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Slowdown pinches business travel. But there's a silver lining

This article first appeared in Moneycontrol

The economic slowdown has hit India’s travel sector, and it is not just the leisure segment that is seeing a slump in activities. Business travel too is suffering.

According to Prashant Pitti, Executive Director, EaseMyTrip, the travel industry is witnessing slowdown owing to the increasing price of ATF (average ticket fare) and dropping margins on air tickets.

“In corporate travel segment, there has been cost cutting and average spend on travel has also dropped as compared to last year,” he said.

But there is a silver lining as companies are focusing on travel cost optimisation, which is helping the corporate travel sector grow.

According to Anish Khadiya, co-founder and Chief Business Officer, ITILITE, an AI-powered SaaS platform helping companies to digitise their travel management, firms are not focusing on cutting down spends.

“Firms are using analytics to optimise travel cost. Companies are using data to drive more booking discipline. One part of efficiency is driven by early bookings. That is how firms are bringing down the cost. They are using data to demand better discounts,” Khadiya said.

A white paper titled ‘redefining corporate travel management’, released by KPMG and FCM Travel Solutions earlier this year said that corporates are now taking to new travel tools that drive savings, efficiencies, compliance and traveler safety.

“Travel booking tools are solving issues of multiple bookings from different vendors, reimbursement etc. by deploying technology. They are also driving efficiencies by minimising the amount of time employees spend in travel management,” the report said.

This is one reason why the business travel market in India is growing even in times of downturn.

The report estimates India to be one of the fastest growing markets over the next five years, growing at the rate of 12.5 percent.

“Rise in annual growth of business travel spend for India has been the highest among the top 15 business travel markets globally in the past year. Consequently, India surpassed South Korea to reach seventh position in the top 15 business travel markets (by spend) globally and is projected to be in the top five by 2022,” the report added.

While leisure travel has been hit hard, the slowdown impact on business travel has been less.

“If we compare business and leisure travel segment, the former does not seem to be much affected by slowdown as it is a necessity that has to go on even when a corporate house is in its tightest budget. On the other hand, leisure travel is a luxury that has direct influence of prevailing economic and market conditions and per capita income and we have seen substantial fall in this segment,” said Pitti.

Although companies continue to spend on travel, there has been a dip in spending.

Khadiya said that from last year to this year companies have expanded their travel spend by 10 percent. A year before that companies were doing this at 13 percent. But he says this is where optimization angle comes in.

He added that companies are now looking at optimizing travel cost because there’s optimism around growth.

“Companies are saying growth will come and I need to be well-positioned for it. And the driver for this growth are the sales team and it is important for them to travel,” he said.

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