With the first anniversary of the 11 September terror attacks behind us, no-one needs reminding of the horror. One year on and the corporate travel sector, as with UK business in general, is counting the cost and reflecting on a difficult year - a year industry figures say was characterised by uncertainty.
In the immediate aftermath, many events were simply cancelled, some rescheduled or postponed indefinitely. Not only was there little stomach for them, but flights were so disrupted there was little point trying to get to them. Other companies had to relocate events at the last minute. Aventis Pharma switched from Malta to Edinburgh, Suzuki swapped Dubai for Mauritius, and Novo Nordisk ditched Cyprus for Brighton.
Grass Roots Group operations director Mark Taylor says there was a short-term switch from some destinations. "We only lost one piece of business which was actually to Prague. It was for a US company and they didn't want to fly. But British clients seem less concerned. We had a UK client in Boston three weeks after the attacks, he says.
Taylor notes that certain destinations such as the US, the Middle East and North Africa were chalked off most lists straight away, but that is changing. "We've had a couple of briefs where people have requested Dubai and we've done business in Marrakesh."
The effect on certain regions is reflected in the most recent PKF survey of hotel chains. Properties in the 19 Middle Eastern and African cities surveyed saw occupancy and average rates fall between 9.4 and 59.7 per cent. Hotels in Jerusalem (59.2 per cent) and Tel Aviv (38 per cent) bore the brunt.
Skybridge managing director Randle Stonier says 11 September led to a review of destinations. "When people look to go abroad for conferences, they focus on easily accessible places with stricter security, he notes.
For UK conference towns, still reeling from the impact of foot and mouth, companies keeping conferences at home was a welcome if unexpected lift.
"There was certainly anecdotal evidence of events staying in the UK," says British Association of Conference Destinations (BACD) executive director Tony Rogers. "While international cities, London especially, suffered a loss of business, most regions of the UK did not."
Some destinations have been affected more than others and some continue to struggle. The US is a case in point. New York, through its marketing arm NYC & Company, has focused on leisure and consumer traffic but will look to address the C&I market further ahead, says spokesperson Sarah Handy.
Orestis Rossides, director of the Cyprus Tourist Organisation is another who admits business has been hit. "Initially, it was bad as companies were reluctant to send their sales executives overseas, but this improved by the end of December, he says. "The first quarter of 2002 was slow, but there's been an improvement each month since, especially in the second part of the year."
Some have noted an increase in the popularity of European destinations.
Richard Dodds, sales manager, conference and incentive travel for Wonderful Copenhagen says: "In the last quarter of 2001 we picked up business from firms with options for destinations such as Istanbul, Malta and Cyprus."
He feels this year has been affected by a lack of decision making. "Buyers are starting to show interest again. There has been a resurgence in the second half of the year ."
With companies spending much of the year deliberating, lead times are now hectically short. "We're lucky to get eight weeks, says Dodds. "I've just had enquiries for two 700-delegate events, so business is still out there."
However, some long haul destinations are prospering. Willem Eksteen, South African Tourism UK managing director, reports 21 per cent growth for the first half of 2002. "Events like the World Summit have made South Africa a prime destination, he says.
More importantly, with budgets under pressure, the country stacks up well because of the strength of the pound. "South Africa is phenomenal value for money and the quality on offer is superb, he says.
Sharon Wood, the Hong Kong Tourism Board's European manager for conventions, exhibitions and corporate events, says Hong Kong experienced minimal disruption with only one cancellation. "The city's reputation as the 'safe' C&I destination held true. While we did notice a period of uncertainty in the decision-making process, our clients continued to choose Hong Kong, she claims.
Wood says 2001 saw a 27 per cent increase in the number of worldwide visitors. "Corporate meeting figures from the UK have also shown substantial growth, with 70 per cent more events of this kind taking place in Hong Kong last year."
Other long-haul destinations are bouncing back too. Chris Brown, sales executive for Air Mauritius C&I markets says traffic from the UK is up by 4.7 per cent year on year. The destination is becoming more popular with UK buyers and the airline is launching a fifth weekly flight from Heathrow.
For hotel chains, already suffering from an economic slowdown, it has been a tricky year, but even here suppliers are keen to be bullish. Chains are anxious to demonstrate their flexibility, particularly in regard to attrition rates. However, this is largely a willingness to discuss each case on its own merits rather than a wholesale change of policy. "In the immediate aftermath, I'm sure venues and organisers were keen to be flexible to ensure business was not lost completely, opines the BACD's Rogers. "My gut feeling is this flexibility is not as forthcoming as it was ten months ago."
Jarvis Hotels marketing director Calum Russell backs this theory. "We haven't changed our cancellation policy. But where there is a long-term relationship, and where possible, we will try to be flexible."
Russell saw a slump in business during the last quarter of 2001, but says in the past six months bookings have soared by 48 per cent - especially in regional centres such as Birmingham, Glasgow and Edinburgh. "We have reacted and looked at pricing adjustments where we felt it could stimulate demand. We have also kicked off sales initiatives to encourage local business, he explains.
Other premium hotels claim to be less susceptible to price. Ian Schrager Hotels, which has four New York properties, only opened its global sale office last August. "The last six months have really picked up and we have done a number of fam trips, says global sales manager Jonathon Perritt.
European buyers were recently given the opportunity to see first hand how the US market is bearing up with Delta Airlines' Gateway Showcase which took 120 buyers to meet representatives from its key hubs. Claire Liggins, national account manager of specialist business at Delta says it has been tough to attract the right clients due to tough trading conditions in the UK. "A lot of agencies have reduced their staff, so there are fewer people who can come along."
Liggins says group numbers are down by about 25 per cent and companies are more prepared to fly economy. She also notes that with domestic connections taking longer due to increased security at airports, some groups are opting for other means of transport for journeys under 400 miles.
Although security has been tightened, this is more noticeable in the US. Skybridge's Stonier says European airports were already geared up to the terrorist threat. And, although the prospect of passengers arriving hours before check-in to cater for an increase in security has not materialised, there have been changes. Off-site check-in is no longer a given, although some carriers still offer this service, and it can also be tougher to arrange receptions at airports.
Brown says security is not questioned by clients, but they have other concerns - "such as the age of the fleet and what happens if the airline stops trading like Swiss Air, he says.
In some ways, company expenditure and budget cutbacks are even more critical than the issue of security. As meetings and incentive programmes are often viewed as discretionary spend they are cut first when companies batten down the hatches, a process that was already under way in the UK before the events in New York. Jarvis' Russell says 11 September compounded an existing UK slowdown bought on by foot and mouth. "A lot of companies were reviewing travel and general expenditure, and there have been cut backs."
"We had noticed the market slowing, agrees Skybridge's Stonier. "We have a strong IT and telecoms portfolio and they were feeling the pinch as far back as January 2001. However, he denies there is any crisis in the companies' appreciation of the role of conferences and incentives.
"People are recognising more than ever the value of getting people together."
He does admit, though, that budgetary constraints do exist. "Whereas people previously wanted to talk about the bigger picture, now it's about detail and costings."
Gordon Owen, sales director of relationship travel services at Carlson, says return on investment is more important than ever. "I have not noticed people questioning C&I's role, but they are looking for proper evaluation of events. Even for an incentive travel trip, people have to do it for the right reasons."
Cuts are being accommodated by scaling down in conferences and rolling together separate events. Numbers are also being trimmed particularly for incentive travel and business agendas are being tagged on to what were reward schemes. "There will now be a business element to most incentive trips rather than them being purely social. Delegates tend to be there for recognition rather than reward. People aren't being taken just for doing their jobs. They must have made a key contribution to the business, says Owen.
Overall, the spectre of recession has delivered a double whammy to the industry. And those programmes that were quick to be cut are reintroduced far less quickly. This has left proponents in the industry nervous to be the ones to announce the first sighting of the green shoots of recovery.
Says Russell: "The past six months have been more stable than the previous nine, but it's incredibly hard to forecast the next six to 12 months with any confidence."
It seems the coming year will continue to be a highly challenging one for the C&I industry, but the situation now is far better than many would have dared to predict in September last year.
Jeremy Taylor, Jack Morton Worldwide director of logistics
"The events of 11 September were certainly felt at the time. One of our events cancelled in the middle of the build and another postponed until March. But there were good news stories too. One of our annual events, which takes place each October for an EMEA audience, mainly hosted by Americans, received the highest attendance ever. It was a true stand against terrorism.
"This year I wouldn't say our UK business has been really affected. In fact we've had a successful year to date. People in Europe appear to be happy to travel anywhere. Those in the US are a little warier and need additional reassurances. But once they become aware of the security situation, even they will travel."
Chris Moore, Managing director, TFI Group
"Confidence is the most important thing for our customers and they want to see evidence that it's returning. Most of them are blue chips, and for them New York is an attractive destination. There is a concern about long haul travel in general, but there's no doubt the economic slowdown has also played a part.
"One effect is a move towards greater transparency and reductions on event spend.
"All long-haul destinations are suffering while European work has gone up. It's not as crude as certain countries being seen as 'safe', rather that they are more accessible and cheaper.
"Things will continue to slowdown this year and agencies will have to cut their cloth accordingly."