Banks Missed Chance to Cut Travel as `Employee Power' Returns
The HSBC company logo sits outside the bank in London. Photographer: Jason Alden/Bloomberg
June 7 (Bloomberg) -- Giovanni Bisignani, chief executive officer of the International Air Transport Association, talks about the airline industry's return to profit in 2010 after two years of losses. Bisignani speaks from the IATA annual meeting in Berlin on Bloomberg Television's "The Pulse" with Andrea Catherwood. (Source: Bloomberg)
Banks that failed to slash travel allowances at the height of the recession have missed the chance now that job security in the industry has improved, HSBC Holdings Plc’s U.K. travel chief said.
Institutions typically relied on employees to curb their own travel costs during the slump rather than imposing permanent restrictions on premium flights and top-end hotels, said Lee Whiteing, travel and company car manager for HSBC’s 50,000 U.K. staff. Bills are rising again now, he said.
“Employee power is back,” Whiteing said in an interview. “Certainly in investment banking we’re in a situation where it’s an employee’s market. Making them stay at cheaper properties, fly economy when they could go business, is not going to wash. They’re just going to leave us and go to another institution.”
HSBC, Europe’s biggest bank by market value, will post net income of $12.29 billion this year, according to estimates compiled by Bloomberg, more than double the $5.83 billion earned by the London-based company in 2009. U.K. banks are expected to generate a combined profit of $20 billion, the estimates show.
The number of airline passengers flying first and business class jumped 7.6 percent in the first quarter, according to the International Air Transport Association. The figure rose 1.1 percent in April even after a volcanic eruption in Iceland grounded flights across Europe, compared with a 6.5 percent decline in coach-class travel, IATA said on June 16.
Higher Pay
Average salaries at London’s financial-services companies rose 9 percent in May from the previous month to 55,353 pounds ($82,000), according to a survey from recruitment consultant Morgan McKinley published this week.
Job openings in the City, as the U.K. capital’s business district is known, rose 82 percent from a year earlier to 5,733, 3 percent higher than in April.
The emphasis for banks is now on retaining and motivating staff, Whiteing said after a presentation on travel trends at the Business Travel Market conference in London this week.
HSBC hasn’t officially changed its travel policy in two years, and caution over expenses claims exhibited by employees during the credit crunch and recession is evaporating, he said.
“We had a brief window of opportunity last year, all of us, to very significantly reduce our travel policy,” Whiteing said. “People were happy to have a job and if you were to reduce the policy, reduce the quality of the hotel, you would have got away with it. We didn’t react quickly enough.”
Video Conferencing
Beyond banking, companies have pushed through deeper cuts to travel costs, said Todd Kramer, vice president of corporate sales at Cologne, Germany-based reservations specialist HRS Ltd.
The average length of a hotel stay has fallen from 2.3 days in 2009 to 1.8 days this year as more companies opt for video conferencing or day trips without overnight accommodation, while the standard of room has also declined, the executive said.
“Investment banking is an exception to the rule,” Kramer said in an interview yesterday. “From a corporate perspective, cost-saving is still a priority and I see that continuing. It’s not as if they’re asking staff to stay at a campsite.”
To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net
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