With the end of the year comes an opportunity to review what’s changed in the corporate travel space over the past 12 months, and what we predict for the coming year.
While corporates continued to examine critically their travel needs and budgets in 2018, other developments have opened doors and are making corporate travel even easier.
Looking back on the year, the Corporate Traveller found that some policies and events had more of an impact than others.
Increased Africa access
An ongoing challenge facing corporates this year when conducting business in Africa was the difficulty in finding good-quality, affordable hotels for their employees. The good news is that 2018 saw a significant increase in the availability of product, with Hilton and BON hotels two of the chains that significantly increased their portfolios across Africa to cater for the increased demand.
The availability of well-known hotel brands in Africa offers corporates peace of mind and also enables TMCs to offer a range of options in different price brackets, which in turn means companies could potentially find it cheaper to do business in destinations that were prohibitively expensive and inaccessible because of high costs and safety concerns.
Airlines including RwandAir and Fastjet have added new routes into Africa, and other airlines have enhanced their frequencies. Improved air access means travellers can attend important meetings across Africa in person and save time, money and effort getting there.
VAT the heck?
South Africans have been accustomed to paying 14% VAT since 1993. From April 1, VAT was hiked by 1% and the knock-on effect has touched every aspect of corporate travel.
The result has been a rise in business costs, including travel costs, with suppliers across the boarding having no choice but to increase their rates and fares. We saw a price hike in the cost of air travel this year, as well as accommodation, and the fees of tour operators and travel agents.
The VAT increase also impacts international travellers who claim VAT refunds. Corporates have had to adjust their travel budgets and stipends to compensate for the increase. They’ve also had to become even more savvy about how they spend their travel budget, which is where Corporate Traveller has been able to show real value and deliver savings, without compromising on traveller safety and comfort.
Extreme currency fluctuations
There is very little corporates can do to when the rand goes into freefall. They still need to do business, but their revenue can be negatively impacted, and in turn their appetite for and ability to travel is diminished.
Travel agents in South Africa report that in 2018, there has been a decline in both business and leisure forward bookings compared with last year. Numerous agents also said that they had experienced cancellations with the weakening of the rand, and some travellers even opted to forfeit deposits, instead of paying the remainder of the increased package price.
In the corporate sphere, companies often forward book travel for industry conferences, AGMs and events.
While the fluctuating rand will likely impact the cost of these future trips, this is another area where Corporate Traveller can add value by assisting with competitive foreign exchange options because of its partnership American Express Foreign Exchange, and a seamless efficient end-to-end forex process.
London on top despite Brexit woes
According to Corporate Traveller, four of the five top international airports in the world for corporate traffic originating in South Africa in 2018 were cities in Africa: Windhoek, Gaborone, Livingstone and Harare.
London remains the top international business destination for South African corporates, Corporate Traveller’s data reveals. The British capital retains its status as one of the largest gateways to Europe despite concerns that with Brexit this will no longer be the case.
The impending split from Europe has been a hot topic throughout 2018 and while the jury is out on how the changes will impact travel programmes, Corporate Traveller predicts some key areas that may be affected if the EU and UK fail to strike a deal.
These areas include significant disruption at borders when travelling between the EU and UK, knock-on delays, a removal of visa-free travel, a potential change in airline compensation for delays and cancellations, a change to how personal data is managed and a change to taxation as UK business no longer have access to the EU VAT refund system, among others.
All will be revealed in March next year and Corporate Traveller will ensure it have our finger on the pulse to advise our corporate partners accordingly.
Price hike = hitchhike?
Soaring fuel prices were a mainstay of 2018. This had a devastating impact on the pockets of many South Africans consumers and corporates and influenced the price of air and ground travel.
Corporates have had to factor these increased costs in their travel budget. They may have had to become more selective about which meetings require travel and how best to manage their travel spend, which is an area Corporate Traveller has focused on in 2018.
The lifting of the electronics ban
In 2018, rules limiting the carry-on of certain electronics were relaxed. The previous year, numerous airlines, especially those in the US, placed bans on carry-on electronics larger than a mobile phone. Laptops and similar electronic devices had to be checked in and stowed.
Although restrictions were mostly on US inbound flights originating from Middle-East and some North African countries, business travellers were affected, as it cut into hours of potential working hours in transit.
Under US President Donald Trump’s administration, requirements for L1B visas which are required for work in the US, have been reviewed. This has of course derailed travel plans for many who planned or were intending to work and travel abroad.
US employers such as Deloitte, and many others, now have limited options to employ expats, which has in turn affected business travellers who were due to be redeployed in the USA for temporary or permanent contracts.
At Corporate Traveller, we’re keeping our eye on the ball as it moves from 2018 into 2019 to ensure we move with these trends and pre-empt and predict any impact on our corporate travel partners so that the management of their travel policy and budget is seamless, strategic and successfully contributes to each company’s growth objectives.