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With costs being cut everywhere Bob Papworth asks if the travel industry can still offer good service and value
On January 18, the great and good of the global travel management industry will be flocking to London's Grosvenor House, A JW Marriott Hotel, for Buying Business Travel's Business Travel Awards dinner.
The great and good, of course, are well-used to donning their glad-rags and taking their Great Room seats at the Park Lane establishment. On December 9, the hotel will host the National Customer Service Awards where, among the finalists up for gongs, the Manchester Airports Group (MAG) will be nervously speed reading its acceptance-speech notes.
MAG staffers are in the running for several of the glittering prizes on offer, and deserve our warmest congratulations. After all, we Brits are not exactly renowned for service quality. Paradoxically, for a so-called nation of shopkeepers, we are generally only outdone in the begrudging surliness stakes only by the French, whose shoulder-shrugging indifference to client satisfaction remains unequalled.
In the UK, Little Britain's "computer says no" sketches are funny precisely because they are so true to life. In the travel procurement business, 'keeping the customer satisfied' presents particular challenges, simply because there is a veritable food-chain of customers to keep satisfied.
To make matters worse, there's a recession going on, which means that CFOs across the land are not only sticking their oars in, they're also thrashing them about and generally rocking the barely-seaworthy boat.
By nature, he who holds the purse strings usually cares more about dosh than delivery and, given that 'service' does cost, one might expect corporates to trim their service level demands. On the contrary, says Anthony Rissbrook, head of Co-operative Travel Management, who believes that clients see high service levels as a "given".
"Price is certainly one of the highest priorities," he says, "but our view is that in the current market, clients are also demanding exceptional service levels.
"In all businesses in times of recession, companies will look to reduce costs, and there will be individuals who start asking whether they are getting value out of using a travel management company [TMC]. The real question is not about the size of the fee, but about what the client is getting for those fees."
Rissbrook goes on: "What the TMC needs to continue to demonstrate is the savings that it can generate in travel spend, and the value of the data that it can provide to a business - these issues far outweigh the question of TMC fees. "Our challenge is to keep the customer focused - too much concentration on transaction fees and the customer can potentially lose sight of the more important issues."
Steve Hall, customer service director at Expotel, adds another slant. "We recognise that our clients are dealing with multiple suppliers from multiple industries. They are not just dealing with the travel industry - they are comparing us with their utility companies, their telecoms providers and so on.
"Obviously, price is a really hot bun for clients at the minute and if agents are going to do what is asked, then we have to drive down the cost to our clients. However, at the same time customer service is paramount. The first thing clients recognise is whether they are getting good service or not - service is how we differentiate ourselves."
Expotel is an interesting case in point because it is still known principally as a hotel booking agency, although chief executive Ian Burnley has made clear his intention to make greater inroads into the transient travel market.
"Our business profile is still largely on the accommodation and conference side," says Hall, "but we are establishing ourselves as a significant presence on the travel side. We've picked up £35 millions- worth of new business in the past year, a lot of it on the travel side, so we must be doing something right.
"In terms of service standards, while we have some basic, across-the-board standards, travel management has a lot in common with the conference business in that it is not often as simple as handling a straightforward hotel booking. The process is rather longer, so we have to focus on the quality of that 'conversation'." And quality matters. HRG (Hogg Robinson Group) prides itself on, among many other things, tailoring service provision to client demands.
Commercial director Chris Fry is perfectly happy to offer what he calls "a low-cost, no-frills service" if that's what's called for, but even in these tough times he believes clients are prepared to spend that little bit extra for a few bells and whistles. "People do still care about service," he insists, "because it is our job, and our clients' job, to get people to their destination in good shape to do business. In the first stage of any downturn, the first priority is always getting the prices down, but clients still have to travel to do business, and they come to realise that as we come out of a recession they have got to build on that, and go out and do more business."
Looking back to the last global travel downturn - the immediate aftermath of the New York World Trade Center atrocity - Fry reckons that this time, service levels are even more important.
"After 9/11, the big question was whether it was safe to fly, or to travel at all," he says. "Once people decided that it probably was safe, the business came back very quickly. This time there has been a much more measured reaction - to a very different crisis - which suggests that the recovery will be much more measured too. Clients will undoubtedly be looking to see how we deliver during the downturn." Over at Co-operative Travel Management, Rissbrook believes the recession could actually have hidden benefits.
"There is most definitely an opportunity in the current climate to improve service levels," he says. "This is the time to concentrate on how we could help our clients more and more." Reassuringly, buyers seem to recognise and appreciate that. Louise Kilgannon, Manchester-based Europe, Middle East and Africa travel manager for Infor, and a member of the Association of Corporate Travel Executives (ACTE), makes no bones about the business potential.
"I can't say that I have experienced a downturn in service standards in the past 12 months," she says. "I really think that this is a great time for suppliers to be communicating regularly with key clients to ensure that relationships are maintained; when the economy finally picks up it will be those suppliers that we will want to work with to forge strong ongoing relationships." She continues: "Despite the economic downturn and the increased focus on driving down costs, the quality of service remains an important factor for us when choosing suppliers.
"That said, there has been a definite shift in the category of hotels that some of our travellers are using. Interestingly, this has been driven by the travellers themselves. It is also encouraging to note that some of the typically budget suppliers, who in the past have not engaged in discussions with corporates, are now realising that our room nights are vital to their survival."
And Paul Tilstone, chief executive of the buyer-led Institute of Travel & Meetings (ITM), firmly believes there is a balance to be struck.
"The majority of buyers obviously enter negotiations with the aim of getting the best service for the best price, and whilst some get what they expect, others do not - either because the tender has resulted in prices being squeezed so much that the service levels are subsequently unsustainable, or because they [the buyers] under-negotiated and they are paying over the odds.
"However, in the main, this isn't the 'fault' of either party - it's the natural dance that buyers and suppliers do, finding the right balance."
He goes on: "The clever buyers will squeeze to a point which does not affect service - understanding that point is the key. The clever suppliers agree a price which allows them to demonstrate value, otherwise the account will move - and value is a combination of both price and service."
Are clients' demands for quality service at little or no cost realistic? Expotel's Steve Hall takes a pragmatic view: "Realistic or not, that's what they want. It's up to us to provide it."
Anthony Rissbrook believes that provision is not only possible - it is crucial. "It is important that a TMC continues to invest for the future and keeps utilising the best systems in the market to enable its staff to work as productively as possible.
"If the staff have the right tools for the job, they will continue to deliver exceptional service levels. It is all about getting the balance right and we are always looking for ways to improve the productivity and efficiency of our people - it is vital that we continue to invest in the technology and training available.
"Co-operative Travel Management is investing in training all the time and this last year has been one of concentration on ensuring that the practical training on using the systems available to our staff is given where needed.
"We are looking to achieve Investors in People in the coming year, and one clear area of investment will be in developing customer service training so that we can bring out the best in our people.
"In terms of quantifying the benefit that we derive from such investment, we anticipate excellent client retention, excellent staff retention and increased travel expenditure as more and more customers choose to use us."
HRG's Chris Fry is equally adamant about investment in technology - driving bookings online, and making greater use of travel alternatives, he says, saves both time and money. Clients can then either fill the time and pocket the money or, perhaps more profitably, give the travel management company greater scope to up its service levels.
By the time next year's National Customer Service Awards come around, Manchester Airports Group may find itself facing even stiffer competition...
CORPORATE TRAVEL buyers and travel management companies are increasingly turning to rail - and specifically to online booking systems - to manage the cost of UK business travel and to drive up productivity, allowing greater scope for improved service provision.
Investment by train operating companies in technologies such as wifi, mobile phone connectivity and quiet carriages has helped to boost corporate rail travel dramatically over the last few years as business travellers look to optimise their journey times.
Online systems, such as Evolvi, are not only making it easier for businesses to manage their rail booking and ticketing requirements, they are also providing immediate access to the best available fares - often resulting in savings worth hundreds of pounds.
Jon Reeve, Evolvi trade relations director, says: "Even now, there is a relatively low level of awareness as to quite how dramatic the price differentials can be between pre-booked and walk-up fares. Historically, purchasing managers have not appreciated the magnitude of potential savings and have been relaxed about allowing ad-hoc rail ticket purchases by employees, then reimbursing through expenses reclaim rather than regarding business rail travel as an essential component of a managed travel programme alongside airline and hotel elements.
Systems such as Evolvi help to consolidate a fragmented corporate spend profile, enabling travel management companies and procurement professionals not only to manage cost more effectively but also potentially to negotiate preferential fares with train companies on heavily-utilised routes."
As well as providing scope for service improvements, the system also enables companies to set their own rules for travel and gives instant access to a variety of management information, capturing every variable associated with a transaction, including a multi-modal comparison of CO2 emissions (such as air and road) for the same journey.
Unlike travel by air or car, the train makes it easy for business travellers to use their computer, mobile phone or PDA while on the move. Says Reeve: "In my own case, I recently travelled from London to Manchester by rail and was able to function just as if I was in the office - something that would not have been possible with air travel."
Evolvi, which notched up a record 47 per cent increase in revenue in 2008, partners with eight of the top 10 corporate travel management companies in the UK, and grew its rail business from £150m to £220m last year.
In part, it was the result of being selected by the Home Office to deliver self-booking rail reservation and ticketing functionality as part of a three-way partnership with Carlson Wagonlit Travel and distribution specialists Amadeus.
"The corporate market is moving," says Reeve. "Businesses want flexibility but they also want to ensure compliance with travel policy, manage costs effectively and tap into a ticketing system that's instantly available 24 hours a day, all year round."