Travel makes wary recovery

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: September 8, 2012 - 4:00 PM

Carlson Wagonlit executive sees corporate travel rising, but companies prefer coach over business class.

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Hakan Ericsson, president of the America's division of Carlson Wagonlit Travel. Wednesday, September 5, 2012.

Photo: Glen Stubbe, Star Tribune

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Håkan (pronounced Hokan) Ericsson likes to travel, which is a good thing in his role as president of the Americas division of Carlson Wagonlit Travel (CWT).

Based in the Minnetonka tower of CWT parent Carlson, Ericsson spends most of his time on the road managing his portion of a $28 billion travel powerhouse.

"It's nice being out meeting with clients, employees and suppliers," Ericsson said in an interview last week. "I'm here maybe two days a week."

Ericsson joined CWT in 2008 as president of the Europe, Middle East and Africa division of the company and officially took over the North and South America regions and moved to Minnesota last Jan. 1.

Ericsson oversaw a couple of rough years economically in 2008 and 2009 as the U.S. recession broadened across the globe. But things are brighter these days. Sales volume for 2012 is up 1 percent year over year which follows a 2011 where sales were up 15 percent.

With more than 20,000 employees worldwide and more than 800 in the Twin Cities, CWT provides travel services to a wide range of corporate clients, government bodies and nongovernment organizations. One-third of the Fortune Global 100 does business with CWT.

Ericsson, Swedish by birth, sat down last week to talk about the state of the travel industry.

QIs corporate travel returning to prerecession levels?

AIt's better than it was in 2008, but it's not booming. Other regions are suffering more. Europe is down but the U.S. is holding up. In 2008 and 2009, corporate travel went down seriously. Everyone hit the brakes. When the economy got better, companies were careful about going back to the old times.

The recession, in a way, was good. It highlighted the need for good travel management. If things slow down again, the dropoff won't be as dramatic.

QCarlson Wagonlit Travel also arranges meetings and events for corporate clients. How's that business segment performing?

AMeetings and events were never controlled the same way as corporate travel policies. Things were booked by so many different people ... [and] companies didn't negotiate rates and they didn't coordinate between departments. Companies need a partner like us to centralize it more.

Events these days are less lavish. We did an event in Boston recently for the Global Business Travel Association where we had members of the Boston Pops and the STEP program for kids learning to play an instrument. That was the most popular event we've ever had. That's because there was value added to the event. It wasn't just a party.

QWhat trends do you see in corporate travel policies? Are executives returning to the front of the plane?

ANot really. Maybe the opposite. Companies need to compete globally and they learned from the recession. We see earlier bookings and an increase in the length of a flight before you can upgrade. It used to be four hours now it's six to eight hours before you can upgrade to business class. First class is very rare.

QWhat expectations do corporate clients have in terms of safety and security for their business traveler?

ATen years ago we mainly administered bookings. Today we manage the whole travel experience. Security has become an integrated part of this. Companies have responsibility for their travelers these days. There are the risk of terror threats, earthquakes, blacklisted airlines. We have a crisis management center in Paris and 24-hour service centers with different procedures for different crises and events. We run reports to show where every traveler is for a client. We can communicate with travelers. That was big during the Arab Spring situation. We've even chartered flights to get travelers out of an area.

QHow do you help companies make sure their travelers are in compliance with travel policies in a world where flights can be rebooked on a smartphone app?

AOur role is to manage [Internet] noise. A traveler might find something that looks good, but they may not see the fees or the cancellation policy. Companies want travelers to adhere to policy to manage cost and security. There are blacklists of airlines we don't want people to use in areas like Africa and Eastern Europe. Not so much in the U.S. We make sense of the noise and help the traveler connect with company policy.

QCarlson Wagonlit Travel came out recently with a forecast of travel costs earlier this year that show airfares rising out of Minneapolis-St. Paul International Airport at a rate double that of the rest of the U.S. Why is that?

AIt's all about demand and capacity. Airlines reduced capacity during the recession and have not been having fantastic financial results since. But demand is still strong. Clients can manage travel smarter. They can book in advance, negotiate fares and hotel rates. Most can offset the higher fares that way.

QWhat travel trends do you see over the next five years?

ATravel is not going to slow down. People still need to meet and do business. But we will see alternatives to travel. There will be more videoconferencing, for example. But that is complementary to business travel because at the end of a conference someone will be assigned to do something that requires travel. We help book video conferences.

David Phelps • 612-673-7269

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