Released on = April 16, 2007, 5:05 am

Press Release Author = Bharat Book Bureau

Industry = Marketing

Press Release Summary = Business trips account for a significant share of world
tourism, and this Market Assessment report reviews the demand for business travel
to, from and within the UK. It considers the main factors that influence this
demand, both broad trends and developments in specific product markets.

Press Release Body =
The Business Travel Market - Market Assessment

Business trips account for a significant share of world tourism, and this Market
Assessment report reviews the demand for business travel to, from and within the UK.
It considers the main factors that influence this demand, both broad trends and
developments in specific product markets. Also considered is the structure of the
industry that supplies the needs of business travellers resident in or travelling to
the UK, including airlines, the hospitality sector and other supporting services.

Many recent changes in behaviour by international business travellers have occurred
widely across several different geographical markets, including a resistance to
higher business and first class fares, an increasing use of the services of low-cost
airlines, growth in the use of air taxis and business jets and the use of the
Internet for booking business travel.

Traditionally, business travellers have purchased travel and accommodation services
through the internal travel department of their company, or through intermediaries
such as business travel agents, but now travellers are increasingly booking many
elements of their trips online.

The advent of the new low-cost airlines, such as easyJet and Ryanair, has radically
changed the rules of the game, such operators using the Internet to cut out the
middleman. By way of response, the established scheduled carriers have also adopted
this technology as part of their distribution strategy. Moreover, not just airlines
but hotels and surface transport operators are encouraging their clients to make
reservations online, while online agencies are also currently handling small but
growing volumes of business travel.

Since 2001, business travel demand has received a number of blows, including the
terrorist attacks in the US in September 2001 and the slowdown in world economic
growth in 2002 and 2003.

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.

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