further migration of business from Perth as decision-making centres disappear from the State.

And smaller companies are reluctant to move into the void left by departing big accounts.

Business Travel International business development manager Steve Rule said many smaller operations were not convinced of the savings that could be generated by using a corporate travel agency to manage transport and accommodation requirements.

A key sticking point is often airline loyalty programs through which many executives have built up considerable points and fear outsourcing could mean losing that treasure chest.

“Loyalty programs drive a lot of people,” Mr Rule said.

“They tend to be blinded by the number of points they need to get to Europe.”

“There is a big reluctance there. They all want to look after the company and save money but when it comes to the crunch mum has already booked the holiday.”

In contrast to this, big companies have cut back severely on the travel budgets of their staff, shifting more air travellers into economy and using three-star hotels more frequently.

“These days it seems to be looking for the most economical option which doesn’t have rats in the room or fleas in the bed,” he said.

Ms Monk said everyone was cost conscious at the moment.

“The only time you see people splashing out is in boom time,” she said.

“We have not seen that for seven years, so we must be due for one.”

But she said too many people equated cost-savings with dealing with the multi-national corporate travel agencies.

“There is a misnomer that if you negotiate on a worldwide level you will get better rates - that ignores the local market,” Ms Monk said.

“That is particularly the case if you are negotiating out of the US where everything is in $US.”

Add your comment

BNIQ sponsored byECU School of Business and Law

Students

6th-Australian Institute of Management WA20,000
7th-Murdoch University16,584
8th-South Regional TAFE10,549
9th-Central Regional TAFE10,000
10th-The University of Notre Dame Australia6,708
47 tertiary education & training providers ranked by total number of students in WA

Number of Employees

BNiQ Disclaimer