With hotel rates and corporate contacts stymied by two years of ad hoc travel, businesses want to know what lies ahead. At Illuminate, ACCOR’s Anne Gill addressed issues and trends in the hotel sector, while FCM Consulting revealed that airline capacity continues to recover.
When the going gets tough
One of the highlights of Illuminate 2022 was hearing from Graham 'Skroo' Turner, Chief Executive Officer, Flight Centre Travel Group when he spoke with Tom Walley, Global Managing Director, Corporate Traveller, during a frank discussion about resilience, business growth and planning for the future.
The Flight Centre Travel Group (FCTG) is well and truly on the path to recovery. As far as industry, and global ups and downs go, business founder Skroo has seen nothing like the past few years since starting out in travel in 1973.
“The business had $230 million in monthly expenses in early 2022 and then in March 2022 there was nothing,” said Skroo. “Lockdowns meant no income and we had just $1.1 billion in the bank.” It was a scary time for all businesses and Skroo believes the country-wide restrictions delivered many learnings for society as a whole.
“As a company it was a tough period, when we were letting people go. But now there’s no shortage of people coming back, which I put down to our good company culture – and we worked hard to keep in touch with our own people during COVID.”
Staff went above and beyond during the pandemic, with many in the office seven days a week for the first few months. It’s a commitment that Skroo puts down to the culture that FCTG is renowned for. “As a company, our core internal values have always been ‘irreverence, ownership and egalitarianism’,” said Skroo. “The culture of the business is to have fun and to give staff ownership, and that’s why we attract good people. While we are now in 25 countries, maintaining ownership of the business means you can take action and make the decisions necessary that translate into a good culture and good values.”
In welcome news, FCTG is coming back stronger than ever – emerging from the FY 2021/2022 in a solid position and delivering better than expected full year earnings. “The change is that corporate travel is now a bigger part of the business,” said Skroo. “We are above pre-COVID sales in corporate travel in dollar terms and that is mainly due to higher airfares. Leisure volumes are currently 70% of pre-COVID volumes, however this coming financial year we will be back to pre-COVID levels and by the 23/24 financial year we predict sales volumes will be higher than pre-COVID.”
Looking even further ahead, Skroo predicts that by 2025 the company will be 25% larger in terms of sales and profits than pre-COVID. “FCTG will be represented in 30 countries, which will be mostly corporate businesses; with more online operations and tech platforms to support our corporate and leisure customers, and improve productivity for our people,” said Skroo.
Skroo’s airfares and capacity predictions
So when is the best time to travel?
- Airfare prices are being driven by restricted capacity.
- Currently we are seeing only 60% of capacity going out of Australian airports. But that is expected to rise to 70% by Christmas and 80% by late January or February.
- By February and March 2023 airfares will be starting to get cheaper, but they will still be expensive until next summer.
- International airfares will also remain high, but they will fall a bit next year.
