Under Pressure

As belts tighten and corporates find themselves under pressure to cut costs across the board, travel management companies are having to work even harder to justify their fees and show their customers real value. It’s pretty easy to book your own travel, regardless of where you’re going, even if it’s a fairly ‘un-travelled’ destination, which is often the case when it comes to corporate travel on the African continent. All it requires is a few taps of your keyboard or smartphone, and within minutes you could be looking at your itinerary, including booked flights, accommodation and ground transportation. Quite simply, technological advances have made just about everyone a potential travel agent or one-man/woman travel management company. That extends from booking one’s own personal leisure travel through to the user-friendly booking tools that have found their way into many corporate offices around the world. As a result, even the most technologically-challenged corporate traveller is now equipped to book his or her own travel. With that freedom, however, comes responsibility, and corporates have a job on their hands in ensuring the traveller in question follows the company’s travel policy, particularly in austere times. Do you really expect an exec with a speciality in a particular field to also have a high competency level in travel management as well? Throw in the minefield that is reconciliation and you have a corporate travel time bomb on your hands. That’s because whilst travel technology has made it considerably easier than ever for travellers to plan and book their own trips, maintaining some element of control over that process is something that can’t be guaranteed. Balance is obviously key – finding a way to get the best out of the technology, as it relates to making life easier for everyone, whilst still sticking strictly to a travel management policy that was implemented for very important reasons. That’s just one of the areas where travel management companies can add value. “Managing travel spend is our core business,” says Claude Vankeirsbilck, Chief Sales and Marketing Officer at Tourvest Travel Services, the custodians of numerous travel brands, including Seekers Travel, American Express Travel Services (23 franchises across Africa), Maties Travel, Indojet Travel and Travel.co.za. “The key benefit of using a travel management company is having complete control over the travel programme.” In fact, if you look at Wikipedia’s definition of what a travel management company is, it says that “corporate travel management is the function of managing a company’s strategic approach to travel (travel policy), the negotiations with all vendors, day-to-day operation of the corporate travel programme, traveller safety and security, credit card management, travel and expenses, and data management. CTM should not be confused with the work of a traditional travel agency.” That’s pretty broad and covers a fair deal, but if you’re the corporate customer in this equation, that’s the least of what you expect from your TMC. Quite simply, they are the experts in the space and will charge you for that expertise, so they had better deliver. Applying the squeeze That being said, even if you’re a TMC that is delivering, there’s little doubt that the operating climate is currently more challenging than ever before. That’s because the African continent is currently ‘feeling the squeeze’, thanks in main to a global oil price that first plummeted in late-2014, countries that remain heavily reliant on commodities, and the under-performance of a host of Africa’s biggest economies. “Companies are targeting ever greater value for money from their TMCs – seeking more services at less cost,” says Procon Solution’s ‘How Technology Supports Travel Management Company Growth’ report. “In a competitive market, TMCs need to do all they can to attract and retain customers. This means offering high-quality services and support at attractive prices. In order to maintain and/or increase their own profitability, TMCs need to raise efficiency levels and reduce spending.” Clients are now seeking more, for less, because the budget just isn’t there. Further to that, those clients are also looking for something different from their TMCs, as traditional models are now being flipped on their heads, as needs change. “The biggest challenge facing today’s TMCs is the perception among clients that they are not adding enough true value across all phases of the travel journey, from inspiration to planning, booking, during and post-travel,” says Otto de Vries, CEO of the Association of Southern African Travel Agents (ASATA). And further to the ‘flipped model’ point. “What was perceived by TMCs in the past as ‘adding true value’ is not necessarily what their customers believe adds value to their journey,” says De Vries. “As such, TMCs are having to move away from the transactional business model, to a consultative one which provides input at all stages of the journey, especially the inspiration phase. TMCs are required by their customers to not only provide a painless travel experience across all those stages, but also one that is pleasant. That is defined as the new ‘Duty of Care’ role that TMCs are required to provide.” That may be the case, but there’s no doubt that financial considerations are driving a lot of the change. “The economic downturn has meant that less travel is taking place and companies are looking at ways to control costs,” says Themba Mthombeni, CEO of Duma Travel. “Technology is bringing travel closer to the individual traveller and giving them the opportunity to actively be involved in travel decisions, which further contributes to the commoditisation of travel.” So, what to do? How do TMCs show their clients the value they bring to the table and justify the fees they charge? “Clients need to be treated as partners and be kept abreast of all the factors that affect travel policy formulation,” says Shaun Lovett, Head of Business Development, Oil & Gas Division, AME at Wings Travel Management. “This clarity makes it easier for them to understand why a certain course of action was implemented and why it is important to do things in a certain manner to ensure safety and security, or realise significant cost savings and drive best practice traveller behaviour aligned to company travel policy.” So, it’s about educating the client and taking them along the journey with you, with an increased level of communication and explanation, with regards what you are doing and why. Club Travel seems to have a similar approach. “As part of the Club Travel Corporate DNA, transparency and saying it as it is will always be key,” says Mohammed Jogee, Club Travel Corporate Sales & Marketing Director. “Through this we are able to provide our client base with an open book fee schedule as well as accurate data that links to our value proposition. Through this policy, our clients are able to see what they are paying for, why they are paying for it, and when they pay for each line item.” That’s all well and good, but as competition increases, there are going to be TMCs who are happy to compete on price, as their clients squeeze them and put them up against competitors who are willing to bow to that pressure. How does the industry then maintain its standards and a certain amount of integrity, as it relates to potential price wars? “We are firm believers that just as other industries don’t bow to the will of the economy, so too do we need to ensure that we don’t sell ourselves out,” says Darryl Desmarais, Group Sales & Marketing Manager at Atlantis Corporate Travel. “Travel is a seven trillion dollar industry per year and it didn’t get that way by selling out to low prices. The economy is under strain, however service comes at a cost, and if our clients see value in that then price wars should not play a role.” Yes, education is key, but TMCs are more than likely going to have to look at different models, including how they charge clients, as these clients become more demanding and pay closer attention to the bottom line and what type of service they are receiving. In that regard, though, the TMC industry is no different to many others out there. Technology Further muddying the waters for those TMCs under pressure to show their clients real value is the broad range of technology available to corporate travel departments. “Technology can play a vital role in achieving this goal (raising efficiency and reducing spend), by automating manual processes in the mid and back-office,” says the Procon Solutions report. “Management solutions assist agents in working productively, while also allowing them to deliver an enhanced consumer experience and ensure compliance. As such, TMCs should be considering the business case for technology investment as they aim to position themselves for growth.” De Vries believes that too many in this space are getting caught up in a one-dimensional approach to technology and what it can offer the bottom line, as opposed to using it more strategically. Again, it’s all about value. “Technology is used as a mechanism through which TMCs can provide their customers with true value,” he says. “TMCs must focus far less on the transactional component of travel management that technology can fulfil, and far more on creating true value based on their specific technological, data knowledge etc needs. TMCs can use the data that they are acquiring about the company, and the actual traveller, and act in a consultative role to assist companies in implementing a pro-active and effective travel management policy.” So, it’s a means to an end – make use of the technology to ‘complete’ the travel programme, as opposed to making the travel programme all about the technology and its fancy new tools. Tnooz is a global provider of news, analysis, commentary, education, data and business services to the travel, tourism and hospitality industry. It claims to be the “leading voice to the industry for all areas related to travel technology”, and it focuses on distribution, marketing, systems, devices, start-ups, social media and commerce in the travel sector. It also publishes pieces with titles such as ‘Top Tech Priorities for Corporate Travel Managers’, and in this particular piece went on to state that “it’s hardly surprising that technology is high on the list of priorities for corporate travel managers given the drive to cut costs, attempts to integrate data and the need for management information.” It goes on to reference information from the GBTA and Egencia, based on a survey that involved the study of about 1,500 travel managers globally, with the focus on gauging their perceptions of the challenges and expectations around global travel programmes. “Technology is seen as the key for the future of travel management,” the report said. “Data integration, flexibility and the integration of new mobile technology (think travel apps) are among the top five must haves for future global travel programmes.” Questioned on how TMCs had improved over the previous five years, top answers from respondents were keeping up to date with technology and online booking solutions. 70% of respondents believed online booking capabilities had improved. Oh, and by the way, this piece was penned in November of 2013, nearly three years ago. I thought I’d keep that bit of information until the end, but it’s arguably no surprise that those observations could have been written today and retained their relevance. That’s because the fact remains that every TMC worth its salt just has to keep pace with technological advancement, if it is going to remain relevant and be in a position to show its clients that magical ‘value’ that everyone is demanding. “Technology has to be a part of the TMC offering, and will continue to become more important in the future,” says Lovett. “For the travel buyer, there is the calculation to make in terms of what is really useful for the corporation, because the more sophisticated the technology becomes, the more you pay for it. In terms of travel procurement, it is all about becoming more effective. You may be paying more in one area, but you could be able to save in others, so travel buyers need to embrace the available technology and make use of the solutions that could add value to the corporation.” Again, there is that word, ‘value’. “Duma Travel is continuously tracking new technological developments and keeping an eye on automation and integration for both the consulting service and the online booking tool,” says Mthombeni. “We are also using technology to track behaviour and to manage travel expenses and reporting better.” Mthombeni and his team are not alone, as they attempt to keep pace with how quickly their industry is moving, technologically. “We have over the years invested significant time and resources into various segments within the corporate travel space,” says Jogee. “Through research and development we have access to a host of technologies and platforms that have simplified and enhanced the corporate travel portfolio for ourselves and our clients. In a space that has many players and competitors, the drive to be constantly unique with a unique offering is vital.” All of that being said, Desmarais brings us back to an important, salient point. In fact, it’s arguably one of the reasons that TMCs are in existence. “Travel technology has come on leaps and bounds and there are so many apps, systems, and online tools that seem to make our lives, as well as our clients’ lives, more efficient and effective,” says Desmarais. “However, as much as we wish to embrace this tech, we are finding that our clients, at the end of the day, are people who want to talk to people. They find this the most effective way to get something done, using the tech to achieve efficiencies, but embracing the people that make it happen.” Again, balance is key, and an important element in just how far you go in hanging the fortunes of your company on what technology can do for you. The more savvy operators are finding a way for technology to work for them, whilst at the same time not diluting the expertise they are offering. In fact, they are using technology to enhance that expertise and, in turn, making it difficult for clients to consider walking away or cutting their investment in the TMC. The TMC Future According to Ole Mortensen, a partner at AMM Consulting, “predicting the future is virtually impossible and information is not as private now as it once was…..but there are some trends that help us to look into the crystal ball.” In Mortensen’s opinion:
  • The number of corporate trips globally will stay the same or decrease
  • Technology will substantially decrease the number of physical meetings
  • The cloud will globally replace company networks. This may limit access to the internet
  • Having more than one screen, split screen or dual access availability will become the norm, including BMOD (bring my own device)
  • The smartphone will become the primary travel and communication tool
So, where does that leave the TMC and the role it will play in the future? Interestingly, Mortensen’s answer is to pose nine questions to the TMCs of tomorrow:
  • What value does the company add to a trip?
  • How are these values perceived by corporate clients?
  • How do those values compare to competitors?
  • What is the direct and indirect cost of producing a trip generated online and offline?
  • How are these values compared to trading direct with the supplier?
  • How will a TMC deliver in a multisource environment?
  • Does the TMC have systems in place to improve quality and productivity?
  • Does the TMC have a product development plan in place?
  • How will the TMC approach the smartphone world and apps?
Mortensen seems to suggest that answering those nine questions is a good starting point, and it’s no surprise to see the words ‘value’, ‘systems’ and ‘smartphone’ in there. Along similar lines, the UK-based Buying Business Travel published a piece by Martin Ferguson, who quoted Mervyn Williamson, Joint Managing Director of Statesman Travel. He said that only those investing in future models will ‘prevail’. “TMCs have long occupied the middle ground between OTAs (online travel agents), independent procurement consultants and financial analysts,” said Williamson. “Those moving with the times are building as seamless a booking process as possible, while using data and insight to provide actionable advice to help buyers make the important decisions.” That last sentence actually sums up the role that TMCs play quite nicely, but future models are going to look quite different, not least due to this emerging segment called the ‘sharing economy’. With the likes of Uber and Airbnb seemingly playing a bigger and bigger role in both the leisure and corporate travel spaces, TMCs are going to have to integrate these services into their offering, if they are going to stay relevant. “The sharing economy is embraced to various extents by companies, many of which have declined to consider it in their travel policy due to safety concerns,” says De Vries. “Several TMCs however have acknowledged that it is here to stay and that travellers are using it, and have developed processes and technology to ensure that this type of travel is monitored and managed within the company’s travel policy.” De Vries is right – the uptake currently doesn’t seem that extensive, with only the most forward-thinking TMCs already incorporating these sharing economy services into their offering. There’s no doubt, however, that this segment is not going away. “The sharing economy is something we are seeing happen more and more in today’s economy,” says Lovett. “It’s more aligned to corporate companies where you may have multiple individuals travelling the same destination and utilising joint cab rides or transfers to hotels/clients. When the economy was booming companies travelled and the miles just rolled in. Now, when every penny has to be turned over three times, clients have become more attuned to the fine prints of loyalty programmes and rules.” Everyone seems to be in agreement that the future is all about embracing new approaches and technology, and seeing how these elements can work in the favour of TMCs and their clients. “I believe that it can certainly be more of a key factor for years to come,” says Desmarais. “We have seen that in other industries the strong survive and are finding strength in the collaboration of the industry. Travel can certainly learn from this to strengthen our position and not become victims of the economy, but rather pool resources to better serve it.” So, what’s the best way for a TMC to go about embracing the sharing economy and working it into their offering? According to Navitas Solutions, “it seems that not a day goes by without the sharing economy, with services such as Uber, Airbnb and Lyft, featuring in the travel news. This phenomenon is, without question, beginning to disrupt the business travel world, after triggering a revolution in leisure travel.” Navitas Solutions conducted a sharing economy survey with a host of TMCs, and after digesting the data, put forward three simple steps or tactics for TMCs to employ, in order to adapt to the sharing economy. Firstly, it urged TMCs to ‘monitor the situation’, and secondly ‘advise your clients’. “On the surface, services such as Uber may appear extremely attractive to businesses and business travellers managing their own budgets, due to potential cost savings or other perceived benefits,” said the Navitas Solutions report. “However, there are risks associated with their usage, particularly surrounding duty of care and management. TMCs should highlight these issues to clients, ensuring they are informed about the weaknesses of the sharing economy for responsible businesses.” The third suggested tactic was ‘embrace the opportunity’. According to Navitas Solutions, this may involve helping clients to develop a formalised booking process for, say, Airbnb, or finding technological solutions to provide methods for booking, accounting and reporting of sharing economy services. “Our survey confirmed the need for TMCs to take the sharing economy seriously,” said Navitas Solutions. “Its disruptive potential in the corporate travel industry is not yet understood, including its impact on TMCs. Carlson Wagonlit Travel was another big player to study the potential advantages and disadvantages of TMCs embracing the sharing economy, with these insights gleaned from a piece that featured in Buying Business Travel. Under ‘Potential Pains’, it listed the following:
  1. Corporate Culture and Traveller Fit – Consider alignment with all travel programme components, as well as with overall company philosophy, and the willingness of travellers, young and old, to try something new.”
  2. Duty of Care – Sharing economy properties and transportation are not always licensed, inspected, or regulated. Buyers must ensure all approved properties are safe and secure.”
  3. Evolving Regulations – Understand current and changing regulations in key markets along with the related effect on pricing, ease of use, and flexibility. New York ruled that nearly 75% of Airbnb’s listings between 2010 and 2014 were “illegal hotels”.
  4. Traveller Inconvenience/Cost Transfer – Weigh the pros and cons of the sharing economy. It could be time-consuming to select trustworthy vendors. Sharing economy accommodations also don’t include amenities that traditional hotels offer such as meals and concierge services.”
  5. Programme Cannibalisation – Analyse the point at which sharing economy usage jeopardises established discounts with other suppliers.”
Under ‘Potential Gains’ CWT listed the following:
  1. Savings – “Uber for Business suggests fares average 40-60% less than a taxi in most major cities.”
  2. Traveller Experience – Get even more mobile as sharing economy providers transform the users’ experience through slick and simple mobile interfaces, cash-free transactions, feedback and ratings.”
  3. Supply – Consider additional supply as Airbnb asserts an estimated 550,000 accommodation options or inventory, which makes it in the top five for all hospitality brands considered. Uber is present in 330+ cities in 60+ countries with 100k+ driver partners.”
  4. Central Billing – Review new functionality as key sharing economy suppliers now market a central billing option on their business travel platforms, allowing corporations to streamline payment for all travellers.”
  5. Reporting – Compare functionality as key sharing economy suppliers market a new offering with detailed reports on traveller usage, total cost and traveller ratings.”
So, plenty for TMCs to consider, before diving into the sharing economy, although it’s clear that it is going to play a big role in the future of corporate travel. And this very much taps into corporate travel of the future, and how TMCs are going to have to evolve in order to stay relevant. “There’s no doubt that the traditional travel model is evolving and evolving very fast,” says Mthombeni. “Companies that are going to win and survive are those that can come up with creative models that judiciously combine traditional consulting elements and creative technology solutions.” Couldn’t have said it better myself. Four ways your TMC should be adding value This is according to Sarah Marin, Director of Operations at UK-based Capita Travel and Events.
  • Influencing travel booker behaviour Influencing booking behaviour to get the desired outcomes for companies and their travellers is a ‘must do’ – whether that’s through the technology used by travel bookers and travellers on the move, or via well-trained reservations experts.
  • Offering a single operations point of contact for travel managers If you’re a business traveller, or if you book travel and meetings for your colleagues, knowing how to contact your agency is crucial – whether that’s via an online booking portal, a reservations team or an online booking support team.
  • Meeting service demands – come what may No one likes to dwell on the negative, whether that’s bad weather, disruptions that could impact travellers’ ability to get to a sales pitch, or more serious incidents affecting employee safety. But planning for those “what if?” scenarios is a vital part of any TMC’s remit. Making sure that the operations personnel and resources are in place to look after your travellers in any eventuality is crucially important if your TMC is to give you the best possible service.
  • Investing in new travel management talent It can be tricky for TMCs to attract and retain the right people. According to the GTMC (Guild of Travel Management Companies), only 7% of TMC employees are under 25 years of age. Alongside developing the skills of existing employees, our industry needs to do more to appeal to younger generations. This will include rising stars – the future leaders who will guide and shape our industry’s services and technologies for the good of our customers.
Five corporate travel trends to watch in 2016, according to Amadeus The following was put together by John Dwyer, Marketing Manager, Corporate Segment, Amadeus North America.
  1. Data privacy and ownership take centre stage We have seen airlines start to look at terms and policies more closely and set new requirements for agency partners. As we continue to see hacks and data breaches across many industries, corporations will start looking more closely at where traveller data lives, where it is stored, who has access, and start re-evaluating processes.
  2. Personalization comes to business travellers In the second half of this year, we could start to see the first real benefit of airline efforts to deliver personalization through NDC XML. Each airline has a unique vision when it comes to what the offering will look like and each airline’s capabilities around the searching and shopping experience will likely prove to be the differentiator for business travellers. Travel managers may need to assess their travel policies accordingly.
  3. Strong focus on total trip cost Cost efficiencies are often judged by segment, but in 2016, we expect many travel managers will instead start looking at total trips costs. For example, if a traveller saves money on a lower room rate but as a result has a higher ground transportation cost, the lower room rate might not be the most cost efficient. Individual trip segments do not tell a complete story, and we could see many companies take a more structured approach to cost evaluation, working toward full trip cost efficiency.
  4. An end to open-bookingdialogue Open booking has been a very hot topic of conversation during the last 3-5 years. But we will likely see this significantly diminish in 2016. The dialogue has been great for the industry as it forced everyone to take a good hard look at the booking process and content available. As a result, there has been significant progress, and we will see this conversation shift to booking tools that are more accommodating of the full spectrum of content.
  5. A move toward direct supplier relationships We have seen significant airline consolidation in recent years and there are signs that hotels will follow suit. As this trend continues, working directly with suppliers could become much more attractive for certain companies, especially those with a strong regional focus. For these companies, the TMC would continue to serve a process-and-service role.
Previous articleEd’s note
Next articleStill fighting