CWT's Patrick Andersen on distribution concerns, sustainability

The corporate travel community faces continued uncertainty with estimates it may take another 12 to 18 months to get back to 2019 levels.

The majority of travel managers and buyers within businesses are anxious about the coming year, according to the results of a poll from the Institute of Travel Management shared at its annual event this week.

Asked to comment on the sentiment, Patrick Andersen, president and CEO of CWT, said that while the second and third quarters of 2022 were strong, travel demand stabilized at “around the 70% mark” in Q4 versus 2019 levels.

“If you look at various surveys and ask various institutions that look at our industry to try to provide some prognosis of where we are going, one thing I have seen is that recovery has been pushed out probably 12 to 18 months," he said. "I think that’s fair given what we’ve seen in the back end of 2022 and the first part of this year. Demand has not continued to accelerate to the degree we saw.”

Andersen, who took up the reins at CWT a year ago, also said that while recovery is expected, it’s the “incline that’s questionable,” adding that different geographies are seeing different rates of recovery.

“China is back up at 110%, the [United States] is closer to 60%, and European countries are somewhere in between.”

Meetings and events meanwhile represent a beacon of hope “where demand seems to be high.”

“Hotels have very high demand when it comes to events and are able to command very high prices relative to that and given the new reality of working and the nature of hybrid and remote working, that is fueling additional opportunities for events,” he said.

The interview, conducted by Richard Tams of Tailwind Advisory, also touched on sustainability and how travel management companies could support travel managers through this “frightening period in terms of meeting their organization's ESG [environmental, social and governance] goals.”

Andersen said that sustainability is in all of CWT’s request for proposals now and is a “stated aim.”

The TMC also just unveiled a carbon calculator for meetings and events with Thrust Carbon.

He also said that it boils down to customers wanting visibility on the potential carbon footprint at the time of booking as well as how CWT can help companies understand their carbon emissions through reporting.

“I think companies have calculated on average that if they’re going to achieve their carbon footprint [reduction] by 2030, they have to reduce the amount of travel on average per employee by 20%. And that’s all other things being equal. I think airlines are going to become more efficient, and generally the economy is going to become more efficient so that’s going to potentially reduce some of those ratios. So it’s going to be interesting to see the extent to which companies decide the carbon emission is more important than the price of the ticket.”

Andersen said that while behavior doesn’t seem to have changed towards buying direct flights at higher prices, some companies are consolidating trips and combining meetings in a number of cities in one trip.

“It’s going to change the dynamic. It’s not a land shift yet. It’s a six percentage point shift from pre-pandemic to today. Multi-city, transatlantic was about 50% pre-pandemic, it’s about 56% now.”

Content fragmentation, particularly in airline inventory, currently a big concern for the travel management community, was also discussed.

ITM’s poll revealed that only 40% of those gathered feel the TMC sector is adapting to the changes required to be able to sell airline inventory through more modern channels.

Andersen said the supply chain needs to be more “joined up on this” because everyone wants the best experience for travelers and access to the right inventory.

“We all share the aspiration of NDC, and the industry has the responsibility to provide that to travelers on a go-forward basis.”

He said the industry is used to content fragmentation with the majority of hotels in Europe sitting outside the global distribution systems historically, but that air is more complex.

“Where the data resides is changing in an NDC environment, but we need to solve for that and in a scalable way. One party racing off and saying ‘problems be damned we’re going to do it anyway,’ is that going to push us all forward a bit? Probably. Is it good for the supply chain that it needs that? No. Will clients, travelers and the supply chain suffer? Yes.”