Wings Travel Management has seen a 15 per cent upturn in travel by its UK energy sector clients since the beginning of 2018, particularly to Iraq and the Gulf States, as the steady rise in oil prices has reignited investment in oil and gas exploration.
But continued indecision around Brexit’s trade negotiations means business travel spend from the TMC’s corporate sector clients has seen slower growth than anticipated.
“The uncertainty and status quo around decisions by the UK government concerning Brexit trade negotiations has definitely had a knock-on effect in terms of the level of growth we have seen from our UK corporate sector clients,” said Paul East, chief operating officer, UK/Europe & Americas, Wings Travel Management. “We had forecast seven to ten per cent growth, but so far this year we have only experienced three to five per cent.
“On the plus side however, now that the price of oil has increased to $70-$80 per barrel, drilling is becoming more cost effective for our clients in the oil and gas sector. If cost of extraction in certain countries is equivalent to $50 a barrel, then this means it is worth these clients investing in getting the oil out of the ground,” explains East.
“We have also seen an increase in travel to Iraq now that this market is expanding – not just from oil and gas companies, but also our clients who specialise in providing security services,” he added. “Safety is still a key factor for companies operating in Iraq, so our security sector clients are sending more employees there on contract placements of one or two months.”
Wings Travel Management has also seen a ten per cent increase in clients travelling to the Far East particularly Singapore, Hong Kong, Japan and Vietnam, as they seek to explore new business opportunities in a bid to prepare for a potentially unfavourable Brexit trade deal.
In addition, booking patterns for financial services clients have shifted as these companies are increasingly opening new offices in the Netherlands and Belgium, whilst retaining a London-base in preparation for post-Brexit.
“Our larger financial clients are keeping their options open so that they have the infrastructure in place as no one knows yet what the Brexit trade agreements will ultimately mean for UK plc,” continues Paul East. “Large corporates have the means to take this approach, but for our SME clients, the situation is much more challenging.”
SME clients with a business travel spend of up to £1M make up 60 per cent of Wings’ portfolio and the TMC is urging them to review their travel programmes and consider alternative scenarios.
“Currently it is almost impossible for SMEs to make long term business plans, particularly in terms of export growth to European markets,” says East. “It is therefore important for travel managers to consider potential opportunities and alternatives so that once the Brexit trade situation becomes clearer in six months’ time, they will be ready to take advantage of those opportunities.”
According to Wings Travel Management, geopolitical instability is continuing to add to the complexities of business travel and deterring companies from moving into certain markets.
“Diplomatic relations and economic sanctions are constantly in a state of flux, making it impossible to second guess what will happen next,” says East. “We expected to see growth in travel to Iran, but now that the USA has introduced sanctions, that growth has stalled. Similarly, for destinations such as Russia and Cuba, one moment sanctions are lifted, the next they are in place. Under the Obama administration, Cuba was forecast to flourish, but the Trump administration has now re-instated sanction. Companies who go into these markets need to invest a great deal of time and money to make it commercially worthwhile. They are holding back due to ever-changing geopolitical tactics from world leaders and this ultimately holds back business travel growth.”
About Wings Travel Management: Wings has carved a niche in the market as a trusted travel provider for clients in the oil, gas and marine sector, as well as companies operating in service- and people-critical industries where travel is an integral part of their business. Founded in 1992, Wings’ global reach spans North America, South America, UK/Europe, Asia Africa, and the Middle East, where the company has wholly owned and managed regional offices. Wings is known for its unique expertise in navigating complex and challenging energy-related business travel, as well as its advanced, customizable technology solutions, all seamlessly accessible over a standardized global platform. www.wings.travel