Credit crunch causes corporate travel cutback

A corporate travel specialist warned this week that tightening market conditions are affecting spending on foreign business travel.

John Coombe, chairman of Hogg Robinson, the world's fourth largest corporate travel firm, reports that the leading banks and financial institutions are cutting back.

"Certainly, we began to see some changes in the final quarter of the financial year and some of our managed clients, particularly those in financial services, have sought to reduce their overall travel expenditure," he said.

And more cut backs could be in store, he suggested, as "market conditions remain challenging and economic certainties exist".

In March, Hogg Robinson posted a profits warning, citing a poor recent performance from its corporate events arm, as well as diminished demand from smaller businesses.

The profits posted this week were in line with City forecasts, with gross earnings of £40.3 million for the past financial year, slightly down from £44.1 million achieved previously, when the firm's coffers were boosted by the World Cup.

Shares in the corporate travel company rose by 4.9 per cent to 43.25p on the morning of the announcement.

Mr Coombe added: "Managed travel has historically been more resilient than unmanaged travel in times of economic uncertainty.

"However, no business can be immune to the fallout from the continuing crisis of confidence in financial markets."

Tough conditions are forcing smaller companies to cut back on extravagances at corporate events and on trips, but prospects are good, according to Hogg Robinson's chief executive David Radcliffe.

By focusing on cutting costs, there is no need for small and medium-sized businesses to travel less frequently or host fewer or less elaborate corporate gatherings.

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