| MP63095 |
| MAPS Report : The Business Travel Market : January 2005 |
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This report covers: Business Travel, Market, tourism, forms of tourism, transport services, distribution, accommodation, distribution, mode of transport, time of travel, price of travel, online booking, travel management companies, airlines, railway operators, vehicle ferry companies, transport infrastructure providers, hospitality industry, accomodation, providers, restaurants, hotels, hotel loyalty schemes,
EXECUTIVE SUMMARY
| One lasting effect of the September attacks has been a heightened attention to security, especially in the US, where until then the population had little direct experience of international terrorism. These events led to a disproportionate fear of foreign travel, even to places unlikely to be at particular risk of terrorist activity, and to a more intrusive approach to the security issue in the US compared with most other countries. Several problems have been created for business travellers as a consequence. There have already been incidents where flights have been cancelled due to suspect names appearing on passenger lists. Furthermore, as well as more stringent screening of both people and baggage at departure airports, visa requirements have been tightened and there are increased delays at arrival airports, currently mainly in the US, as fingerprint and other identity checks are introduced. |
| There are also fears that security concerns could soon affect online travel reservations, with fingerprinting and other forms of identity becoming a requirement before tickets can be purchased online. Another consequence of the terrorist threat is that a further boost will be given to the use of alternatives to travel in the conduct of international business, such as webconferencing and videoconferencing in situations where face-to-face contact is not required. |
| Since the early 1990s, transport markets within the EU have been progressively liberalised as a result of legislative change at both European and national level, so that operations of member states of the EU are opened up to competition from airlines based in any other EU country. This new regime has also encouraged the emergence of low-cost scheduled airlines, such as Ryanair and easyJet, that compete with the existing operators in business as well as leisure markets. Even the established carriers have been forced to enter this market in an effort to retain business that would otherwise have been lost to the new entrants. This liberalisation now extends to the new EU member countries in Eastern and Central Europe, creating a new breed of low-cost carriers based in those countries. |
| There are still issues to be resolved before a completely level competitive playing field is achieved even within Europe. One remaining concern relates to the extent to which national governments can be permitted to subsidise companies that are unable to compete on equal terms in the harsher deregulated climate. |
| IT advances have been among the most significant developments affecting the business travel market over recent years. Such developments have included continued improvements to computer reservations systems and their reinvention as global distribution systems (GDSs), the development of the Internet as a means of direct access to travel information and booking facilities, the electronic ticket (ticketless travel) and webconferencing and videoconferencing, reducing the need to travel. |
| The role of the travel agent and the growth of direct selling to the public has been a recurring theme in the travel industry for many years. However, new mechanisms are now available to the general public and to individual business travellers that facilitate the obtaining of travel information and the ability to make bookings direct with suppliers of transport and accommodation services without the intervention of a third party. This has again called into question the role of the travel agent. Fresh from disputes with airlines regarding the level of commissions, travel management consultants are now also in conflict with GDS providers. |
| Many future developments affecting the business travel market will represent a continuation of current trends. Some of these will influence demand, others will represent constraints or stimulus to the supply of business travel services. Examples include the influence of demographic and economic factors on demand and the influence of technological developments on supply. Other influences are likely to prove less predictable, the result of unforeseen events, mainly in the political field. |
| Recovery in business travel demand worldwide now seems well under way, fuelled by global economic recovery, and UK business travel demand seems set to increase on the basis of that recovery. In the longer term, the hospitality industry is one sector of the UK economy that is expected to show above average growth over the next 5 years. |
| The market for UK domestic business travel is relatively mature, meaning only slow growth in volume terms is expected over the period to 2009. The UK market for overseas business travel is expected to recover in parallel with the anticipated continuing recovery in the growth of the world economy as a whole. Business travel to the UK by overseas residents, hit hard by the events of 2001, is estimated to have returned to the levels achieved in 2000 before the end of 2004. |
TABLE OF CONTENTS
| 1. Introduction |
| BACKGROUND |
| Definitions |
| Tourism |
| Forms of Tourism |
| Classifications of Tourism Demand |
| Basic Tourism Units — Categories of Traveller |
| Published Tourism Statistics |
| Classifications of Tourism Expenditure |
| Definition of Business Travel |
| The Supplying Sectors |
| Transport Services |
| Accommodation |
| Business Travel Agents |
| Other Services |
| 2. Strategic Overview |
| Market Dynamics and Segmentation |
| Segmentation by Product |
| Product Characteristics |
| Transport Services |
| Origin or Destination |
| Duration of Trip |
| Mode of Transport |
| Time of Travel |
| Price of Travel |
| Accommodation |
| The Total UK Business Travel Market |
| Table 1: Business Travel to, from and within the UK by Volume and Value (000 and £m), 2000-2004 |
| Distribution |
| Travel Purchasing Methods |
| Online Booking |
| Travel Management Companies |
| Business Travel Agency Networks |
| Competitive Structure |
| The Marketplace |
| Competitive Structure — An Overview |
| Significant Players |
| The Transport Operators |
| Airlines |
| Railway Operators |
| Vehicle Ferry Companies |
| Transport Infrastructure Providers |
| The Hospitality Industry |
| Accommodation Providers |
| Restaurants, Cafés and Bars |
| Other Supporting Sectors |
| Business Travel Agents |
| Credit- and Charge-Card Companies |
| Car-Rental Companies |
| Providers of IT Services |
| Providers of Other Goods and Services |
| marketing activity |
| Airlines |
| Airline Mergers |
| Airline Alliances |
| Internet Marketing |
| Frequent Flyer Schemes |
| Hotels |
| Hotel Loyalty Schemes |
| Internet Marketing |
| Hotel Marketing Associations |
| New Products |
| Other Operators |
| Railways |
| National Rail Services |
| Eurostar |
| Advertising |
| The Consumer |
| Market Forecasts |
| Table 2: Forecast Business Travel to, from and within the UK by Volume and Value (000 and £m), 2005-2009 |
| 3. Business Travel by UK Residents |
| Background |
| Market Size |
| Table 3: Business Travel Taken by UK Residents in the UK and Abroad by Volume (000 trips), 2000-2004 |
| Table 4: Business Travel Taken by UK Residents in the UK and Abroad by Value (£m), 2000-2004 |
| Consumer TRends |
| Marketing and Distribution Activity |
| Advertising |
| Airline Business Travel Advertising |
| Table 5: Main Media Advertising Expenditure on Airline Business Travel Products (£000), Years Ending September 2003 and 2004 |
| Non-Airline Business Travel Advertising |
| Table 6: Main Media Advertising Expenditure on Non-Airline Business Travel Products (£000), Years Ending September 2003 and 2004 |
| 4. Domestic Business Travel by UK Residents |
| Background |
| Market Size |
| Table 7: Domestic Business Travel by UK Residents by Volume and Value (000 and £m), 2000-2004 |
| Table 8: Domestic Business Travel in Great Britain by All Modes of Transport† (number and miles), 1998-2003 |
| Season of Travel |
| Mode of Travel |
| Table 9: Domestic Business Journeys and Journey Distance per Person per Year in Great Britain by Main Mode of Transport† (number, % and miles), 1999-2001 |
| Consumer Trends |
| Table 10: Business Travel in the UK within the Past 12 Months (% of respondents), 2004 |
| Marketing AND DISTRIBUTION ACTIVITY |
| 5. Overseas Business Travel by UK Residents |
| Background |
| Market Size |
| General |
| Table 11: Business Travel Abroad by UK Residents by Volume and Value (000 and £m), 2000-2004 |
| Table 12: Business Travel Abroad by UK Residents by Destination Region by Volume and Value (000 and £m), 2000-2003 |
| Average Length of Stay |
| Table 13: Business Travel Abroad by UK Residents by Broad Destination Region by Average Length of Stay (number of nights), 2000-2003 |
| Destinations |
| Table 14: Top Ten Destinations for Business Travel Abroad by UK Residents by Volume and Value (000 and £m), 2002 |
| Season of Travel |
| Table 15: Business Trips Abroad by UK Residents by Destination Region by Season by Volume (000 and %), 2003 |
| Mode of Travel |
| Table 16: Business Trips Abroad by UK Residents by Mode of Travel by Volume (000 and %), 2000-2003 |
| Consumer TRends |
| Table 17: Business Travel Abroad in the Past 12 Months (% of respondents), 2004 |
| Marketing Activity |
| Overseas Hotel Advertising |
| 6. Business Travel to the UK by Overseas Residents |
| Background |
| Market Size |
| General |
| Table 18: Business Travel to the UK by Overseas Residents by Volume and Value (000 and £m), 2000-2004 |
| Table 19: Business Travel to the UK by Overseas Residents by Region of Residence by Volume and Value (000 and £m), 2000-2003 |
| Average Length of Stay |
| Table 20: Business Travel to the UK by Overseas Residents by Region of Residence by Average Length of Stay (number of nights), 2000-2003 |
| Destinations in the UK |
| Table 21: Top Ten Destinations for Business Travel to the UK by Overseas Residents by Volume (000), 2002 |
| Season of Travel |
| Table 22: Business Travel to the UK by Overseas Residents by Region of Residence by Season by Volume (000 trips and %), 2003 |
| Mode of Travel |
| Table 23: Business Travel to the UK by Overseas Residents by Mode of Travel by Volume (000 trips and %), 2000-2003 |
| Marketing AND DISTRIBUTION Activity |
| 7. An International Perspective |
| Market Developments |
| Historic Background |
| Business Travel and the World Economy |
| Table 24: The World Travel and Tourism Market by Sector by Value ($bn and %), 2000-2003 |
| Table 25: The World Travel and Tourism Market by Sector by Volume ($bn at 1990 prices and %), 2000-2003 |
| World Trends in Business Travel by Air |
| Table 26: The Top 25 Business Airports in the World by Estimated Number of Business Passengers, 2003 |
| competitor Environment |
| The Air Transport Regulatory Environment |
| Major Suppliers |
| Airlines |
| Table 27: The Top 20 World Airlines by Revenue Passenger Kilometres (billion), January-August 2004 |
| Hotels |
| Table 28: The Top 20 Hotel Brands in the World by Number of Rooms and Hotels, 2004 |
| Forecasts of World Business Travel |
| Table 29: The Forecast World Travel and Tourism Market by Sector by Value ($bn and %), 2004 and 2014 |
| Table 30: Forecast World Travel and Tourism Market by Sector by Volume ($bn at 1990 prices and %), 2004 and 2014 |
| Consumer Behaviour |
| International Business Travel |
| Domestic Business Travellers |
| The Meetings Business |
| 8. PEST Analysis |
| political FACTORS |
| The `War on Terror' |
| Impact of Political Uncertainty |
| Security |
| Regulatory/Licensing Framework |
| EU Air Transport Market Deregulation |
| State Aid to Airlines |
| economic FACTORS |
| Business Travel and the Economy |
| Table 31: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 |
| Micro-Economic Influences |
| The Euro |
| Fuel Prices |
| social FACTORS |
| Fuel Taxes |
| Safety and Security |
| Business Travel and the Environment |
| Social Performance |
| UK Social and Employment Legislation |
| National Minimum Wage Act 1998 (as amended) |
| Employment Act 2002 |
| Disability Discrimination Act 1995 |
| Tobacco Advertising and Promotion Act 2002 |
| Working Time Regulations 1998 (as amended) |
| technological FACTORS |
| General |
| Global Distribution Systems and the Internet |
| Electronic Ticketing |
| Webconferencing and Videoconferencing |
| Technology on the Move |
| 9. Consumer Dynamics |
| Extent of business travel by individuals |
| Table 32: Business Travel in the UK in the Past 12 Months (% of respondents), 2004 |
| Table 33: Business Travel Abroad in the Past 12 Months (% of respondents), 2004 |
| Table 34: Business Travel both within the UK and Abroad in the Past 12 Months (% of respondents), 2004 |
| frequent business travellers |
| Table 35: Business Travel for More Than 10 Days in the Past 12 Months (% of respondents), 2004 |
| Occasional Business travellers |
| Table 36: Business Travel for Between 1 and 5 Days in the Past 12 Months (% of respondents), 2004 |
| 10. Company Profiles |
| Introduction |
| BAA PLC |
| Company Structure |
| Corporate Strategy |
| New Product Development |
| Awards |
| Advertising |
| Profitability |
| Future Company Developments |
| British Airways PLC |
| Company Structure |
| Corporate Strategy |
| Product and Brand Development |
| Appointments |
| Advertising |
| Distribution |
| Investments and Disposals |
| Profitability |
| Future Company Developments |
| British Midland PLC |
| Company Structure |
| Corporate Strategy |
| New Product Development |
| Brand Development |
| Appointments |
| Advertising |
| Distribution |
| Profitability |
| Future Company Developments |
| Carlson Wagonlit TRavel |
| Company Structure |
| Corporate Strategy |
| New Product and Brand Development |
| Appointments |
| Distribution |
| Profitability |
| Future Company Developments |
| Corus Hotels plc |
| Company Structure |
| Corporate Strategy |
| Brand Development |
| Product Development |
| Advertising |
| Distribution |
| Profitability |
| Future Company Developments |
| easyJet PLC |
| Company Structure |
| Corporate Strategy |
| Product and Brand Development |
| Appointments |
| Advertising |
| Distribution |
| Profitability |
Text © 2005 Key Note
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Last updated by Amanda Porteous June 2005
