(Updates with comment from HSBC in sixth paragraph, travel booker from 10th, Virgin Atlantic sales chief in 13th.)
Oct. 17 (Bloomberg) -- HSBC Holdings Plc, Europe’s biggest bank, is telling employees to reduce travel and become more savvy in shopping around for flights and rooms as concern about a global economic slowdown prompts a push to rein in spending.
HSBC’s travel volumes will almost certainly decline over the next 12 months, Lee Whiteing, the London-based bank’s travel and company-car manager for Europe, the Middle East and Africa, said today at the 2011 Business Travel Conference in London.
“It’s just going to be getting tougher out there,” Whiteing said in a presentation. “We’re going to continue to need to look to drive down the amount of travel. We’re constantly looking at ways of economizing and doing things smarter.”
Growth in premium air-traffic slowed to 2.3 percent in August from 7.5 percent the previous month, with bookings back at levels seen late last year, the International Air Transport Association said today. There’s also evidence of a permanent shift toward business people travelling economy class, it said.
HSBC can’t simply achieve cost cuts by squeezing the travel companies with which it has corporate accounts, Whiteing said.
“The message I’m going out to our businesses with is that we’re not prepared to provide the cost reductions that you are looking for simply by beating up the suppliers,” he said. “It’s more about amending travel behavior, travelling less if we can.”
Employees who traditionally arrange meetings and then book flights and rooms should check out the cost of travel first, and then tailor their trips to match cheaper times or those occasions when they can combine more than one visit, he said.
“People tend to ring a customer, arrange a visit and then go and book their travel,” Whiteing said. “What we’re saying to them is look at booking the travel first, or at least look at the cost of traveling first before you make the meeting.”
HSBC plans to cut 30,000 jobs by the end of 2013, about 10 percent of the total, to stem costs driven by rising salaries, it said Aug. 1. While the bank reported a 36 percent increase in first-half profit, it said expenses equal to 57.5 percent of sales are still higher than its 48 to 52 percent target range.
Chris Thelen, CEO of Chambers Travel Management, a U.K.- based booker of corporate trips, said a year that began “robustly” amid strong growth has turned much tougher, with tighter budgets likely to eat into his industry’s profitability.
“We are seeing much greater caution both in the public and private sectors, tight financial control,” Thelen said at the TBTC convention. “We see a reduction in margin and much more pay-as-you go pricing from our customers.”
Paul Wait, general manager for U.K., Middle East and global sales at Richard Branson’s Virgin Atlantic Airways Ltd., said travel budgets shouldn’t be viewed as a soft target for cuts and that a reduction in face-to-face interactions comes with a cost.
“Whenever companies feel the need to reduce expense, one of the first things that comes under scrutiny is business travel,” he said at the conference. “Why stop doing the things that make you successful? You only have to look through the history books to understand the importance of trade and how countries develop, thrive and survive as the result of a strong trading culture.”
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