A Focus on Value

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Such is the diverse nature of travel management, that to be too prescriptive in terms of what one expects from a chat with two senior level TMC execs, is to run the risk of shutting oneself off from an array of interesting thoughts on a wide range of topics. So it proved over coffee in Johannesburg, with Morne du Preez and Claude Vankeirsbilck holding court on everything TMC-related.

IATA’s proposed New Distribution Capability? Lufthansa charging for GDS bookings? The value of the TMC? Challenges facing South Africa’s travel management industry? The changes to the country’s visa regulations?

Nothing was off the table, as Du Preez and Vankeirsbilck were forthright on some of the biggest issues facing their industry.

Let’s start with Lufthansa steering customers away from the GDS and towards the airline’s direct booking platforms.

“All they’re doing is thinking that the customer is going to go to them entirely,” says Du Preez. “In certain markets it might work, but in the African market, no chance. Globally, every single large corporate customer is moving into centralisation and central procurement.”

This, of course, feeds into the discussion on IATA’s proposed NDC.

“The GDS is a system the airlines created and then sold for a significant amount of money, forcing the industry to use it,” says Vankeirsbilck. “Now they want the industry to come out of that and go direct to the different airlines. So, now we have to create the technology to interact with every single airline around the world. Fundamentally, it’s a model that cannot work.”

I get the sense that Du Preez and Vankeirsbilck have bigger fish to fry, and it’s no surprise to hear that corporate clients squeezing them on price and battling to see the value of the TMC remains their biggest challenge.

“It’s the commoditising of our service,” says Vankeirsbilck. “That’s the biggest threat. As an industry, we’re not doing enough to show the value that we provide. We don’t talk about it, demonstrate it, monetise it enough, or convince the corporate to stop looking at the price all the time, but to rather look at the value we add.”

Ever the chartered accountant, Du Preez likes to talk numbers and how it makes sense to him.

“They want us to reduce their 5% travel spend with the TMCs,” he says. “Our focus is to say we’ll give you a reasonable price, but we’re going to give you the technology to manage the 95% and that’s where you’re going to get your biggest saving. Half of 5% is only 2.5%. That’s no big deal. But 10% saving of 95% gives you 9.5% saving, which is proper cash.”

Numbers aside, it’s difficult to complete a conversation with a South African travel industry member without touching on the changes to the country’s visa regulations.

“It was a political decision that was made without much substance or thought to the impact it’s going to have, because of a very single-minded approach to an issue of child trafficking,” says Vankeirsbilck. “So, it’s putting a process in place to stop that, but not thinking about the implications for the entire industry.”

“I think they’re going to realise that the impact is so big, they’ll retract it and it will take us two to five years to recover,” says Du Preez. “South Africa has always been seen as a really good hub for Africa. Now, you don’t just lose that corporate passenger who doesn’t want to come through here because he has to get a visa, but you also lose all the family business that comes with it.”

Tourvest are the custodians of some of the most respected travel agency brands, including Seekers Travel, American Express Travel Services (27 franchises across Africa), Maties Travel, Indojet Travel and Travel.co.za.

That’s a lot of balls to juggle, yet Du Preez and Vankeirsbilck seem quite clear in their minds about what approach their business needs to adopt in the short-term.

“Our focus is to try and get our consultants to be consultants again,” says Du Preez. “To consult with the customer and deliver the right service when the customer requires it.”

“So that we can charge for that value that they’re delivering,” says Vankeirsbilck.