Business travel clampdown being 'relaxed'
The clampdown on business travel launched amid the recession is starting to ease as executives fly more and trade up from the economy class cabin, corporate travel group Hogg Robinson said today.
The group said companies were rekindling overseas face-to-face meetings, particularly in growth areas such as the Far East.
But Basingstoke-based Hogg Robinson cautioned this may not be the start of a sustained recovery as the economic outlook remained uncertain.
It has faced a steep drop off in demand for corporate travel since the recession struck as firms have cut out discretionary spend.
The group has been heavily exposed to the troubles in the financial sector, as one of the City’s favoured travel agents – with banking and finance its largest target market.
But Hogg Robinson has weathered the conditions thanks to a fee-based business model and ability to offer clients cheaper travel alternatives.
Half-year figures out today revealed that underlying pre-tax profits dipped 3.8% to £7.5m in the six months to September 30.
The firm has also cut costs to match the lower demand, reducing its global workforce by around 20% to 5,500 over the past 18 months.
David Radcliffe, chief executive of Hogg Robinson, said it hoped recent signs of stabilisation was confirmation of a more general recovery in the business sector.
“What we are seeing is some relaxation of travel policies,” he said.
“It started with a pick-up of activity within the Far East and now starting to see travel from Europe to the Far East and also a relaxation in classes of travel, with a return up front.”
He added: “It’s a general trend where companies are saying that they are international companies and need to operate internationally.”
The group’s revenues slipped 9.2% to £155.3m in the half-year, with falls limited by favourable exchange rates, although Hogg Robinson said it had maintained its client retention rate at 90%.
It has also continued to win new clients, including private equity giant Kohlberg Kravis Roberts and French bank BNP Paribas.
Shares eased 2% today, but Singer Capital Markets analyst Andy Murphy said the outlook was more upbeat for the firm moving into its stronger second half.
“Traditionally, Hogg Robinson Group is second half weighted and we anticipate it could be more second half weighted in 2009/10 as some signs of recovery are evident and costs have been aggressively reduced.”
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