With technology having advanced as extensively as it has over the past two decades, the travel management industry is one of those that has changed in complexion, with the major players having had to evolve and re-look their offerings. So, where has that left the major travel management companies in Africa, who is doing what and how, and should you be looking for a TMC to manage your travel, or continue to go it alone? Richard Holmes consulted some of the biggest names in the space, to get their thoughts.
As a business traveller in Africa, you’re most likely an expert in your field. You know the vagaries of your industry, the opportunities to exploit, the pitfalls to avoid and the skills required to succeed.
You’re good at your job – a professional – and take pride in your work. With your carefully cultivated skill set, you wouldn’t dream of handing over the responsibilities of your position to someone who’s nosed around the Internet a little and now thinks they can do it better than you. Am I right?
So why do so many corporate travellers do precisely that when it comes to travelling on business? Along comes a shiny online booking engine and suddenly every accountant, entrepreneur or mining consultant is fancying themselves as a travel agent. It just doesn’t make sense.
Across large parts of Africa there is a highly specialised travel industry, where agents and operators are trained to manage complex arrangements for corporate and leisure travellers. Experts in their chosen field, they understand the inner workings of hotel reservations, of airlines’ arcane revenue management methodology, the visa protocol required for dozens of countries and the vagaries of travelling across Africa.
Sure, you could theoretically book much of it yourself, but just as a home-cooked meal rarely matches the precision and care of a fine-dining restaurant, so the services of a professional travel management company (TMC) can transform both the efficiency and efficacy of business trips for corporate travellers.
And, as the growth of African economies outstrips that of Europe and the United States, so the demand for world class travel management companies is booming.
The continent “accounts for seven of the world’s fastest-growing economies and Africa’s natural resources remain a significant draw for multinational organisations, particularly clients in the oil and gas sector,” says Chris Schuitmaker, Manager: Regional Business and Partner Management Africa for HRG Rennies Travel. “In line with multinational clients expanding their businesses across the continent, we are seeing an increase in TMC offices being opened due to the local and global requirements of these multinational clients.”
HRG Rennies Travel is a perfect example of the growth of international TMCs in Africa. From its international headquarters in the United Kingdom, HRG has representation in over 120 markets worldwide.
“The majority of these relationships are contractual partnerships. HRG Rennies Travel is the strategic partner for HRG in the African region, and as such we drive the strategy across Africa on behalf of HRG,” explains Schuitmaker.
Leveraging the power of a recognisable brand has also worked for American Express Travel Services, which has 23 franchise partner network offices across the continent, explains Clive Jones, Chief Operating Office for American Express Travel Services – South Africa: “We also own the office in Nigeria, together with a local partner. We have over 55 team members based in this office and growing in alignment to our growing client base. We are also the Master Franchise rights holders for sub-Saharan Africa, so all of the 23 partners report into us in South Africa. As global clients enter Africa, we are alongside them. Travel is a key component of their own success and we play our part in ensuring that they can undertake their core functions to the best of their ability.”
BCD Travel has had similar success on the continent, with over a dozen offices spread from Egypt to Morocco, Nigeria to Mozambique, Madagascar to Gabon. Perhaps even more impressively, there are plans to open a further 10 offices – in Ethiopia, Democratic Republic of Congo, Congo, Malawi, Rwanda, Namibia, Zambia, Botswana, Cote d’Ivoire and Cameroon – over the next nine months.
Africa is certainly a promising new frontier for corporate travel, suggests BCD Travel’s Vice-President for Europe, Middle East and Africa, Paul Tracy: “The growth figures and forecasts are there for everyone to see. We find corporate clients are starting to look at extending their consolidation programmes into Africa rather than leaving them outside.”
On the other side of the coin are local brands that are actively growing their network on the continent. Brands such as Duma Travel, which has its sights set firmly on expansion north of the border.
“Our intention is going aggressively into the rest of the African continent,” says Chief Executive Officer Themba Mthombeni, who sees carefully chosen partnerships as the most efficient strategy for growth. “We have decided that rather than opening our own offices, we should enter into strategic alliances with well-recognised TMCs in the Southern African Development Community, West, East and Central Africa. It is not surprising to see the international interest in African travel. African economies are growing fast relative to the world average, and so are the travel volumes according to International Air Transport Association figures.”
Similarly, South African Travel Centre has a franchise presence in a number of countries in southern Africa – including Botswana, Mozambique and Lesotho – and has recently opened offices in Swaziland and Ghana, says Chief Executive Officer Bulelwa Koyana: “As part of our growth strategy, we have also identified specific markets which we would like to enter. We have a good pipeline of potential franchisees that are currently under negotiation in two more countries.”
Club Travel – whose corporate division manages travel accounts for clients such as MTN, Adcock Ingram and Rhodes University – is a trusted South African brand that has grown its footprint through franchise deals and cemented its TMC reputation through its appointment as the South African representative of GlobalStar Travel Management.
“Club Travel is tasked with growing the African footprint,” explains Managing Director Wally Gaynor. “Currently, GlobalStar are represented in Angola, Nigeria, Tanzania, Kenya, Uganda, Ivory Coast and Egypt.”
Wings Travel Management, however, is a global company that’s an old hand at managing travel in Africa. An international operation with a footprint on five continents, Wings has used its two decades of experience in Africa to springboard into other territories, and is now one of the most respected TMCs worldwide.
“As Africa is experiencing phenomenal growth, primarily due to the oil and gas industry, TMCs from other international locations are trying to capitalize on this growth,” explains Mary Ann Harvey, Vice-President Global Marketing for Wings Travel Management.
“Africa has been a missing link in many TMCs’ portfolios of service, but they’re discovering that navigating the inherent challenges of travel across the continent is markedly different than on other continents,” says Harvey. “Emerging markets aren’t easy. It takes having people on the ground – experts in the regional customs and business workings – to get things accomplished efficiently. For our consultants, it’s second-nature.”
“With many African economies either growing or expected to grow substantially, corporates from other parts of the world are finding it necessary to travel to these markets,” agrees Koyana. “With this as a driver, global TMCs need to either establish a physical presence or partner with local TMCs with world class capabilities and reputation, in order to service these clients locally.”
The growth in TMCs across the continent is also being driven by increased demand from corporate, state and non-governmental organisations realising that business travel can be streamlined and made more cost-effective through the use of a TMC.
But not everyone is sold on the benefits of using a travel management company. “I’m getting along just fine booking my own trips on the Internet”, I hear you say. “What can a TMC actually offer my business, you ask”. Well, the answer is… ‘plenty’.
“The function of a travel management company is to holistically manage all aspects of the travel cycle of an organisation. This includes the travellers and behaviours through effective travel policies, supplier relationships, data analysis, service configuration… all with the purpose of maximising efficiencies and reducing cost for the organisation,” explains Schuitmaker.
“What many corporate clients do not know is that if they choose the right travel management company they can often save money rather than going direct to a supplier,” explains Gaynor. “The Club group last year had an air turnover of R1.55-billion. This gives us a lot of clout with negotiating better rates. Also, where a client’s spend may be low, we can group them with other clients and negotiate cluster deals.”
Many corporate entities may be concerned that engaging a TMC could result in a loss of flexibility, particularly for last-minute travel, but by allowing executives to call the shots when it comes to how they fly and where they stay, it means “there is no way to manage the spend and make sure that everyone is travelling according the company’s travel policy,” adds Marc de Jager, General Manager – Global Network for TWF Global, which has offices in eight African countries.
“Companies realise that there is a time/cost implication to them doing their own bookings, which is not part of their core focus. They therefore look to TMCs to manage their travel policies, provide financial analysis of their spend, channel their spend to the suppliers that will benefit them the most, negotiate with suppliers to get the best deals, consult on the best practices for travel policy management and provide a 24/7 solution,” says De Jager.
And although the industry is still in its infancy in many countries on the continent, the increased participation of global multinationals in African economies have highlighted the need for world class TMCs in Africa.
“Travel expenses are coming under increased scrutiny and more companies are working with travel management companies to manage spend and drive efficiencies,” says Schuitmaker. “In addition, commission-cutting and a shift to fees is happening in some African markets, bringing with it a renewed emphasis on how agencies add value.”
“The issue is now on strategic travel services,” adds Mthombeni. “Corporates are looking at leveraging the knowledge base of the TMCs, the buying power, technology and economies of scale. Establishing travel programmes that align to business goals is the challenge.”
It’s a salient point worth noting – travel is simply the means to achieving a business goal, not the end itself, and a good TMC should engage with its clients to help achieve those goals and add additional value to the expense of travelling on business.
“A good TMC will work with you, as part of your team, to ensure you are getting the best value,” says Harvey. “It’s our job to determine what their pain points are, how we can help alleviate them, all while freeing up the company and its travellers to focus on the business at hand. Travel within our niche industries can be difficult, challenging and unpredictable. A good TMC will help alleviate those challenges. The price that clients pay their TMC should be offset by the benefits and value that the TMC brings to the partnership.”
The issue of cost is an important one, but the structural change in the travel management industry has by and large been a positive shift for clients seeking value and travel managers hoping for better professional recognition.
The entire travel management industry has seen dramatic change over the past decade or two, moving from a model based on commissions paid by airlines and hotels, to a more professional approach where service fees are charged for the knowledge and service that is made available to a client using a travel management company.
“The change in the remuneration model ensured that TMCs are forced to deliver value,” adds Mthombeni of Duma Travel. “The advent of technology in travel has also ensured efficiencies, economies of scale and knowledge-based decision making,” adding that the increased “duty of care” companies owe their employees, along with sustainability concerns, have become important considerations for corporate travel managers.”
Value is key, agrees De Jager: “Look beyond the cost structures and see what the value-add to your own business will be. The role of a TMC has changed from the old travel agency style of processing, to a more consultative and integrated role. At TWF, we have a seen a dramatic shift in moving from ‘I want to book a flight’ to ‘I want to understand my true spend and get the best value out of what I am paying’.”
As it’s become easier for travellers to make their own booking online, TMCs have had to reinvent themselves as travel managers, agrees Koyana: “With travel being commoditised and technology making it easier for anyone to make their own bookings, TMCs have had to evolve to ensure that they add value to their clients’ businesses. Successful TMCs are those that emphasise the management aspect of travel and are not just travel bookers. This includes aspects such as managing budgets, providing advice, suggesting alternatives, and very importantly – successfully implementing and managing clients’ travel policies.”
Ironically, while eschewing the technological improvements that allow travellers to book online themselves, a large part of that value-add is through the increased use of relevant technologies.
Mobile security analysis, online voucher retrieval, deep-level data reporting on spend, process flow management solutions, mobile communications… the list of innovations that allow the travel booking process to be streamlined and corporate accounts to be better managed is a long one.
“Technology has been the driving force in the industry, with self-booking tools and the global distribution system suppliers being proactive in providing aids to help both the TMC and the corporate,” says Rod Rutter, Chief Operating Officer of XL Travel. “The delivery of service is now driven by technology.”
“We have assembled a wide range of products and services to meet your specific needs when travelling in Africa,” comments Schuitmaker from HRG Rennies Travel. “Unique product offerings such as our GPS-enabled Traveller Tracking tool, South African Reserve Bank Clearance, and Travac mobile vaccination clinic, assists us in delivering a hassle-free service to you across the continent. In addition, we share our knack for Africa with you through our daily travel alerts, regional account management programmes and the on the ground support in 28 African countries across the continent.”
“As with any industry, if you’re not evolving, you’re not serving your client base,” agrees Harvey from Wings. “We have a suite of traveller tools that provides information about a traveller’s destination and any potential risks of travelling to that location; sends text messages with itinerary information; and helps secure waitlisted seats more efficiently. Travel managers can use the tools to manage their travel spend, reconcile transactions and manage the company’s refunds, all through one convenient portal.”
All in all, it seems a no-brainer for companies with a considerable amount of corporate travel to use the services of a professional TMC. However, with the growth in travel management companies on the continent it has – conversely –become harder for procurement and travel managers to select the TMC that’s right for their business.
Size matters in terms of having resources on the ground, but so does dealing with a real person on the end of the phone. And as local companies expand and international brands sign partnership deals, it’s important to know whether you’re dealing with a satellite office, franchisee or sub-contractor.
As a contractual partner to a global network of TMCs, HRG Rennies Travel is able to tap into global best practice and technologies, says Schuitmaker: “With a network comes a level of consistency and brand identity, of professional service delivery.”
And while smaller local TMCs may sub-contract some services in destination countries, using an international TMC provides “a network synergy of local on the ground solutions for travellers,” he adds.
Guaranteed levels of service is part of the reason Wings Travel Management – with a presence on five continents – has chosen to ensure that every office remains under the same corporate umbrella, to provide a consistent and predictable experience for clients.
“All of our offices are Wings offices, meaning that the company you get in South Africa is the same company you get in Brazil, the United States, or any of our international offices,” says Harvey. “We have a deep understanding of the energy industry, so we know how important consistency of service is when you have a commuter who may be assigned to a rig in the North Sea and then reassigned to a rig off of Nigeria’s coast.”
“We’ve deliberately expanded our global footprint with wholly-managed operations so that we have full control of the process and service delivery. This way our service delivery across the globe is seamless and the commuter is afforded the benefit of one company, one relationship and one Wings experience, no matter which of our operations he’s engaging.”
That network of wholly-owned offices allows processes and technologies to be streamlined across the globe, providing economies of scale that also stretch to the fares and hotel rates available to clients.
“Our operations and our technology platform are standardised across our global offices, and as such we can co-ordinate products and services anywhere in the world,” says Harvey. “By maintaining strong supplier relationships, we enjoy preferential agreements with major carriers, hotel groups and car hire companies. We have the ability and flexibility to access fares through any of our global offices, ensuring we are getting the best value for our clients. But, it’s our standardised technology platform and our extensive experience in Africa that make a huge difference in providing seamless support to travellers.”
As multinationals expand in Africa with offices spread across the continent, “a single TMC provides a consolidated understanding of the true financial aspect alongside trends on the continent,” says De Jager. “Having a TMC with an international affiliation – to be able to leverage better rates, support and uninterrupted service – is what is currently required throughout Africa.”
“As travel remains the second or third largest controlled expense within many businesses, it represents an area of opportunity to achieve improved return on investment,” notes Schuitmaker. “As such, the programmes implemented to manage travel, have become a priority for companies looking to impact the bottom line. This focus, combined with the continued technological advances across the world, has changed the role of the TMC.”
In addition to extracting value from your travel budget, a good TMC should also take responsibility for the safety of employees on company travel. Security is a primary concern for many corporate travellers in Africa – particularly for executives travelling in from Europe, North America and Asia – and risk analysis and destination-specific advice should form a key component of the service offered by a TMC.
“We are committed to our travellers’ safety and supply our clients with relevant destination data, alert messages and incident-management reporting, to make them aware of risks that may affect business travel,” says Harvey. “Accurate traveller tracking is essential. Because each Wings office uses a standardised technology platform, we can keep track of all Wings clients, no matter their point of origin or destination.”
While cost saving, efficiencies and new technologies are certainly important considerations, old-fashioned service is just as vital for corporates managing complex travel itineraries.
“We specialise in the oil and gas, corporate and government travel sectors. Across these three sectors of business, the commonality is that they all demand a high level of service,” says Harvey from Wings. “Our clients are in service-critical businesses where travel is crucial to their business model, and they’ve really come to rely on Wings to navigate and simplify the complexities of their travel.”
Having the knowledge base to navigate those complexities is one thing, but it counts for nothing if clients aren’t able to tap into their TMC at a moment’s notice. Along with transparency in terms of expenditure and return, corporates want their TMC to be standing by when the best-laid plans go belly up.
“Accessibility to the TMC is important to clients. Are they there for them whenever, wherever they need? Can they reach a real person at three in the morning if they have an emergency? Providing 24/7/365 service is a given,” notes Harvey. “After-hours help should be just that: help. They need someone on the other end of the telephone, or computer, who can solve their problem, not just take a message for an agent to handle the next morning.”
“What happens to you when your local internal flight gets cancelled or delayed and you are stuck in a small domestic airport upcountry? That is when you need the real support of a global travel management company that through its local office has people on the ground to look after your employee and make sure they have somewhere to sleep for the night,” adds BCD Travel Managing Director: South Africa, Kananelo Makhetha.
“Technology is a core component of the value proposition, but is only an enabler,” adds Jones of American Express Travel Services – South Africa. “The best human resources will ensure a comprehensive and thorough travel programme in alignment with the client’s objectives.”
And things can – and will – go wrong for corporate travellers making the most of Africa’s diverse opportunities. Much of the growth in the travel management space is off the back of a booming mineral extraction industry – an industry that has long required careful travel co-ordination, although local knowledge is key regardless of destination, says Koyana from SA Travel Centre.
“It is essential to have good knowledge of local conditions and challenges. These can be as simple as selecting suitably-located accommodation in cities like Luanda and Lagos, considering travel infrastructure and traffic challenges, to making arrangements for travel to remote parts of some countries with limited direct air services, for example oil fields and mines.”
“Angola, Kenya, Tanzania and Ghana – these regions are seeing the largest growth, so are key regions for us to service, grow and develop,” says Jones. “The other region is Central Africa, as it is undeveloped and challenging to undertake business, let alone travel in, thus our on-the-ground expertise plays a critical role in allowing the client to pinpoint prospects in these countries by getting to their destinations quickly and safely.”
“Mineral and petro-chemical rich areas have seen tremendous growth,” adds Mthombeni. “The key growth areas have been Angola, for oil and diamonds; Zambia for copper; Uganda for oil; Ghana for oil, gold and diamonds; Nigeria for oil; Mozambique for coal and gas; the Congos for diamonds, gold and oil; and Kenya for tourism, retail, finance and property.”
“A lot of the economic growth in the region has been driven by the extractive industries and these companies are looking for travel management,” agrees Tracy from BCD Travel. “But at the same time don’t underestimate the Fast-Moving Consumer Goods (FMCG) companies, as well as telecommunications, which you find all over the region. They are also looking for the TMC approach.”
“The fact is that Africa, in general, is going through a robust structural transformation and corporate travellers are going in and out of all of these locations. Most of these areas are emerging markets where travel is quite complex,” says Harvey. “Each country has its own particular visa or entry requirements, and keeping up with the paperwork and documentation can be confusing.”
“A TMC should offer expertise in getting travellers from point A to point B as efficiently as possible and be there to support them should something go wrong. Business travellers are working, they need to focus on their company’s mission – let the TMC do the legwork on the travel end,” she says.
That seems a simple enough approach, but make no mistake, the African TMC industry remains and will continue to be a highly competitive space, with the role of the TMC evolving all the time. Technology will have some say in how that role evolves, but at the end of the day, it’s about understanding your client’s needs and delivering a service that is of the highest quality.
How this plays out in the African TMC industry over the next few years will be interesting to see.
Signing up with a TMC
Corporate, state and non-governmental organisations considering appointing a travel management company should bear in mind that most TMCs work on a contract basis, with the goal of building a long-term relationship between client and travel manager.
“We get to know our clients, their needs, their preferences, and work with them to help make their travel programme efficient and cost-effective. To do that, you need to build a relationship and rapport,” explains Mary Ann Harvey, Vice-President Global Marketing for Wings Travel Management.
“We prefer to work on ongoing contracts, because it is about developing a travel management programme with a client,” notes BCD Travel Managing Director: South Africa, Kananelo Makhetha. “However if there is an immediate project, we are always happy to quote on it.”
“At TWF we mostly engage with our clients on an ongoing contract,” says Marc de Jager, General Manager – Global Network for TWF Global. “But from time to time, we do have smaller clients that only do business on an ad hoc basis for specific projects.”
Just as TMCs allow for companies to apply strict travel policies, so operating on a contract basis allows for a clear appointment process to take place, says South African Travel Centre Chief Executive Officer Bulelwa Koyana: “Corporate clients normally engage travel management companies on a contractual basis, with many of them following a formalised procurement process. This is especially true for public sector entities.”
However, while a contract allows for clear service levels to be agreed, some travel management companies prefer for their work to speak for itself.
“Most of our clients are on contract, but we do deal with ad hoc clients,” comments Wally Gaynor, Managing Director of Club Travel. “Talking of contracts, many TMCs tie their clients into a strict contract, but we have the philosophy that we are only as good as our last booking. If a client is not happy, we will tear up a contract!”
On the ground…
One of South Africa’s most trusted brands has a firm eye on expansion into Africa, so we asked John Gawler, Group Procurement Manager for Kansai Plascon, how they manage a R10-million travel budget across 2000 employees.
Firstly, tell us about Kansai Plascon…
In 2012, the company formerly known as Plascon South Africa was renamed Kansai Plascon, after a merger with Japanese company Kansai Paint, the world’s sixth largest coatings company. Kansai Plascon continues to champion the Plascon brand as it expands into Africa as the continent’s number one coatings company. Recently, Kansai Plascon acquired a controlling stake in Astra Industries Limited.
What volume of corporate travel do you book?
We have about 800 travel instances a month. The majority is within the borders of South Africa, but we have a fair amount of regional and international travel. Our travel spend is in the order of R10-million a year.
How did you operate before joining a TMC, and what made you change?
We have always used a travel management company in various stages in the past. We had a failed attempt at on online booking tool. What we found was that the booking engine was very good but the back office systems and support didn’t work for us.
Most corporates have fairly rigid internal control processes. Ours is no different. While the dynamics of the wireless generation do allow for faster booking and turnaround times, these often caused internal control issues. After a period we decided to pull the plug and revert to a TMC… and that’s where Club Travel came into the picture.
We have a bit of a hybrid system with them in that we do some of the reservation and use them to facilitate the booking, especially for local travel. When we do international trips we brief Club Travel and they come back to us with routings and price options. We have a dedicated team within their organisation looking after our account and they do all the corporate work for us.
What’s wrong with booking it all yourself?
The vagaries of the travel market make it difficult to arrange business travel yourself. You can find yourself short-changed quite quickly if you don’t understand where you’re going, where to stay, how to get there etc. Crucially, what you see on the Internet isn’t always what you find at the destination, and I think most business travellers into Africa would attest to that!
What other advantages have you found from using a TMC?
Typically, good TMCs have the answers to the difficult questions and have the answers to the issues we hadn’t thought about. Examples when travelling internationally or regionally – what are the passport/visa requirements? How far is it between terminals at international airports? What vaccinations do you need? A TMC with personal knowledge of the destination also adds real value to business travel.
TMC’s are also fantastic for getting you out of tight spots, especially in emergency situations. A good TMC never ‘sleeps’ and it is comforting for our international travellers to know that if they have an emergency or a flight plan change, one call to Club Travel can have them on the way again.
Financially, what benefits have you seen?
There are two aspects here. Firstly, there are reductions in actual travel spend. A large TMC like Club Travel has specialist knowledge of the airline industry along with enormous buying power, and in the first year we probably saved around 28% of our travel spend on airfares, car hire and hotel accommodation.
Then secondly, most TMCs charge a transactional fee for each booking. With Club Travel, we suggested a flat fee per month for the entire organisation, irrespective of how many times we use their services. This is not normally the way TMCs operate, but Club Travel saw the benefit to themselves and us by not having to generate a pile of invoicing paper. Not only saving work, but also the trees!
Consider this: with 800 travel instances a month, each could potentially generate three different service invoices: one each for the airfare, car hire and hotel accommodation. That’s potentially 2,400 individual invoices a month that both parties would need to process! With a flat fee, there is one invoice on our side and one collection on Club Travel’s side. By reducing all that back office paperwork, we’re also saving efficiency money, and that efficiency is one of the real benefits Club Travel delivers to us.
Club Travel also manages the loyalty schemes of each traveller. Every traveller has their own profile, and each time a booking is made they make sure the frequent flyer numbers are inserted.
Perhaps the only downside is that with a younger generation everyone is mobile and connected, and you tend to lose some of that mobile flexibility with a TMC. But when you weigh up the benefits and negatives, you simply can’t compare the two.