September 15 2008 is not a day Jeremy Bull, chairman and ceo of HillgateTravel, is likely to forget. It was the day one of his major clients, Lehman Brothers collapsed. He tells ABTN about the "worst year" in his company's history.
The rumblings through the spring and summer of 2008 from the fall out of the sub-prime loans crisis had already claimed one major client of Hillgate Travel when Bear Stearns collapsed and was bought for a song by JP Morgan.
But it was the crash of Lehman Brothers on September 15, 2008 which really brought the enormity of the crisis home. For Hillgate, a major independent UK travel management company specialising in the financial industry, it spelt the loss of a second leading client.
When Dresdner Banks was bought this May by Commerzbank, a third client had gone. "This has been the worst year in our history. We have had a really rough ride. We have lost three of our clients - a serious amount of business has gone away," Jeremy Bull, its chairman and ceo, said.
"Fortunately we have some cash in the bank and some assets. Everyone has been hit this year but we have been hit harder than most."
Mr Bull founded Hillgate 26 years ago and has built up a business with a £150m turnover and three offices in the UK. In that time his business has experienced ups and down at the hands of events like the two Gulf Wars and 9/11. But this current crisis outstripped them all.
With earlier crises, there were obvious and finite reasons why people were travelling less. Once those factors had passed, the old level of trips resumed. Not this time.
"We have had some people downgrading, but there has not been much of that. It's that people are just not travelling," he said.
"Companies have put embargoes on travel. At the moment there is also a ban on internal travel. Internal travel has been slashed. People are not going to see their own colleagues. Such a trip has to be approved at board level."
One of the routes most hit by this decrease is the one that Hillgate books most: London to New York.
Hillgate's response to the crisis has been three pronged. It has downsized, adapted its technology to meet the changing needs of its clients and aggressively set about winning new clients.
"We have had to let people go. You just have to adapt. But there is a certain limit to how far you can go without damaging the company. Our infrastructure is designed to support these big players," he said.
On technology, Hillgate is on more familiar ground. It is one of the few TMCs which designs and markets its own IT, under the guidance of Mr Bull's brother Mark, the company's IT director. "Basically we have adapted our system to meet the new requirements of our clients, like adding pre-reporting functions. There have been all sorts of additional facilities," Jeremy Bull said.
Its basic online booking tool FreeWay now includes most of the low cost carriers and allows bookers to buy on the spot. Another change is that it also features restricted tickets, which Mr Bull said was saving clients an "absolute fortune."
The adaptations reflect the changing wishes of clients. Even if they are rich bankers, they are looking for the least expensive option, even if it means using LCCs or spot buying. And while clients are still travelling business or premium economy on long haul, they are not paying out the normal £5,000 for a fare but again looking to get deals with discounts.
"We are doing everything we can to bring down the cost of travel to get the cheapest rate. That is our big focus at the moment. Every client is focused not just on the cost of travel management but also on the cost of the trip. They usually want the cheapest," he said.
"Nor is it a time to shun clients which have banned travel. Whether they are spending £50,000 or £1m, we will always look after them. We don't discard clients. We see what we can do to help them. You have to help each other through these times. In 26 years, I have seen all sorts of ups and down but nothing like this."
Perhaps surprisingly Mr Bull said he had not seen a particular rise in clients seeking alternatives to travel. There are some in the legal profession using more video conferencing but he makes two points: firstly, he is not a specialist in these alternatives to travel, so clients would go elsewhere, and secondly, most which do this have their own facilities, saving the need to contact Hillgate.
But he is adamant that alternatives can only go so far."There are still some meetings that can't be done with a conference call."
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Jeremy Bull, Hillgate Travel |
The last prong is the hunt for new clients - something just about every TMC is undertaking. "We have got a very aggressive sales strategy which has had great success, picking up the House of Parliament contract in September. We are also talking to some other big ones as well," he said.
"The current situation has a lot to do with getting new business, with getting your business up so you can take advantage as and when the recovery comes."
To help this Hillgate joined GlobalStar, a worldwide travel management network, in October.
Mr Bull is not over-optimistic as to when that might be. He believes that next year could well be as rough as this year and that the recovery will not start to get underway until 2011 or even 2012. He looks to the London Olympics in 2012 as a great boost for the economy and a spur to revival.
Until then, TMCs will have to hold on. "I am not looking to make zillions in 2010 but we shall come out eventually as stronger and we shall be leaner and more efficient," he said.
www.hillgatetravel.com