Twelve European countries on Jan. 1 will scrap their national currencies and replace them with the euro. The new notes and coins will usher in not only an era of much greater convenience for business travelers, but also several opportunities for corporations to improve their pan-European travel management, including simplifying expense administration, management information analysis and supplier negotiations.
The 12 countries adopting the euro are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Portugal, Spain and the Netherlands.
The one benefit that is unlikely to materialize is cheaper travel, in spite of the greater transparency a single European currency will bring. Before Sept. 11, it had been anticipated that the first month of 2001 would see demand and prices fall slightly as travelers deferred trips while coming to grips with the new currency. This would have been followed by a more pronounced price rise as the convenience of the euro stimulated unprecedented demand for travel within Europe. Long term, this upward trend yet may prove the case, but, for now, the economics of supply and demand for travel have been distorted far more profoundly by Sept. 11.
However, Americans already are finding the euro is making travel cheaper. The euro has performed weakly against the dollar since its launch as a parallel currency and Barclays Capital currency analyst Jane Foley expects it to stay weak next year, perhaps falling even lower.
As for companies based in Europe, Carlson Wagonlit Travel senior vice president for the euro Pierre Szekely believes they can make process savings even if they are unlikely to make direct purchasing savings. Filing and administering expenses, for instance, will be quicker, more free of errors and less complex both for travelers and the systems that deal with them. Automated expense management tool providers, such as Captura, are expecting to win more pan-European business, although the taxation regimes governing expense claims will remain different in the 12 'euro-zone' countries.
Louise Innes, travel manager for financial services company Standard Life, is among those who anticipate being able to introduce a coordinated expense management system across euro-zone countries. She also expects efficiencies for Standard Life's headquarters in the United Kingdom, despite it not being a euro-zone country. "I won't have to worry about keeping stocks of foreign currency for travelers," she said. "We hold eight or nine, but that will now be reduced."
It also should be easier for suppliers and corporate clients alike to consolidate management information for pan-European agreements. Philippe Darson, Bristol-Myers Squibb associate director of corporate travel services for Europe, Middle East and Asia, has negotiated all his 2001 hotel rates for the euro-zone in euros and had some responses for the company's airline RFP in the new currency as well.
"Travel managers in the euro-zone should find it easier to compare numbers and do the work," said Matthew Davis, director of consulting services at American Express. "It might also increase pressure for airlines to do deals, especially alliances." However, neither Davis nor anyone else is holding their breath. He pointed out that such deals "are few and far between" and airlines continue to show a marked reluctance to discuss pan-European contracts.
Carlson Wagonlit's Szekely believes it is nevertheless a good time for companies to review whether they should pursue national or multinational deals in Europe, just as it is a good time to review their data reporting, given that their systems will have to change anyway.
A confirmed supporter of the euro, Szekely expects many clients will find the new currency's transparency and simplicity make it much easier to manage administrative tasks centrally. The resulting economies of scale will make it more tempting for companies to reduce internal costs by moving their pan-European operations to a single site.
In spite of this optimism, Szekely has found corporate clients slow to switch to trading in euros. Carlson Wagonlit has offered this as an option since 1999, but the vast majority have waited almost until the Dec. 31 deadline. "Clients have been discouraged by the complexity of the change required," he said. "It involves invoices, statements of invoices, tracking the collection of money, issuing statistics and many other things."
Carlson Wagonlit knows this from experience, having had to change 230 million lines of computer code on its systems in Spain alone. "The euro has been a far more complex undertaking than the Y2K project," Szekely said, though he remains confident. "The majority of European businesses will finally be ready by Dec. 31—maybe in haste but they will have secured the key functions," he said.