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John MacOmish, the director of business strategy for BSI, one of the UK's largest specialist hotel booking companies, claimed recently that one-stop shopping was “obsolete” and that corporates may be unwittingly increasing their travel costs by using a single travel management company (TMC).
Predictably, his provocative views are not shared by the TMCs which see themselves in a very different way. The argument that the TMCs most frequently put forward is that they are now much, much more than just an agency which issues tickets or books hotel rooms. In the past booking and issuing tickets may have been their main function but now their services included technology, MI, billing, policy compliance, ancillary services like special deliveries, management support, security, credit and supplier deals. In short the added value for which they charge their management fees.
TMCs have changed so much in recent years - some of it forced, some of it voluntary - but the concept of the old relationship which travel agents had with airlines, dies hard. Mr MacOmish claimed that corporates still went to TMCs to book hotels to go with their air travel even though they could be missing out on savings of at least 15% on their hotel spend. This now accounted for more than half a company's travel spend without taking into account the cost of events and meetings.
“Air travel probably no longer takes first place as a corporate's main area of travel spend. The impact of fierce competition in the airline market has seen the estimated hotel accommodation expenditure in Europe at $140 billion per annum now being greater than that of air travel,” Mr MacOmish said.
His view is that travellers would be literally better off going to specialists, like BSI, to book hotels rather than to a jack of all trades. It sounds a valid point, especially with so much being spent by companies on hotels and the potential for savings. But it is one the TMC strongly reject. Research done by Carlson Wagonlit Travel and by the American consulting company, Topaz both show that the TMC gets the best rate when booking hotels far more often than some booking agencies.
The reason, say the TMCs, is that they are just as specialist as the specialists. Margaret Bowler, BTI UK's general manager for hotel relations, rejects the view that a specialist can give better service in their particular field than can a TMC which spreads itself more widely. Ms Bowler said: “We don't feel at all inferior in the service we give. We have focused on hotels for ten years. For seven years, we have had our own special hotels division which covers reservations, meetings, conferences. We have 160 people working in this area.
“If a customer wants to segment his business, we can do that for him but the difference is that his spending can still be consolidated in terms of MI which is so important to the client. “We have had tailor-made tools for the past four years and that means we don't have to rely on the GDSs. We use our own technology. We don't need third parties as BSI does.
“We use the GDSs. We don't rely on them. The GDS and their rates are better than ever and you are not being undercut in other channels.”
BTI has hotel only clients, guaranteed availability “which is crucial for the market we work in” and teams of negotiators which can get tailor-made rates for clients which have a huge demand for hotel accommodation in one city, Ms Bowler said.
The choice of the customer between the specialist and the TMC is likely to boil down to who gives him best value for what he or she wants. The fact that some TMC do use agencies like BSI suggests they can get rates as good as anyone and there is obvious advantage in using them. But if a customer wants a flight, accommodation and perhaps a hire car or cab, the one stop shop would seem a more likely and time saving course.