Hogg Robinson feels the pinch as firms cut travel

Hogg Robinson, one of the City's favourite travel agents, today said that big-company meetings are being cancelled, American banks are slashing their travel budgets, other finance houses are bringing back video conferencing, bankers are being told to fly budget and small firms have stopped travelling altogether.

The group said that underlying profits in the year to March were flat at £40million, 10% lower than analysts had been expecting before Hogg sounded an alert at the end of its financial year, saying some of its business was in decline.

The outlook has not improved, with Hogg Robinson today conceding: "Market conditions remain challenging and economic uncertainties exist."

Hit hardest is the ad hoc business of putting on one-off events for corporates and banks as well as the fall-off in demand from smaller clients, which together account for around £100million of Hogg Robinson's £332million annual revenues.

"These clients are much more susceptible to any general economic downturn," said chief executive David Radcliffe.

Among its largest customers, where annual travel budgets can be more than £20million, Radcliffe admitted business from some big banks has been hit in recent months.

"We began to see some changes in the final quarter of the financial year and some of our managed clients, particularly those in financial services have sought to reduce their overall travel expenditure," he said.

Radcliffe said transatlantic travel had been hit hardest, European travel had seen a switch by some bankers and executives to budget airlines while others who demand a seat in business class have been bumped on to less prestigious - and cheaper - carriers.

The company is pegging its final dividend at 2.8p, making 4p for the year.