Managing T&E Indirect Contracts in Asia Pacific Issa Isaac Director, Global Service, Asia Pacific
Asia Pacific
East vs. West
Opinion A A B B
Contacts
Traveling
Handling of Problems
The Boss
Pakistan China Korea Japan India Taiwan Bangladesh Hong Kong Thailand Vietnam Philippines Malaysia Sri Lanka Singapore Indonesia Australia New Zealand 9
25+ countries & currencies 100+ languages 8 time zones 10
Oceania Greater China North Asia South East Asia South Asia 11
Guanxi Relationship Personal touch Commitment & Long Term partnership Business Etiquette Respect for authority Avoid loss of face scenarios Communications Bring a local representative to the meetings Some senior people are still not comfortable speaking in English Negotiations Expect it, part of the culture Initial meetings are just for introductions and presentations Food Business Importance & depth of the relationship judged by the food offered 12 12
Looking ahead
$61 $54 $41 $35 $31 $31 $30 $24 $22 $22 $20 $18 $17 $225 $274 Top 15 business travel markets (US$billions, 2013) Source: GBTA BTI Outlook: Annual Global Report & Forecast 2014-2018
Travel Spend by Region (US$billions, 2013) $302B 27% $262B 24% $76B 7% $415B 38% $51B 4% Source: GBTA BTI Outlook: Annual Global Report & Forecast 2014-2018
Annual Percentage Change Global GDP Growth 2012 2013 2014 2015 2016-18 7 6 5 4 3 2 1 0-1 Source: International Monetary Fund, HIS Global Insight, Rockport Analytics
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Australia Brazil Canada Business Travel Spend Growth 2014-2018 and current level of spend (bubble size) France China India Germany Indonesia Italy Russia S. Korea Netherlands Japan Country (Arranged Alphabetically) Spain UK US Source: GBTA Foundation, Rockport Analytics
Travel Spend Growth (%) Total Travel Annual Growth (2015-2024) Business Travel Annual Growth (2015-2024) Business Travel % to Total Travel (2013) China 7.7 % 6.8 % 23.7 % India 7.0 % 6.5 % 21.1 % Indonesia 5.7 % 2.9 % 20.8 % Australia 3.1 % 3.6 % 16.9 % Singapore 3.4 % 3.0 % 48.6 % Hong Kong 2.9 % 4.1 % 19.7 % Japan 1.0 % 1.2 % 34.2 % S. Korea 2.6 % 4.5 % 20.3 % Thailand 6.4 % 5.4 % 11.4 % Vietnam 6.0 % 6.0 % 11.0 % APAC 5.6 % 5.0 % 23.8 % WORLD 4.2 % 3.7 % 24.4 % Source: World Travel & Tourism Council (WTTC), 2014
China
India
Indonesia
Australia
Singapore
Hong Kong
Japan
South Korea
Thailand
Vietnam
Managing T&E
Global Policy compliance Air savings Online adoption Hotel savings Online booking Consolidation
Asia Pacific Policy compliance Air savings Hotel savings Travel Policy Online Adoption Savings
Budget Expense Policy Payment Suppliers Process
Sales conversion with in-person meeting USA 49% UK 45% Germany 50% China 57% Brazil 49% Source: World Travel & Tourism Council; Oxford Economics
Sales rely on business travel USA 21% UK 28% Germany 24% China 38% Brazil 32% Source: World Travel & Tourism Council; Oxford Economics
What to Expect Asia Pacific s large companies expect to spend more on business travel in 2015 and beyond. China, India, Indonesia being the biggest contributors in next 10 years Domestically generated (referred as 2nd wave rapid growth, compared to the 1 st wave which was the previous growth trend based on travel within Asia and rest of the world) Additional demand from businesses around the world sending employees to APAC to capitalize on economic expansion Corporations will continue to partner with Travel Management Companies (TMC) for optimization.
Meetings, Incentives, Conferences, Exhibitions (M.I.C.E.)
Travel Event Mgmt Venue Others 12% 4% 43% 41%
What to Expect Tremendous growth to continue (Industry expanded by 133% since 2009 compared to global growth of 19.9%) About 70% to 75% of meetings are being held domestically Top 5 APAC MICE destinations:: Singapore, Shanghai, Sydney, Beijing, Bangkok Corporations are recognizing the importance of strategic MICE management [ 38 ]
Key Insights Even for corporations with travel management programs, MICE often represent a fragmented and uncontrolled spend category. MICE spend is one of the least transparent spend categories, with indirect contracts and without SLAs. As much as 35% of travel spend is dedicated to MICE. Unlike business travel, which usually utilizes TMC best practices, MICE utilize multiple tools. Current challenges:» Find the synergies between business travel and MICE for further cost savings and better management controls» Overcome fragmentation, indirect contracts and decentralized data sources» Consolidate data to improve negotiation with suppliers (e.g. air, hotel, car) [ 39 ]
Path Forward Consolidating Business Travel and MICE Management is a MUST! By consolidation, all sourcing and contracting activities in aligning business travel and MICE are geared towards optimization and strategic spend management
Travel Consolidation
Travel is emotional
Degree Of Globalization Is your travel program aligned with your company s globalization? Global Multinational International Export Domestic Time
Global Travel Program consolidated travel expenditure through one agency to leverage in negotiating substantial discounts from suppliers and drive program compliance and savings
Considerations Client travel culture Countries organization and culture Travel spend distribution 45 45
Barriers in APAC Multiple and proprietary GDS Language Corporate card adoption Low cost of human resources Outdated tools (LCCs entry) Capabilities vs what s available 46
Benefits Tracked spending Cost control Policy compliance Traveler flexibility Support of corporate objectives
Thank you Issa Isaac, Director, Global Service, Asia Pacific