12 December 2022, etc.venues Monument, London
Business Travel Show Europe, presented by The BTN
21 November, London Hilton Metropole
Hotel booking agents have years of specialist knowledge and experience in their sector, says Bob Papworth. So why are TMCs trying to muscle in on the action?
The John Bracelen Company of Nebraska has a lot to answer for. Back in 1930 it took out a minuscule newspaper advertisement in The Lincoln Star, coining a simple phrase to sell its many services as a car repair outfit: "One stop shop".
Since then, the term has been snaffled by everyone from supermarkets to those funny little places that repair shoes, cut keys and sell umbrellas. The Department of Health has toyed with the idea of one stop shops for sexual health provision, while filling stations invariably come with an attached outlet catering to those who need to buy bouquets and barbecue briquettes at the same time.
And then there are travel management companies (TMCs). Having cornered a significant chunk of the getting-from-A-to-B market, when they were known as mere travel agents, they then started to look beyond the blindingly obvious for additional revenue streams. Setting up meetings, booking taxis, renewing passports, reserving car parking spaces.you name it, and most of them will do it.
The big question as far as travel buyers are concerned is whether they do it well. The big answer, at least as far as hotel booking agents (HBAs) are concerned, is "probably not". Indeed, the UK's Hotel Booking Agents Association (HBAA) categorically asserts: "Whilst travel management companies may look to consolidate travel and entertainment expenditure, accommodation and conference bookings are often neglected in the equation."
"The top line is that travel management companies are very good at managing global travel programmes, and the hotel booking agencies are very good at managing accommodation programmes," says Nick Hurrell, sales and marketing director at Hotelscene. "The hotel market is very fragmented, there are multiple booking channels available, and when it comes to the two most important measures of the success of any hotel programme - average room rate and compliance - hotel booking agencies win hands down.
"If you book online with a hotel booking agency you will almost certain be using a hotel-focused tool; if you book online with a travel management company, you are probably getting a third-party tool with no specific hotel focus.
"At Hotelscene, we reckon we are 8 to 12 per cent cheaper on average room rate, and we also hit very high levels of compliance. The average travel management company just doesn't have the ability to match that."
On the question of rates, Hurrell says Hotelscene's average rates for hotels in the top nine cities in the UK are below £100 - £97 for offline bookings, £96 for online - but the HBA advantage doesn't stop there.
"Preferential online rates are the first to disappear on the GDSs," he says. "They tell you the hotel you want is full, so you have to opt for an alternative which ends up costing 20 per cent more than if you had booked by telephone in the first place - but hotel booking agents will almost always get a better rate.
"Hotelscene will never show a hotel as being full on our system, and 70 per cent of the time, we can achieve the rate we say we will."
Ian Burnley, chief executive at Expotel, identifies yet another differentiator. "I think over the years a number of the larger hotel booking agencies have accumulated a much broader range of hotel inventory - and that means rates and allocations as well as properties - than is accessible through the GDS channels.
"The larger travel management companies have been moving more and more into accommodation, but they are looking at a very different delivery model. They are booking fewer air segments in any given period than we are booking hotel segments, and they struggle with the volumes.
"So we not only have an inventory advantage and, in many cases, a room rate advantage, we also have a service delivery advantage in terms of booking capabilities."
In short, the HBAs' argument - and that of some buyers - hinges on the premise that while the TMC has become a jack of all trades, the HBA is master of the hotel bookings territory, and corporate clients need that mastery.
Remarkably, an increasing number of TMCs are tending to agree. Hillgate Travel's business development manager Andrew Burch, for example, is an out-and-out fan. He explains: "I first came across hotel booking agencies when I was at OAG, where we worked very closely with BSI, and I thought their model at the time was extremely attractive - and I still do.
"There is a marketplace, there is a need, and when I moved into the agency world, we very quickly teamed up with Conferma - we don't have any issues whatsoever about working with HBAs. They are specialist providers in a global industry, and long may they reign. They provide - for certain clients - the type of inventory that we need. Conferma, for example, was the first to get into budget hotels."
Burch says he is not alone in taking this line. "There is not a travel management company worth its salt that doesn't work with HBAs. We are all in this together, and if it works, do it.
"From our perspective, we would see ourselves as a contractor taking on a sub-contractor - that's not meant to be arrogant, that's just the way our contracts work. We look at the need, at how we are going to fulfil it, and decide whether we need specialist expertise. There is a lot of loyalty between [TMC and HBA] partners, because you trust them to work to your ethos. If the trust is there, you get a seamless approach, and that's what the client demands - seamless service."
Richard Eades, a former BSI man now heading up his own consultancy, Inkerman Associates, couldn't agree more. "You can't force a partnership on corporates - it really has to be client-led, because it is all about trust at the end of the day. Clients have to be fully aware who they are working with, and make sure that both parties are at the table when it comes to review time."
Though renowned for his often critical comments, HRS commercial director Grant Appleton professes himself happy to work in partnership with TMCs, and even believes that in most cases such commercial co-operation can work well.
"The bottom line is that it has to be in the interests of the client company. There are some clients where that kind of HBA/TMC relationship simply won't work to the client's best advantage, but there are plenty of cases where it can and does - but both sides have to be completely client-focused."
The partnership does not have to extend - indeed, probably should not extend - to the TMC's entire client base. "It can work well on a client-by-client basis," Appleton says. "For example, together with a partner TMC, we handle the hotel reservations for a client with a particular requirement for a large proportion of non-GDS hotels in pretty remote locations. For that particular client it's a no-brainer to use someone like HRS who can provide them with electronic access to these hotels without adding to their cost of booking."
Then comes the sting in the tail.
"All too often, however, the larger travel management companies have commercial agreements in place with suppliers, and that's where this 'partnership' concept breaks down. These over-ride agreements compromise the integrity of the partnership, and that is something we cannot live with. We are increasingly approached to work with TMCs, who are finally waking up to the fact that we are better at what we do than they can ever be, but these tend to be the smaller and mid-sized companies who don't have the volumes to command an over-ride deal."
Hillgate's Andrew Burch springs to the TMCs' defence. "That's a dreadfully obtuse way of looking at things. It may have been true 10 years ago, but that is history." And with a none-too-subtle dig at HBA pretensions, he adds: "Mode of transport is the determining factor in any kind of service - the hotel has a role to play, but it is a supporting role."
Although Hotelscene's Nick Hurrell might not agree with the form of words, he too is a firm believer in client-specific partnerships, citing Hotelscene's work alongside Portman and Evolvi for Network Rail, and American Express on the BT account.
The casual observer is inexorably drawn to the conclusion that, while it might have worked wonders for the John Bracelen Company, of Lincoln, Nebraska, the one stop shop doesn't really fit the corporate travel bill, at least as far as TMCs and hotel booking agencies are concerned.
But Expotel's boss Ian Burnley strongly disagrees.
"Some of my clients have been looking at sourcing through a single supplier and my very strong view is, that is the way forward - it is easier for Expotel to move into the air and rail space than it is for many travel management companies to move effectively into the hotel space.
"As I have worked through the business over the last couple of years, what has become clear to me is that [many] HBAs are generally booking a larger proportion of their business through the GDSs, whereas all our UK bookings are placed through our own system, which gives us an advantage - we are in a very strong position."
That strong position is further enhanced by the fact that, two months ago, Burnley led the management buyout of Expotel and the simultaneous acquisition of rival hotel booking agency NIS Europe.
The double deal, backed by Phoenix Equity Partners to the tune of £38 million, brings together two companies with nearly 500 employees between them, handling accommodation and travel transactions with a combined annual value of more than £270 million.
Significantly, the newly-appointed Expotel chairman is Richard Lovell, formerly president, EMEA and Latin America, with Carlson Wagonlit Travel, and a past chairman of the Guild of Travel Management Companies.
"We may well acquire a midmarket TMC," says Burnley, "but we will be more focused on those businesses with a heavier hotel volume.
"We are looking to acquire, and we will acquire, but we are also looking to build the travel capability organically - we expect that side of the business to grow very quickly, at something like 20 to 30 per cent per annum.
"To support that we now have an integrated travel portal so we have an online capability, which rolled out with our first client, to deliver hotel, air and rail."
The aghastness is almost palpable. "We do not have any ambitions to become a full-service travel management company," says Hotelscene's Nick Hurrell. "We are a specialist, and that's what we will always be."
Grant Appleton is his usual forthright self. "As for hotel booking agencies moving into the travel management company space, I just don't see it. We are quick to say that we do a job that the TMCs cannot, and we have to recognise that the same is true in reverse - what they do, they do very well, and certainly we wouldn't want to go there.
"At HRS, we'd rather do one thing really well than take on a whole range of things and fall short on all of them."
John Bracelen would not have been impressed.