Business Travel to Emerging Markets Rising

Tuesday, 20 March 2012, 3:14 pm
Press Release: FCm Travel Solutions

Media Release
20 March 2012

Business Travel to Emerging Markets Rising: FCm

BUSINESS travel to developing countries is on the rise as corporates capitalise on growing economies and new business opportunities in the emerging markets, according to global travel and expense management company FCm Travel Solutions.

Global director of account management for FCm Travel Solutions Felicity Burke said multinational client travel volumes to developing markets within Asia, India, Latin America, Africa and Russia had been growing progressively over the past few years.

“This sector of the corporate travel market is far more buoyant now than it has been in previous years,” Felicity said. “As part of this, we’re seeing more flights to these markets being booked, a greater selection of employees travelling and higher room night volumes for clients travelling to these areas.

“High level observations of our clients indicate that over the past 18 months we have seen steady growth of travel to emerging markets. We’re seeing companies from Australia, Singapore, Hong Kong, Middle East and the US travelling into India, China and Africa. We’re also seeing travel volume into Latin America from companies based in the US and UK.”

But, Felicity said that while companies were increasingly looking to do business with the booming developing world, higher demand for travel services meant corporates were relying on strategic travel management to get the best deal.

“Companies are asking their travel management companies (TMCs) to monitor how far in advance their staff are booking tickets with the aim of buying fares as early as possible rather than the week or several days before travel,” Felicity said. “Our account managers have also been providing analysis around a traveller’s return on investment (ROI) to ensure that what companies are spending on travel they’re getting the financial return on. Companies are also working with TMCs to secure corporate negotiated discounts for their high capacity air routes to boost savings on long haul air travel.

“Productivity and cost efficiency are key for these companies. The itineraries for travellers flying into remote destinations are complex and corporates need to be working with TMCs that know the markets and which airline services have the best routings. Time is money for companies and having executives waiting in airports costs money.”

FCm’s Global Hotel Program director Joe McCormack said growth in the number of mid-range hotels in emerging markets provided companies with opportunities to save on accommodation.

“In a number of developing markets such as India and China, there has been a flurry of hotel development,” Joe said. “We’ve seen new hotel brands and chains particularly in the mid-range introduced to the market eg Choice brands Comfort and Quality, Holiday Inn, Crowne Plaza and Courtyard by Marriott.

“In places like India and China where traditionally there had been only the five-star internationally-recognised brands on offer, now our corporate clients have much more choice and variety in mid-range properties, which is helping companies contain costs on accommodation where there is high demand.”

Joe added that FCm also works closely with local and regional hotel chains in the areas where customers were travelling in addition to the well recognised global hotel brands.

“FCm will identify local hotels that are being used and focus on securing these hotels or hotel chains into our global hotel program to ensure we have the range and type of product to suit our clients’ budgets and requirements.”

ENDS.

FCm Travel Solutions:
1. Is one of the world's leading corporate travel and expense management consultancies
2. Blends global presence with local, flexible and personal service, and provides end-to-end corporate travel and expense management solutions
3. Has a regionally focused global network that ensures in-depth understanding of each client's local business culture and travel environment
4. Creates travel savings for companies of all sizes, in all market sectors.
www.fcmtravel.co.nz

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Rising prices and food scarcity 'present risks, opportunities' - Gulf News

Dubai: Rising commodity prices and food scarcity are posing both risks and opportunities to import-dependent Gulf countries, said Shaikha Lubna Al Qasimi, UAE Minister of Foreign Trade.

Amid the urgency of securing sustainable food sources, there is also a chance for the UAE to develop as a hub for food re-exports and investments, Shaikha Lubna said at Gulfood 2012 yesterday.

The event was inaugurated yesterday by Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance, in the presence of Shaikha Lubna.

"Such a well-defined and comprehensive platform is exactly what we need, given the importance of food security, the uplifting of local industries and the reduction of food imports to our regional agenda," she said in her opening speech at the Food Leaders summit titled "International flavours, world-class business".

Article continues below

Amid mounting concerns over Europe's debt crisis and soaring commodity prices, international food companies descended on the Gulfood exhibition as an opportunity to sell their exports to the UAE, which imports about 80 per cent of its food supplies.

UAE food imports are expected to jump $8.4 billion (Dh30.82 billion) by 2020, Shaikha Lubna said. A surging population will drive this growth as food consumption increases by 5.4 per cent annually from 7.8 million tonnes in 2011 to 9.7 million tonnes in 2015. The UAE spends about $3 billion on importing 80 per cent of its food and is, therefore, closely monitoring fluctuations in price and supply, she added.

But the UAE is also a "favourable destination" for food business and investments, Shaikha Lubna said.

The UAE is the Gulf's second largest food market and accounts for just over 18 per cent of the GCC's total food consumption, securing the largest share of industrial food production in the region that estimated at $9.5 billion, she said.

Re-exports

Food demand in the UAE could rise by up to 10 per cent this year as it re-exports some of these food supplies to sanction-strangled Iran and other countries in the region, food manufacturers said on the sidelines of Gulfood.

"We could see demand for food increase by 5 per cent to 10 per cent in the UAE because it does not just feed the domestic market but also neighbouring countries. Sanctions on Iran mean that food is imported into the UAE and re-exported to Iran," Essa Al Ghurair, Chairman of Al Ghurair Foods and Al Ghurair Resources, told Gulf News.

The UAE is a top re-exporter of rice and a major hub for re-exports of tea and coffee.

"As a re-exporting hub I would like to note that our opportunities lie beyond just direct trade of food; we offer the full spectrum of food business prospects, from machinery and logistics to food services and investment mechanisms, all of which will be addressed by this conference," said Shaikha Lubna.

The less tasty prospect is the increasing commodity prices globally that had food manufacturers groaning under the added costs.

Agthia, the Abu Dhabi-based food producer, saw its profits decline 25 per cent as soaring commodity prices ate into their profits.

The rising prices of PET, a type of plastic derived from oil, at 50-60 per cent and grain at 42 per cent "severely impacted" the company's profits, said Fasahat Beg, General Manager of the Consumer Business Division at Agthia, during an interview at Gulfood.

Specialised programmes

It is now monitoring prices carefully, sourcing raw materials better and consolidating the business after the launch of products such as Yoplait, he said.

As businesses seek new opportunities in a difficult market, Gulfood appeared busier than last year during its first day.

The four-day event, which ends on February 22, had 3,800 companies from more than 88 countries doing brisk business during the opening. A record 110 national pavilions are trying to get a bite of this lucrative market. More than 1,080 new exhibitors are taking part in Gulfood this year. The event includes specialised programmes that reflect the industry's latest trends: Food Leaders summit highlights keys to leadership success, Foodpreneur Forum will offer practical advice on new market development or product launch and the food processing packaging forum discusses key challenges in today's economy.

The Gulfood workshop on franchising will offer a session on food franchising by industry experts and will familiarise delegates with options and feasibility issues.

The Gulfood awards will reward achievements and innovations in the region's food and drink industry. This year, 20 categories will be judged.

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Rising market is a cleansing opportunity’ - Daily News and Analysis

Bhupinder Sethi,head of equities at Tata Mutual Fund, believes that the stock market rally still has legs. His picks are rate-sensitive sectors and the midcap segment. The recent uptrend can be a good opportunity to sell the duds and buy into strong businesses, he tells Nitin Shrivastava in an interview.

What’s your view on the fundamental market valuations post this sharp run-up? Are the valuations justified?
The Sensex has jumped by around 20% from end-December 2011 and is valued around 14 times one year forward earnings. Post the run-up, the extent of undervaluation has definitely reduced, but the market is still quoting below the long-term averages by around 10-12%. Also, over the last four years, while our nominal GDP has grown by around 80%, the BSE Sensex is down by around 15% from the peak level of around 21000 it touched in Jan 2008. This gives a sense of the value that has crept into stock prices as businesses have scaled up over this period of time.

What’s your outlook for the Indian equity markets for the whole year? How should retail investors approach the same?
Given the backdrop of sustained headwinds in 2011, we expect 2012 to be more benign. While there are risks, the equity markets should have a better year hopefully on the back of falling inflation and supportive valuations.
Markets have seen a good uptrend in the last month or so, and generally an uptrend is always a good time to reduce holdings in companies with deteriorating economic fundamentals, poor business models and questionable governance practices.
Systematic investment in good quality companies and investing through mutual funds is what should help retail investors create long-term wealth. That’s what the volatility in the market should be used for, to buy strong businesses on dips during market turmoil, and to treat a rising market as a cleansing opportunity.

There have been domestic headwinds for corporates over the last one year or so. Do you see some of the macro-economic concerns easing?
The Reserve Bank of India has already indicated a change in policy stance towards addressing growth risks from the earlier stance of predominantly managing inflation risks. We believe the RBI could start cutting rates in the next few months. Strong surge in FII inflows in 2012 so far has helped boost the equity markets as well as helped the Indian rupee to strengthen. The surge in the equity market and a better sentiment would also allow some of the leveraged companies to raise equity money to repair their balance sheets. As we speak, two companies have already announced fund-raising plans sensing a better mood in the equity market and a penchant for “risk-on” trade.

What do you make of the Sensex/Nifty earnings this quarter? In which direction do you see them going into fiscal 2013?
The earnings for the quarter ended December 2011, have been largely in line with the beaten down expectations with a marginal positive surprise. One of the key aspects of the results was the continuing robust sales growth at over 20% despite the slowing economy. The operating margins showed signs of stabilisation on a sequential basis, though they were down on a year-on-year basis. Profit growth continued to lag the sales growth by a big margin because of continuing high interest costs.The key takeaway of the earnings season is that the earnings downgrade cycle seems to be bottoming out, whereas in the previous three quarters, the downgrades were prominent.

The sequential stabilisation of operating margins is a key positive going into FY13. Interest costs continue to remain high but are expected to decline in FY13. For FY13, our earnings growth expectations are around 15%.

Which are the sectors you are betting on in the short to medium term and why?
Our core bias remains towards sectors like consumer staples, discretionary, software and pharmaceuticals as also private sector banks and upstream oil and gas. Incrementally though, given the improving macroeconomic conditions and possibility of rate easing, we are also looking at stock-specific opportunities in beaten down interest rate-sensitive sectors. The actual recovery in business may take time for some of these sectors, but the fact is that the stock market is a discounting mechanism; the stock prices are moving up ahead of the event.

Also, we are looking to into buying some better managed midcap companies across sectors, as midcaps tend to outperform large-caps in an uptrending equity market.

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