Corporate travel in Singapore: a booming corporate hub, about to be transformed

In the corporate market, experts see challenges and opportunities in technology adoption, especially self-booking, and also identify the need for more sophistication in payment methods.

Singapore: a growing corporate travel hub

Singapore, as a global trade and transport hub, has many unique characteristics in its business travel procurement and management.

Bertrand Saillet, general manager - Singapore for FCm Travel Solutions, notes that most corporate travellers "are very demanding and require a high touch service".

"The market in general, however, is pretty straightforward. Most of the air content is available in the GDS and hotel aggregators are also present in this market, so there is no real challenge on this front."

Mr Saillet describes the Singapore market as high yield, "with lots of business- and premium-class travel. This trend is expected to continue for a while".

With virtually no "domestic travel", Singapore travel managers have always tended to be outward-looking, and this requirement has been heightened as more global and regional programs are managed there.

CTM general manager - Singapore Andy Michaels Lim is among those seeing an increasing number of clients seeking global travel management solutions.

Andi Budd, vice president and general manager, American Express Global Business Travel, ASEAN, says Amex's local customer base includes a number of multinational companies with either their regional headquarters or local offices in Singapore.

Kurt Knackstedt, president of the Association of Corporate Travel Executives, understands the Singapore market, having recently served as global category lead, travel and expense management for Rio Tinto. He sees the state's geographic location, close to Asia, Australia and Europe, as a key reason for choosing it as a global or regional travel management hub, alongside the strong economic activity and interest in Asia - albeit a bit subdued in recent months.

Kai Chan, general manager - southeast Asia and Hong Kong for Carlson Wagonlit Travel, has seen a significant increase in the number of regional and global programme managers in Singapore over the years which she attributes to business growth in Asia Pacific.

"There are obvious geographical benefits to managing a global travel program from Singapore; however, the cultural and logistical complexities across Asia reinforce the requirement for localised expertise. With more than 3,500 languages, varying maturity of markets, different currency rates, taxation rules and regulations along with a number of different GDS and OBT options, it is unique and requires a specialised approach," she adds.

Tony O'Connor, director of travel consultancy Butler Caroye Asia Pacific, notes that many multi-national procurement managers in the country take direction from head offices in the US or Europe, which means they have to be skilled at fitting in with larger programs and methodologies while still applying local knowledge and adapting to local conditions.

Cost is no longer the only issue for corporates

Mr Budd explains that like in many other regions, there is an appetite among companies to drive cost savings in their business travel expenditure. "Of course, companies can still realise cost savings through consolidation, negotiation and by reducing the number of hotels available within each city, to name some examples, but further opportunity for cost savings exists with increased travel policy compliance."

Benson Tang, ACTE regional director - Asia, notes that business travel in his region, like other markets, is seeking a balance in policy between savings and service.

He cites a just-released ACTE/American Express white paper which predicts that travel managers will increasingly focus on traveller behaviour, rather than supplier cost reductions in the near future.

"The management role of the travel manager has shifted," says Mr Tang, who will be one of the presenters at the CAPA/ACTE Southeast Asia Corporate Travel Innovation Day.

Mr Michaels Lim says CTM is witnessing a gradual shift from the focus on costs (led by procurement divisions) through to the consolidation of reporting (led by finance teams) and increasing emphasis on crisis management (led by human resources teams).

"That is not surprising; as businesses globally need to ensure the welfare of their staff is their highest priority, so efforts to manage and reduce risk are top of mind. Where previously this was a welcome addition to a travel management program, more and more this is considered a must-have for businesses we service."

Mr Budd agrees that traveller welfare is firmly on the agenda. "Our global, multinational customers already have an excellent understanding their duty of care towards their employees as it relates to business travel. There is also a growing awareness of these obligations amongst locally based companies, and I expect that to be a larger focus over the coming years," he explains.

The focus is similar for ATPI clients, according to Kelly Jones, regional head of key account management - Far East: "Strong duty of care policies are now an essential part of all travel programs; therefore, traveller tracking tools are vitally important for corporations to monitor the whereabouts of their employees."

Technology adoption lags other markets

The differences between East and West are nowhere more evident than in Singapore's ambiguity towards travel technology.

As Brett Henry, VP - commercial for Sabre Travel Network Asia Pacific, explains, "Singapore is one of the most mature travel markets in terms of infrastructure, but the emphasis on personal service means that there continues to be the expectation that an agent will manage the traveller's needs. To an extent, that is suppressing self-booking tool adoption and usage, although it is clearly coming."

Major obstacles to adoption of Online Booking Tools (OBT)

Source: Abacus

A recent Sabre Asia Pacific Corporate Travel Practices Survey revealed that customers in Singapore are "high touch (and) tend to expect everything to be completed on their behalf, at minimal or no cost".

However, the cost of labour is rising, putting pressure on the service culture. This is causing Singapore companies and MNCs in the city-state to push for OBT deployment. "They want to trim the cost of booking and fulfillment, especially for the simpler point-to-point itineraries," he explains.

Amex's Mr Budd attributes the low usage of online booking to the high level of international travel, "coupled with the fact that there is a culture of delegation of the travel booking function to assistants and travel arrangers". However, he also sees "a generational preference that will likely shift over the next five to 10 years as younger generations prefer to manage more of these aspects personally, and greater technological advancements enabling trip customisation will only make this more attractive".

Sabre's Mr Henry points out that there are significant differences in the market: Global corporations adopt travel management technology very readily. This is because it is expected, even mandated, in other countries and regions. The travel budgets are very significant and OBTs are understood to drive greater compliance.

Global corporations' local offices are therefore setting the pace with adoption.

National and local accounts tend to favour the traditional client-service model, but with the travel management company crunching the data and providing the behavioural analysis that they want.

Amadeus APAC president Albert Pozo sees cultural differences as a major barrier for the adoption of booking technology. "The service ethos is so embedded in Singapore that people may have balked at the idea of planning something as important as travel without the human touch," he observes.

However, mobile technology is helping to overcome the barriers. "Singaporeans are big adopters of mobile technology and every aspect of traditional behaviour is realigning to the new world. Boosted in part by the emergence of the millennial workforce, Singaporeans are increasingly comfortable with taking ownership of their activity, using the device in the palms of their hands.

"This is also true of self-booking tools. Mobile travel technology has come a long way in the past few years; indeed, Amadeus has made large investments here."

Developments in mobile booking options

Source: ACTE/American Express Global Business Travel

Recognising the rise of mobile, Sabre recently launched Asian language versions of its mobile itinerary management app, TripCase, in simplified Chinese, traditional Chinese, Korean and Japanese. This version provides Singapore users access to benefits enjoyed by 110,000 travel management companies, travel suppliers and corporations relying on the English-language edition.

Mr Pozo says his company's booking tool, Amadeus e-Travel Management (AeTM) and its mobile cousin, AeTM Mobile, have enjoyed real success in Singapore and across the region.

Martin Herbert, general manager Asia for Travelport, while conceding that adoption is still low, is seeing "an increasing trend where large corporations are demanding that their TMCs have the tools available".

Understandably, global and regional corporations tend to be more inclined to travel-related technologies than domestic Singapore companies. There are also significant differences between the online booking capabilities of TMCs in the Singapore market, he says. "Global TMCs ... tend to have stronger commitment in a globally streamlined and standardised technology platform. This could be due to the top-down approach to technology adoptions.

"While local TMCs may have invested less in technology resources and expertise, it should also be noted that most of their business requirements are standalone in nature and do not require the same large-scale standardisations that global TMCs need to implement. Management of local TMCs are also fearful that their users may not be very adaptable to new technologies."

But, Mr Herbert points out, mega-TMCs don't hold all the aces: "While global TMCs might have more sophisticated technology, due to their size and standardisation, they also lack local flexibility in offering solutions. On the other hand, local TMCs may be nimbler in their approach and be able to offer smaller but more flexible technology solutions."

Increased airline competition for the corporate pie

Table 1: Southeast Asia LCC Capacity Share

Air still dominates corporate spend because of the high proportion of international travel from Singapore and Budd points out that legacy carriers tend to lead the market.

"We are still seeing a preference towards the legacy carriers driven by product, schedule and loyalty to the frequent flyer programs," he explains. "That said, companies are shifting their focus towards lowest logical air fare and 'best fare of the day' in ever-increasing amounts. In many cases, the travel manager will want to see a low-cost carrier fare comparison as part of their due diligence, but we are only really noticing an actual shift in bookings on very short-haul routes or where a low-cost carrier has the most direct connection."

Vivian Choo, ATPI regional director, strategic sales, sees the aviation market in Singapore going through a period of change with increased competition from low-cost carriers and a significant fleet expansion by national airline Singapore Airlines (SIA).

"SIA is well positioned and continues to be successful in Singapore," she says, adding that "unless there is a drastic change in travel policy, corporations will continue to purchase air through SIA".

"Singapore Airlines have done well in the positioning of its subsidiary regional brands and each brand has benefitted from each other - Singapore Airlines as a full-service, long-haul carrier, Silk Air as a full-service short-haul carrier; Tiger Air as a short-haul LCC and Scoot is a regional service carrier."

She also notes that the recently introduced SIA premium economy product will impact on the market.

Also observing the rise of low cost carriers is CWT's Ms Chan: "While some global companies may not have adopted the usage of LCCs in their policies yet, companies with a heavy footprint in Singapore, Malaysia and India have been more receptive to the usage of LCCs within their corporate program."

Ms Chan explains that OBTs have also started to host LCC content "which makes it easier for companies to use LCCs within the realm of duty of care by booking through one preferred channel, i.e. the TMC".

Where the national carrier was once the default option for corporate travel, Lee Ser Yi, VP corporate sales and distribution at Singapore Airlines, points out that "all the large companies that we deal with have in place formalised procurement procedures. We bid for their travel spend through a competitive RFP that is held once in two to three years on average".

He adds that while his has both full-service and low-cost operations to cover the respective market segments, "we know from speaking to our corporate customers that they appreciate the benefits that a full-service carrier brings to corporate travellers".

SIA, he says, is happy working with TMCs and clients in "a tripartite relationship that has worked well for us and our corporate customers".

At the same time, the airline welcomes direct relationships with corporate customers. These, he says, ensure that the airline gets first-hand feedback on its products and services. "They tell us what we are doing right and where we need to improve. The close engagement also gives us the opportunity to tailor our offers to meet the diverse and unique requirements of each corporate customer."

Butler Caroye's Mr O'Connor says one of the biggest challenges remains confusion over "best fare". "Is it best fare from preferred airlines or best fare from any airline, regardless of deals and commitments in place? If the latter, a best-fare policy punches holes in airlines deals. This can end up costing you money. However, there is an ongoing shift towards lower cost, more restricted fare types as buyers recognise the excessive premium charged for flexibility. This renders negotiated airline discounts much less important."

Mr O'Connor advises clients to incorporate low-cost carriers into their travel programs, especially as their networks and frequencies expand, and as their service qualities prove themselves over time. "However, this worsens the issue of access to fragmented inventory. We need to be certain that our TMCs' systems automatically access all fares and rates in the market at lowest cost. We are also increasingly relying upon TMCs to satisfy our travellers' growing demand for excellent service via the range of mobile devices."

There has been only limited disruption - but that will change

The experts are divided about the impact of disrupters like Uber and Airbnb, with CTM's Mr Michaels Lim "not currently seeing an impact from sharing applications on the corporate sector".

Similarly, Amex's Mr Budd says the new travel suppliers have "not had a huge impact on Singapore's corporate travel sector thus far, but I suspect this will change by this time next year".

"The reality of the changing world around us is that the next generation business traveller wants more choice. For longer stays, or for travel to unusual business destinations, for example, travellers might want to go for a house or apartment over a traditional hotel. At this stage, however, we are not seeing a huge demand for the likes of Airbnb from the business travel population in Singapore. Singaporeans typically want creature comforts and excellent business services on short trips, so they usually choose to stay in hotels with a four-star minimum.

"In terms of car services, Singaporeans are very accustomed to ordering taxis by mobile app, but travel managers remain concerned from a safety and data capture perspective.

"If we can get better data from these sharing economy providers, our customers are more likely to want to incorporate them into their travel policies. We'll need to work together as an industry to accommodate traveller needs, whilst retaining the essential data we need for insights and from a safety and security perspective," he suggests.

FCm's Mr Saillet is already seeing changes. "With the rise of millennial travellers, the use of the sharing economy is one of the largest changes to business travel management in Singapore. This group of travellers are particularly advanced in adopting the new disruptors in the travel industry, using platforms like Airbnb and Uber in their travel plans," he observes.

The next big thing … mobile, "still in adoption phase"

While self-booking tools are not yet the norm, Singapore travel managers seem to be focused on mobile technology.

Indeed, for Travelport's Mr Herbert, mobile is the next big thing. "Mobile is still very much in the development and adoption phase. The travel industry is still in the process of getting it right and constantly adapting and refining its technologies," he says.

Amex's Mr Budd also sees mobile on the radar, seeing it as a hot topic. "Right now, many travellers have information available at their fingertips with itinerary management tools (but there is still) a significant demand within the industry for a strong mobile business travel solution that delivers on the expectations travellers have, derived from leisure travel experience. Developing a robust mobile solution is a priority for us."

Amadeus' Mr Pozo is also aware of the rising tide of mobile: "Every time we speak with a corporate customer in the region, they are clear that mobile solutions are a high priority."

Mobile, he stresses, is more than an app version of a self-booking tool.

"Travellers are doing much less preparation these days. They basically 'leave the house' and depend on their mobile all the way. From online check-in, disruption information, last minute transfers and hotel bookings, destination information and social connections to their peers and colleagues onsite. A full mobile platform allows them to search, book, rebook and start their expense on the fly with receipt scanning and credit card feeds.

"For (Amadeus), mobile is the 'new normal': the undertaking now is to work with our partners to efficiently connect all the dots of the ecosystem."

Looking more broadly, ATPI's Ms Jones notes the rising importance of data. "The collection and analysis of high-quality data is a key priority for travel managers. This Big Data will be key moving forward to ensure all aspects of travel are managed, analysed and used to build a world-class travel program,"she says.

Ms Jones cites the new ATPI Analytics tool as the shape of things to come: "Traditional travel reporting is often designed to protect the user from high volumes and complexity of data only providing static answers to often out-of-date questions. ATPI Analytics offers a new perspective for travel data analysis. The dynamic platform gives companies the ability to go beyond the mere presentation of the data to truly understanding what is driving travel program behaviours."

Data is also a key concern for CWT clients, with Ms Chan flagging the imminent release of the CWT AnalytIQs business intelligence offering. "With that, companies will have access to real-time business intelligence with insights into post- and pre-ticket data. Globally consolidated, real-time data is available instantly, giving them the ability to monitor and take action on transactions immediately after bookings are made," he explains.

ACTE's Mr Knackstedt sees a big opportunity around payments. "There's still a massive fragmentation across Asia around card and payment consistency. There are huge regional differences, and centralised payment platforms like BTA and AirPlus don't yet have a lot of traction, and card companies are now starting to provide virtual cards, but that's still got a long way to go. But because Asia is such a mobile-driven economy, there's great potential for Asia to leapfrog over other markets with respect to new payment methods."

Another trend to watch is supply aggregation. "We have also seen a trend of consolidation for corporate travel in recent years," says Saillet. "Companies are skipping multiple suppliers for travel bookings; but instead, book their travels through a TMC so that their travel programs are better managed."

For Butler Caroye's Mr O'Connor, the buzzword is integration: "We need TMC networks that are truly cohesive and seamless across the region. We need single booking systems across the region rather than patchworks of different OBTs, GDSs and back-office systems. And we need better integration of duty of care systems and approval systems with booking systems, and we need this also in smaller markets," he says.

These issues, and other more general business travel procurement topics, will be discussed in detail at the CAPA Corporate Travel Innovation Summit on 23-Nov-2015, being held with the support of the Association of Corporate Travel Executives (ACTE).

Upcoming CAPA/ACTE events

The Association of Corporate Travel Executives and CAPA - Centre for Aviation will jointly convene international events next year, including a number in the Asia Pacific.

CAPA and ACTE will provide nine major Corporate Travel Summits in the Australasian markets for 2016.

"CAPA and ACTE have been working together on various programmes throughout the world," according to Peter Harbison, Executive Chairman of CAPA.

"Both groups share common objectives and a common vision. ACTE's reputation for innovation and senior level educational programmes is a perfect match for CAPA's services, which span the interests of airline CEOs and business travel managers. Combining these two annual events provides more options for clients and members, while enhancing opportunities for buyers and suppliers."

Further details of the combined events can be found here.

Provided by Allan Leibowitz, a business journalist and a regular contributor to CAPA.

Allan edited Business Travel Monthly/Management for more than a decade and also transformed Procurement Professional into a leading resource in the Australasian market. His business travel reporting career has included several visits to Singapore to interview industry leaders and attend conferences. He now leads 'talking business', a content marketing and events consultancy which specialises in procurement and business-process issues.