2018 Energy, Resources & Marine Travel Forecast

Published September 2017

FLIGHTS ENERGYMAKE THE WORLD WORK FOR YOU RESOURCES MARINE

Table of contentsGlobal macroeconomic overview 4

Energy 5

Resources 6

Marine 7

Impact on travel 8

Regional forecasts: > Americas 10 > Europe, Middle East & Africa 12 > Asia Pacific 14

Recommendations 16

“It's taken several years, but companies are now set up to

operate with profits despite the lower price of oil. As a result, we're

seeing increased investments in the industry. It's invigorating the

entire supply chain.”– Raphaël Pasdeloup, Senior Vice President

CWT Energy, Resources and Marine

2© CWT 2017

© CWT 2017

Welcome to our 2018 travel forecast for the Energy, Resources and Marine (ERM) industries. While an unstable global economy leaves the ERM industries in a state of uncertainty, the tides of recovery are slowly rippling through sections of all three industries. However, the immediate future isn’t bright for all players—the deeper we delve into each industry, the more variations we unearth.

The energy sector is still affected by volatility in the oil and gas industries, as both adapt to oil prices fluctuating around $40-50 a barrel. However, modest increases in price have seen the Big Five increase their capital expenditures and this confidence has trickled down the supply chain. Times have been tough but hopefully this marks the beginning of the recovery.

The mining industry has more regional variation. For example, activity is picking up in Australia, as well as various places in Africa and Asia. Gold remains an important commodity as other prices remain relatively static.

It’s a more fragmented story in the marine industry. While a shortage of oil tankers leaves them in demand, ships lie idle in the cargo market because supply currently outweighs demand. The fortunes of fisheries vary, though generally speaking they are on the rise: demand continues to grow but it has to be balanced against stock preservation.

What does is it all mean for travel? Unlike so many other forms of travel, travel in the ERM industries is a necessity. A ship can’t sail and a rig can’t drill without crew. Managing the costs of that travel is paramount. The $40-50/barrel cost base means many more people now travel at the back of the cabin and there is an increased focus on policy compliance.

The most important trend is a shift towards harnessing technology, both to ease the journey for travelers and to streamline the entire travel management process. The collection, collation and analysis of data is set to transform how we all approach travel.

In this forecast, we give you an overview of the key sectors, followed by analysis of the travel conditions expected in the coming 18 months, region by region. As well as a few pointers for managing travel in the ERM markets.

I hope you find this travel forecast both interesting and helpful.

Raphael PasdeloupSenior Vice PresidentCWT Energy, Resources & Marine

Welcome

33© CWT 2017

United Airlines is proud to continue our strong partnership with Carlson Wagonlit Travel in providing this Energy, Resources and Marine forecast to help guide and develop the planning of your travel program for the year ahead.

As Houston’s largest airline and major area employer, we have shared in the challenges the energy sector has faced in recent years, but our commitment to you has been unwavering through good times and bad.

The ERM business is one of perpetual uncertainty, change and volatility. Our “easy to do business with” philosophy enables us to help you meet these challenges by increasing flexibility in your travel program. Recent policy enhancements, a customer-focused sales approach and our newly-launched United Jetstream self-service business portal are testament to this philosophy. In addition, we strive to add value to your company by employing a consultative approach to addressing your unique needs.

Based on signs of recovery in energy-related travel, we are optimistic about further improvements in the industry in the coming year, and anticipate that 2018 will see more focus on maximizing efficiency. Reliability is critical to your company’s efficiency, and we have raised the bar, regularly finishing number one amongst U.S.-based network carriers in key metrics such as on-time performance, completion factor and baggage delivery reliability.

All of us at United feel privileged to be a part of your travel program, and look forward to continuing our work with our partners at CWT to provide solutions that address the unique travel needs of ERM customers like you.

Thank you for your business.

Dave Hilfman Senior Vice President Worldwide Sales United Airlines

INDUSTRY SPOTLIGHT FROM OUR SPONSOR

© CWT 2017

The Exchange Rate EffectThis Forecast is conducted and presented in U.S. dollars (USD), which offers easy geographical comparison and consistency with previous forecasts. Forecasts are influenced by each local market’s currency and whether it appreciates or depreciates against the USD in 2018. As an example, the Argentine peso is expected to depreciate 7.7% against the dollar in 2018. So while we expect Argentina’s average air price in USD terms to increase by only 0.2%, the expectation in local terms would be for a gain of 7.9%. The expected gain in purchasing power in USD accounts for the difference between the two rates.

2018 Foreign Exchange Forecast(year-over-year growth vs US$)

-8% -7% -6% -5% -4% -3% -2% -1% 2% 3% 4% 5% 6% 7% 8% 0%

$USD(baseline)

3%5%

Japan

-2%

MexicoDenmark

Brazil

-3%

Euro AreaFrance

GermanyItalySpain -8%

ArgentinaVenezuela

-4%

-6%Colombia

S. KoreaSingapore

2%

AustraliaIndiaChina

1%

Indonesia

6%4%

7%

New ZealandCanada

Russia

U.K.

Global macroeconomic overviewThere is a backdrop of uncertainty for any global industry. However, the Energy, Resources and Marine (ERM) industries are more exposed. Operations are often in remote areas, making travel essential, and often to the more dangerous parts of the world. Security is always a concern.

Tied in with that is politics. Going back to the Arab spring, to the recent elections across Europe and the US, the political climate is unstable. Economies are becoming less sensitive to change, but the end result is still very unclear. A good example is the post-Brexit future of the European Union. It’s clear that the EU trading bloc will be smaller when the UK leaves. But it will be quite a while before we discern exactly how it will manifest itself in the real economy. Nor can we predict the outcome of political problems in places like North Korea and South America, Brazil and Venezuela in particular.

As most economists agree, global growth is being led by China and India, with the US and the EU continuing to grow at a similar rate the past few years. When you take inflation into account, and fluctuating exchange rates, the only real demand is coming from China and India; everywhere else is quite flat. This picture, with its uncertainties, is set to continue through 2018.

These three factors will continue to impact every global industry; the ERM industries are not immune. However, they will be impacted in different ways as this Forecast examines.

Global GDP Growth Accelerating

SOURCE: International Monetary Fund, World Economic Outlook Update, April 2017 2016

3.1%2018

3.6%2017

3.5%SOURCE: IHS Global Securities, International Monetary Fund, Wells Fargo Securities, Rockport Analytics

Forecasted rates are indicated in USD and might have different values when translated to local currencies.

4

© CWT 2017

Energy

Sep2016

Nov2016

Jan2017

Mar2017

May2017

Jul2017

Price/Barrel(USD)

Crude Oil WTI (NYMEX)

60.00

58.00

56.00

54.00

52.00

50.00

48.00

46.00

44.00

42.00

40.00

49.37 (Aug. 8 2017)

SOURCE: WWW.NASDAQ.COM

Operations were profitable when oil was well over $100/barrel, it was a different story at $40/barrel.

Forecasted rates are indicated in USD and might have different values when translated to local currencies.

Much of the work carried out by the energy industries is in remote parts of the world. Travel is, therefore, an essential and challenging aspect of working in the industry. While there has been plenty of production activity in the past three years, exploration fell prey to dramatic and essential cost savings.

The past few years have been challenging. Previous downturns have been V-shaped—this one is more like a yo-yo. The market goes up, bringing expectations with it and then drops suddenly. That said, most expect we are now at the beginning of an up-take that will have some staying power.

But prices won’t return to the highs of years gone by. So, the industry’s cost basis has been forced to change. And it has. Companies have been forced to innovate and produce more efficiently; they have reviewed everything, every contract, every supplier. They’ve re-emerged leaner, using different processes and typically with a reduced headcount.

An increase in mergers and acquisitions (M&A) activity is expected to instill more stability in the oil and gas industry. That stability is reflected in plentiful examples of recovery in action. For instance, one driller in Asia Pacific (APAC) was running 12 rigs in 2015 but just two in 2016. It is now preparing to start operating five again by the end of 2017, bringing the total back to seven. There are examples of similar recoveries hatching all over the world.

Renewable energy continues to be a growing part of the energy sector. Wind and solar farms continue to sprout across all three regions. While, it isn’t as dependent on traveling to remote and challenging places, new challenges are created based on where these renewable energy sources are being harvested. We anticipate renewable energy will continue to increase, driven both by political and public opinion and by the reduction of hardware costs, in particular turbines and solar panels.

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ResourcesThe two main influences on the resources sector are China and the US. However, there are significant variances depending on exactly which sector of resources you’re talking about and which mineral. Some of them are subject to wider global trends. Silver has an important role to play in solar power, so its future is looking good, while lithium ion battery technology is at the tipping point. On the other hand, lead-acid based batteries are set to decline, so lead prices are likely to drop.

China is important because it is such a huge market, so any shifts in demand have a major impact on world markets. Global projections show increasing GDP in China but growth could be flattening, the impact of which would be felt throughout the entire resources industry.

The US is both a major producer and a major market. Again, there is a lot of uncertainty. The US Federal Reserve Open Markets Committee is set to raise interest rates at least one more time in 2017, which will have an impact on the strength of the US dollar and on borrowing. Whether it strengthens or weakens, there will be a significant knock-on effect felt by the market. Likewise, the current US administration’s stated intention to terminate certain trade agreements could send shock waves through the market.

The Dakota pipeline in the US—set to bring crude from Canada to the Gulf of Mexico—is likely to have a major impact on the steel industry. There are also indications that mines will re-open in northern parts of the US, particularly Minnesota. This could lead to even more steel competition.

While positive, these scenarios remain hypothetical and therefore create uncertainty, which is never good from an investment standpoint. The result is that, while 2017 will see positive growth for the mining sector in the US, that growth won’t be as strong as 2016’s.

However, commodity prices are strengthening so cash flow is better. This is having a positive impact in some parts of the world; the sector is looking particularly strong in APAC, where there are lots of projects offered in Western Australia. Tech metals—lithium, rare earths, and other minerals—are driving the surge.

If the promised infrastructure spending in the US materializes, it will provide a boost to the resources industry. The resurgence of coal mining in the US, again if it materializes, will change some dynamics in the mining industry.

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When we look at the short-medium term, there are three distinct areas of the marine industry that stand out for analysis: tankers, general cargo and fishing. Each has a very different future.

TANKERSOf the three, those operating tankers are in the strongest position. While oil exploration has struggled in the past few years, production has continued at full speed. And there simply aren’t enough tankers to meet demand. Prices have therefore gone up, as have profits. There is every sign this trend will continue.

CARGOThe opposite is true for the general cargo market. There has been a major slow-down in the past 18 months and, for the first time in a long time, the big shipping companies are looking at cost savings. The industry is reshaping, with Maersk’s acquisition of the German container line Hamburg Süd being a good example; the bankruptcy of Korea’s Hanjin Shipping is another. And we expect there will be more consolidation.

An over-supply of shipping capacity is driving costs down. Despite the fact that fewer vessels are being built, and more and more are being taken out of commission, the problem of overcapacity will continue into 2018.

FISHINGOn the surface, it seems the fishing industry should have a strong future: after all, a growing global population needs more food. As they say in the industry, ‘Eat More Fish’. Indeed, the major conglomerates, especially in the Far East, are seeing strong growth.

However, adverse climate change is making its mark on the industry. Rising sea temperatures are affecting habitats and sustainability is becoming a major threat. Despite efforts from a number of different organizations—from the United Nations down—there is no global agreement on acceptable catch levels.

Indeed, the imposition of a common regulatory framework could well be impossible, thwarted by contradictory local practices and attitudes. However, some regional sustainable models have been put in place, often based around seasonal fishing. Because some regions don’t have sustainable policies in place, there is potential for disputes.

The result is that we expect the fishing industry, despite the obvious increase in demand, to have a relatively flat immediate future.

Marine

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DEMANDFOR

TANKERS

⇑

SUPPLYOF

TANKERS

⇓+

=PRICE INCREASES

Travel costs rise and fall, driven by the rapidly changing circumstances of industries in a state of flux. While the oil and gas industry is still in recovery from a once-in-a-generation change, costs that were subject to deep cuts are returning to the status quo, including the ability to travel for further exploration.

For most people, travel is not an absolute necessity. Yes, it’s very important to meet people face-to-face and the networking opportunities at conferences are often more important than the content of the conference itself. Yet, if the CEO of even the biggest bank in the world doesn’t make it because the flight was delayed, the conference can carry on. But if a ship’s cook isn’t on the dock at the right time, the ship simply can’t sail. In the ERM industries, travel is critical to business.

Therefore, the savings examination hasn’t focused on reducing travel; instead, it’s been about reducing travel costs. A starting point was shifting people from the front of the plane to the back. We expect to see more business class travel as the industry picks up, which might help those tasked with staff retention.

There is also a focus on planning ahead because last-minute booking is always more expensive. Likewise, companies are using a variety of carriers and we’re seeing an increase in the usage of low cost carriers, although that name is becoming a misnomer when you factor in purchase options. This all falls under a tightening of travel policies and strengthened policy enforcement. We don’t expect that to change.

Impact on travel TOP 5 WAYS TO REDUCE YOUR TRAVEL COSTS:

1 Consolidate travel management company (TMC) and processes

2 Manage supplier deals and their performance closely

3 Invest in travel technologies

4 Optimize policy compliance through pull strategies

5 Outsource selected travel categories to experts

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BPO BENEFITS

Focus on core business

Benefit from latest expertise and trends

Reduced overhead and complexities

Process speed and efficiency

Another growing trend is for companies to outsource selected travel categories. As they examine the cost base of their operations, more and more companies realize they need to focus on their core activities. Drillers need to drill and shippers need to ship. They shouldn't be caught up in the logistics of booking flights. Why would you take on travel management when you can outsource it to a specialist who can help you generate real savings, while freeing up resources?

Looking specifically at air and hotel costs, the basic premise, as always, is to follow the money. The market dictates airline routes and their prices, as well as hotel availability and prices.

For example, if there is an increase in mining activity in Queensland—and there is—there will be more demand for flights. If oil exploration in Texas increases, hotel capacity will increase accordingly. Where there is demand, supply will follow. The background is that plenty of routes have been cut in the past few years and hotel capacity reduced, or at least prices have certainly come down.

Impact on travel

SHIFTING MORE FOCUS TO CORE COMPETENCIES ...Business process outsourcing (BPO) involves third party management of non-essential business activities and functions, though control ultimately still resides within the organization. The incentive for doing so is the dramatic cost-savings which can be made. Done right, BPO improves the speed and efficiency of a company’s business processes, allows it to invest more time in its core business strategies and shift more focus to its core competencies.

But there are still some challenges involved in making the transition: limited visibility and control over operational data, geographical disparity, and location-specific operating models are the sort of obstacles companies often face.

Companies, together with a BPO specialist, should map current operating models and processes to figure out which services can be outsourced for the maximum benefit while causing minimum disruption. On top of ground logistics and transportation, companies can also consider outsourcing administrative tasks, rosters, charters, certifications, qualifications management and much more.

© CWT 2017 9

AmericasThe United States is the dominant player in the region. However, the gridlock caused by disagreements on all sides of the US political arena shows no signs of giving way any time soon. Given this uncertainty and the material impact it has on currency fluctuations, continued US dominance really is unknown and very hard to predict.

However, the market again dictates what happens to air travel and hotels. While demand for hotels in North America has leveled off since mid-summer 2016, we still expect supply to continue growing steadily throughout 2018, although below the global rate. It’s a similar story for air fares.

Some air routes have been discontinued during the past several years, especially to what used to be oil-rich markets. That is expected to change as the market improves. Houston is set to be one of the major beneficiaries although there are uncertainties related to the recent historic flooding. Other cities set to benefit include those with strong competition either between domestic carriers, like in the Chicago hub, or where international competition is high, such as Los Angeles.

In South America, we’re seeing the emergence of more low cost capacity, with Brazilian airline, GOL, increasing its fleet. We’re also seeing the unbundling of fares. The overall impact is a reduction in ticket prices, with Brazil leading the way, even if ancillary costs mean the price for the entire journey is not actually reducing that much.

Hotel prices in North America are set to increase roughly in line with the global rate.

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

-4.0%

2.5%

-2.2%

-3.8%

2.2%

-0.1%

BOGOTÁ

CALGARY

CARACAS

DUTCH HARBOR

HOUSTON

RIO DE JANEIRO

3.8%

2018 Hotel Projections

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

2.1% 2.0%

-2.0%

1.5%

BOGOTÁ

CALGARY

CARACAS

DUTCH HARBOR

HOUSTON

RIO DE JANEIRO

4.6% 4.2%

2018 Air Projections

Forecasted rates are indicated in USD and might have different values when translated to local currencies.Forecasted rates are indicated in USD and might have different values when translated to local currencies.

© CWT 2017 10

AmericasOil prices, and therefore industry activity, really do have a major impact. For example, Houston continues to be challenged by low oil prices, with low hotel occupancy levels just above 60%.

In Canada we anticipate slightly stronger positive growth for the hotel market with a strengthening Canadian dollar likely to lead to increased demand, higher prices, and more growth than the US.

The hotel market in South America is very fragmented, with robust competition from a large number of brands and from independent operators. On the other hand, there is M&A activity, particularly with the Brazil Hospitality Group’s agreement with Accor Hotels, by which Accor will reflag and manage a portfolio of 26 hotels and 4,400 rooms.

Rio de Janeiro has an over-supply of hotel capacity, following the FIFA World Cup and the Olympic Games. Prices are likely to drop even further as we see business travel declining in the region.

THE NEXT FRONTIERS...There are two areas that stand out as the up and coming places for the ERM industries: northern Brazil and northern Mozambique. They share two things: huge potential and minimal infrastructure. When there are roads they are, at best, sketchy. Railway infrastructure is almost non-existent and the best runways are made of dust or grass. It’s nothing, however, compared to the challenge of shipping out the produce, be it oil, gas or mineral.

This exposes the eternal cost/benefit equation. Our projection is inevitably that the potential of both Brazil and Mozambique will lead to the development of the necessary infrastructure.

The gridlock caused by disagreements on all sides of the US political arena shows no signs of giving way any time soon.

© CWT 2017 11

Europe, Middle East & AfricaFor what is a very broad and diverse region, it’s perhaps unsurprising to see significant disparity between growth rates in its different countries. While we expect air fares to experience strong growth in Western and Eastern Europe, Africa is set for moderate growth. It’s a similar tale for hotel costs and capacity, with relatively strong growth expected in Europe and a much flatter trajectory in the Middle East and Africa.

As with other regions, air fares are largely driven by demand, or in some instances by the lack of it. For example, oil exploration is set to increase demand and, therefore, prices on Norwegian routes in 2018. Double-digit growth in international arrivals is expected next year based on a combination of the oil industry and tourism, particularly from China.

Other hot places are the obvious ones: Angola, Kazakhstan, Nigeria and Saudi Arabia. Mozambique is set to become a key ERM destination, though we are some way off being able to predict pricing because the infrastructure simply isn’t yet in place.

The international community is closely monitoring relations between Qatar and its neighboring countries, given the significant impact they could have on the price of oil and gas. Strained relations could also reduce traffic demand in the region.

Airline competition is also playing its part. The most obvious impact is in the Middle East, though since many of the airlines are major international players, their competition has wider ramifications than just in the region.

A further factor impacting price is ticket distribution. British Airways’ move to follow Lufthansa’s lead by introducing a GDS surcharge will push prices up for corporate travel. As yet, the detail of the impact is unclear but it will certainly make flying more expensive.

For the ERM industries, the result is minimal changes in commerical airline prices with an increase for the more specialist routes.

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

-4.0%

-5.0%

-6.0%

ABERDEEN

ANTWERP

ATHENSCAIRO

CAPE TOWN

DAR ES SALA

AM

DHAHRAN/DAMMAM

DUBAI

HAMBURG

HELSINKI

ISTANBUL

LAGOS

LUANDA

ROTTERDAM

STAVANGER

COPENHAGEN

6.1%

1.1%

8.2%

6.9%

-6.2%

5.8%

2.7%

-1.5%

-4.2%-4.5%-5.1%

6.6% 6.6%

-2.6%

8.5%

6.3%

2018 Air Projections

Forecasted rates are indicated in USD and might have different values when translated to local currencies.

© CWT 2017 12

Europe, Middle East & AfricaHotel pricing is following a very similar pattern. Generally speaking, there hasn’t been major investment in hotel infrastructure recently, though there are local variations. The UK is one such example: 13,000 new hotel rooms opened in the UK in 2016 and another 8,000 rooms are expected to open in London alone in 2017. The opposite is true in Amsterdam, where the city council has put a stop to all hotel developments in and around the city center.

But fluctuations in major currencies are expected to impact the market heavily. They are also playing havoc with our ability to predict prices with any degree of certainty, particularly when combined with local currency changes, which we’re seeing in Egypt, Nigeria and Turkey, among others. There is more uncertainty to come.

SECURITYSecurity has always been a concern for the ERM industries. To put it very simply, oil, gas, minerals and fish often come from challenging environments and dangerous places. The result is stringent security processes have been in place for many years, well before the current concerns arose.

Stopping travel simply isn’t a possibility because the industries have to carry on. We’re seeing two trends:

THE LIST OF DANGEROUS PLACES IS GROWING

Security challenges have occurred frequently in Nigeria and Somalia. We can now add Belgium, France and the UK to the list. The risk is no longer isolated to specific parts of the world so security policies are relevant everywhere.

COMPANIES ARE REASSESSING SAFETY AND SECURITY COVERAGE

We're seeing the tightening of corporate security policies and a greater emphasis on adherence.

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1.0%

0.0%

-1.0%

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-6.0%

ABERDEEN

ANTWERP

ATHENSCAIRO

CAPE TOWN

DAR ES SALA

AM

DHAHRAN/DAMMAM

DUBAI

HAMBURG

HELSINKI

ISTANBUL

LAGOS

LUANDA

ROTTERDAM

STAVANGER

COPENHAGEN

-5.2%

7.1%

4.9%

6.1%

0.0%

2.9%

7.7%

6.4% 6.1%

2.8%

-0.5%

-2.9%

-4.7%

-3.0%

5.7%

11.5%

2018 Hotel Projections

Forecasted rates are indicated in USD and might have different values when translated to local currencies.

© CWT 2017 13

Asia PacificThe trend in Asia Pacific will be for air and hotel prices to increase in 2018, particularly for ERM travel, as activity increases. In the major economies of China and India, rises are inevitable because of the macro-economic picture of ever-increasing domestic demand. Indeed, there are potential capacity issues on the horizon if demand in the region stays on its current trajectory.

That said, airlines are developing their business models and governments are acting to impose some control on the market, in an effort to increase capacity in line with demand.

Tokyo is a good example of increasing volume, as it prepares for the 2020 Olympic Games. Both hotel and air capacity are being built, limiting cost increases. However, Tokyo will remain an expensive destination.

Low cost carriers are set to play a greater role in business travel with route expansion and the provision of premium cabins. AirAsia X, for example, is introducing business class that includes lie-flat beds.

The Chinese government has liberated airfares on routes competing with high speed trains to keep prices down. However, because of high demand, prices still continue to increase. On the other hand, the Indian government has sought to limit seat expansion with bilateral restrictions, though demand from markets such as UAE, Singapore, Hong Kong and Malaysia is growing. These moves will result in increasing airfares, compounded by new taxation rules.

5.0%

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-1.0%

-2.0%

3.2%

5.3%

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5.3%

4.1%

5.3%

-2.0%

HONG KONG

JAKARTA

MANILA

MUMBAIPERTH

SINGAPORE

SHANGHAI

2018 Hotel Projections

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

3.9%

6.0%

4.8%

7.0%

4.9%

7.7%

1.9%

HONG KONG

JAKARTA

MANILA

MUMBAIPERTH

SINGAPORE

SHANGHAI

2018 Air Projections

Forecasted rates are indicated in USD and might have different values when translated to local currencies.Forecasted rates are indicated in USD and might have different values when translated to local currencies.

© CWT 2017 14

TRAVEL: COMMERCIAL vs. LOGISTICS...For the ERM sectors, the logistics of travel can be exceptionally complicated. Managing the travel of someone who needs ground transportation from the airport to an airfield; a night in a small motel; a light aircraft or helicopter to the mine, ship or rig is more complex than simple commercial travel. In most companies, commercial travel and logistics travel are managed totally separately. That works fine until something goes wrong. If the commercial flight is delayed, who tells the bus driver? If a chopper is weather-bound, what happens when the traveler gets to the airport?

It’s even more complex when unusual destinations are involved. Increasingly, major companies have regular operations in remote and, sometimes, hostile destinations. Atyrau in Kazahkstan, for example, combines relative isolation with extreme weather, with temperatures ranging from -4°F in winter to 104°F in summer.

Asia PacificCenters of ERM activity in APAC have all felt, and in some cases, still feel the impact of a particularly bad few years. Some key ERM destinations like Mumbai, Singapore and Tokyo are rebounding, while others like Perth are still struggling. But change is coming. The direct flights between Perth and London, which Qantas will introduce in the spring of 2018, are in response to increased demand and will command premium pricing. In turn, that generally will push prices up. That demand comes from increased mining activity and from the gas industry. The arrival of the 600,000 ton, 488m Shell Prelude floating liquefied natural gas platform is indicative of the future.

With mining picking up again, there will be pressure on specific routes, particularly in Australia. Companies have a legal duty to impose minimal impact on the local community and that includes working with the airline(s) to make sure there is enough capacity, at a reasonable price, even when the mining industry is taking up every available seat. We’re starting to see this happen already and co-operation between ERM companies and airlines will become more important in 2018.

Prelude by numbers:

> 488m long, more than four soccer fields

> 74m wide, nearly three times the size of the biggest blue whale

> Construction used 260,000 tons of steel

> Displaces 600,000 tons, six times the world’s biggest aircraft carrier

> Moored to 16 steel piles. The anchor chains are 17km long and each link is a meter long and weighs a ton

> Capacity to produce at least 5.3 million tons of liquids per year

> 500 million liters of cold water will help cool the natural gas

> Located 475km north east of Broome, Western Australia

> 20 to 25 years lifespan in its present location

> Crew of over 200 IMAGE © SHELL OIL

© CWT 2017 15

RecommendationsAs this forecast shows, there are many factors influencing travel pricing, most of which are external, volatile and unpredictable. Your focus therefore has to be on your span of control.

BE PREPAREDHopefully the worst is over. With economies improving, now is the time to build the travel program you want and need. That is our first and most important recommendation.

Whatever route you take, your start point should be unit cost optimization and asset utilization. That way you can be sure you’re getting the very best value from your travel program. That will involve a program that recognizes travel is an enabler, not a cost. It also involves a close examination of the return on investment for every type of travel.

ROBUST TRAVEL POLICYThe best way to keep the unit costs of your travel down is to build a strong travel policy, with cost-effective supplier agreements in place, and then make sure your travelers adhere to the policy.

In particular, negotiate with hotel suppliers, on price, last room availability, bed and breakfast deals, inclusion of Wi-Fi in the price and so on. It’s worth seeking two-year agreements now, while the rates are low.

Once you have your agreements in place, enforce the policy. Don’t allow employees to book travel outside of your channel. Make sure people book as early as possible: question every booking made within two weeks of travel. Don’t always accept the lowest fare offered, even if that has been your policy recently. Make sure your travelers always stay in your selected hotels, to keep costs down and strengthen your hand in the next round of negotiations.

Deviation from the policy always ends up being more expensive and may raise security concerns, especially around hotel bookings. It also weakens your hand when it comes to negotiating with suppliers next time round.

BE PREPARED

ROBUST TRAVEL POLICY

LEVERAGE TECHNOLOGY

BE MINDFUL OF SAFETY

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Recommendations

LEVERAGE TECHNOLOGYBusinesses throughout the ERM industries use the most advanced and sophisticated technology in the world. The same standards need to be applied to travel, both to reduce costs and increase efficiency.

The logical start point is to use software tools to manage the entire travel process. There are several available that can handle rosters and logistics, including uniforms, site security, charter manifests, room check in/out and so on. It’s about optimizing the logistics process and, perhaps, the interaction between the commercial and logistics, to create a single version of the truth between travel managers and the traveler.

This consolidation provides efficiency savings in itself. But, that is only the beginning. Because all the information is collected in one place, that data can then be collated and analyzed to provide a highly accurate basis for your decision-making.

Access to travel data is more instantaneous than ever for companies, giving them near real-time overviews of key considerations such as spend. Every single part of the journey can be included, even those that are generally quite inaccessible. Those scenarios can then be used to predict the impact of certain decisions, for example changing hotel provider, changing airlines, booking further ahead, or changing your crew rotation day from Friday to Thursday.

The second angle is that there is a cohort of people retiring from the industry, being replaced by the millennial generation. They have different demands and expectations. They expect everything to be digitized, from travel tickets to expense forms. Ideally, neatly contained in a mobile app.

BE MINDFUL OF SAFETYSecurity is another area where technology can enhance the measures you already have in place. New technology enables you to track the whereabouts of your employees in real-time, while the ubiquity of mobile means you can almost always contact them. And there are other viable communications channels in the rare event a mobile network is down, such as Whatsapp or WeChat. This is particularly important in parts of the world where security is an increasing concern—Turkey and Venezuela are good examples.

We are seeing new pandemic and epidemic threats emerging across previously unaffected areas of the world. Transmittable illnesses are even appearing in places where health care is considered advanced—the Zika virus in Brazil and US, for example. We recommend that companies review their pandemic and staff healthcare plans including travel healthcare procedures. This is especially important for companies moving their operations to new locations where there are lower health care standards.

Having a firm grip on the things you can control will minimize the impact of the things you can’t. We hope the insights and advice you’ve read throughout this forecast will put you in a strong position to offset the turbulence of fluctuating markets and evolving business models.

Predictive analytics of Big Data means you can be much smarter about your use of data and therefore make better decisions and reduce costs.

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© CWT 2017 18

United Airlines' perspective on the energy industryThe current airline environment includes higher fuel prices, heightened competition, an uncertain political environment, higher labor costs and unprecedented attention on customer service. Despite all these challenges, demand is at an all-time high, economies are improving, airlines are investing in their products and the focus on the customer is increasing every day.

Improved industry profit margins are allowing carriers to re-invest in products and services, vastly improving the customer travel experience. In 2016, airlines took delivery of 353 new aircraft, nearly one every day and as an industry, invested an average $1.5 billion per month in improvements to product and customer experience. Almost 200 new routes were added in the U.S. alone with another 150 expected for all of 2017. For 2018, Airlines will again seek markets worthy of new or increased service to match demand and continue to update items like aircraft seats and add technology to the travel experience.

Keeping up with all this change is crucial to a travel programs success. The introduction of airline portals like United Jetstream are designed with the corporate travel buyer in mind. These tools provide 24/7 access to the information you need to make informed decisions by providing reports on spending trends, total savings, traveler experience, carbon footprint and more. They help reduce costs by simplifying administrative processes and provide transparency as it relates to the overall product offering.

Understanding when, where and how travelers are canvassing the world is an important key to driving overall savings in a travel portfolio. Savings do not always relate specifically to the price of the ticket and tools like United Jetstream help show the entire picture.

We are excited about 2018 and continuing to partner with you and CWT. We look forward to welcoming your travelers on a United flight soon!

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MethodologyThe projections in the 2018 Energy, Resources and Marine Forecast are based on:

A statistical model developed by market and economic research firm, Rockport Analytics, that evaluates historical price behavior and forecasts future price references

The market-specific expertise and travel industry knowledge of CWT Energy, Resources and Marine and CWT Solutions Group personnel worldwide

Macroeconomic information sourced from International Monetary Fund Research Department and other sources as indicated.

Projects were derived based on transaction data from the global client portfolio of Carlson Wagonlit Travel (CWT), including clients’ travel footprints and patterns, over the past recent years. Key macroeconomic and per-country indicators, such as current and expected GDP growth, the consumer price index, unemployment rates and crude oil prices, were used in the statistical model, as well as key supply-side drivers sourced from OAG and STR Global. All air statistics represent point of origin and include all trip types (long and short haul/domestic, continental and intercontinental).

CWT Energy, Resources & Marine provides specialized travel management solutions for organizations operating in oil and gas, diversified resources and mining, offshore, marine services and renewable energies. Building on more than 30 years of experience, we work closely with clients worldwide to find the right solutions for their complex travel needs, providing first-class service and leading-edge technology and products. CWT Energy, Resources & Marine is part of Carlson Wagonlit Travel – a global leader in travel, hotel booking and meetings and events. www.carlsonwagonlit.com

About CWT Energy, Resources & Marine

For more information visit: www.cwt-energy-resources-marine.com.

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