THERE ARE THOSE – mercifully few – in the travel management sector who espouse the vexatious conceit that reconditeness has the capacity to be discerned as being emblematic of perspicacity.
Or to put it another way, there are more than a few Powerpointed plonkers out there who think long words and buzz-phrases make them look smarter than the average Joe.
They prefer to “drill down into the granularity” rather than “go into detail”; they have “end-to-end” rather than “complete” solutions; and for them, a “bonus” has become a “value-add”.
And then, beloved mostly by twonks whose sad aim in life is to discombobulate (there’s another one) rather than communicate, there’s “disintermediation” – a rebarbative (sorry, it’s catching) term that simply means “cutting out the middleman”.
Unfortunately for those who prefer their English plain, disintermediation is already with us, and only likely to get worse in the year ahead.
Taking control
First, the internet – no longer the preserve of the technophile few – has given a new lease of life to the term “do it yourself”. Tasks that hitherto involved the intervention of qualified professionals – extracting cash from a bank account, converting the loft, booking travel – are now well within the capabilities of any Tom, Dick or Harry endowed with a computer and the ability to follow basic instructions.
Leisure travel agencies are already suffering. According to a report by trade association ABTA, only 25 per cent of holiday bookings in the year to October 2011 were made through high street travel agencies. A similar report three years earlier reckoned agencies handled 35 per cent of bookings.
ABTA’s membership, made up primarily of travel agents and tour operators, stands at around 1,300 today, against more than 1,600 five years ago.
Second, apologists who routinely argue that corporate travel, unlike leisure travel, is “non-discretionary” are right, but only to a degree. Higher-quality data and massively-improved tele- and web-conferencing facilities have helped companies reduce their travel budgets, while the recession has forced them to do so.
It is the business that needs to get done, not corporate travel itself, which is the non-discretionary factor.
Third, with ever-improving internet and mobile technology, the increasing trend among suppliers to deal direct with corporates and their travellers, and spot-purchase prices that are often less expensive than negotiated rates, many of the traditional travel management company (TMC) tasks look to be disappearing.
And according to members of World Travel Market’s Meridian Club think-tank, the US government and some blue-chip organisations are at least considering a move away from managed travel altogether, allowing employees to make whatever travel arrangements take their fancy – within a pre-determined per diem budget.
Today’s travellers have so much choice, and such easy access to fares and room and rental rates, the think-tank members wondered if it was simply unrealistic to restrict choice.
As the late, great soul music maestro Edwin Starr might have put it: “Travel management companies? Huh! What are they good for?”
A question of value
According to Mike Hare, chief executive at Portman Travel and immediate past chairman of the Guild of Travel Management Companies (GTMC), they are still worth quite a lot. “Technology has without doubt given the traveller and buyer access to much information,” he says, “but this data has in many cases added to confusion, complexity and doubt. TMCs use their experience and technology to sort through the wealth of available data and give customers informed choice, suiting their individual needs.”
He adds: “Increased reliance on the TMC for corporate social responsibility [CSR], duty of care, and crisis management has resulted in the role and value of the TMC being greater than ever before.”
Paula Cullen, national director of sales at Co-operative Travel Management (CTM), goes back to the hapless holiday sector to make her case. “At CTM, we are closer than most to the leisure market and the challenges are indeed very similar – the key questions are: ‘Does the customer value it?’ and, therefore: ‘Should we be doing it?’
“As a leisure travel consumer you have the right to make that value judgment for yourself – after all, it’s your own hard-earned cash you’re spending – but within the corporate environment it is simply not your call.”
Warming to her theme, Cullen goes on: “The challenge for travel buyers and their appointed TMC is to make it easy for the traveller to do the right thing. As a travel management company it is our role to assist our travel buyers, through data analysis and stakeholder involvement, to get under the skin of their travelling population and understand what their needs are and their definition of value.
“Within any organisation there will be myriad needs, depending on the culture of the business, the level of technology deployed and, indeed, the demographics of the travelling population. We talk a lot about ‘Generation Y’, and meeting their internet-savvy needs, but there are a lot of letters in the alphabet before ‘Y’, and many individuals who need solutions and processes that work for them as well. As a result our role is far from being defunct and has, in fact, become increasingly complex.
Cullen adds: “I truly believe that our evolution from ‘agents’ to ‘management companies’ was not an industry PR exercise, but was driven by our customers questioning, and us needing to demonstrate, our value. Our industry is as dynamic as ever and, as history has shown, we will continue to evolve and rise to the challenges that tomorrow’s business travellers will bring.”
With the latter point, Statesman Travel’s joint managing director Jon Langley could hardly agree more. “If a TMC sees itself solely as a distributor of GDS [global distribution system] content and efficiency of transaction, then it’s already at an evolutionary dead-end,” he says. “TMCs should add value across the wider corporate mobility landscape. We see our consulting capabilities and broadening international expertise as essential features of TMC evolution.
“Our role is to offer strategies for the integration and aggregation of next-generation technology, to foster account management that’s as much about client-employee communications, changing behaviours and HR involvement as it is about simple number-crunching; and engaging with procurement and finance on travel issues that are wider than the relative merits of negotiated rates or spot-buying.”
However, Langley does think Generation Y travellers will drive the evolution. Even the humble booking, he argues, has changed almost beyond recognition. “Generation Y travellers expect choices, and they expect them to be delivered in a user-friendly way that complies with a variety of policies – cost, risk, wellbeing, accounting, CSR, privacy, data protection, insurance and so on.
“Enabling them to buy the flight that meets their employer’s criteria for cost-control and comfort may be a simple task in one sense, but meeting all those other elements requires highly-tailored systems and processes that remain the TMC’s domain of expertise.”
Proactivity
Steve Norris, corporate managing director at Flight Centre, parent company of FCm Travel Solutions and Corporate Traveller, says those pre-trip considerations also have to be married with the travel industry equivalent of after-sales service.
“TMCs certainly play more of a partnership role with clients nowadays as we need to consistently prove our value in helping reduce costs,” he says. “Our account managers work closely with clients on every aspect of their travel programme in order to constantly evaluate processes and systems, benchmark performance, negotiate sharper rates with suppliers, analyse management information and drive down costs.
“Our philosophy in respect to relationship management is to act as an advocate and consultant to our clients by consistently creating value, understanding their business, proactively monitoring expenditure and policy, and identifying measurable travel savings.”
The nature of the relationship may have changed over time, but Egencia UK managing director Jonny Shingles argues that TMCs should never lose sight of the client’s basic requirements, nor of their own unique ability to meet those requirements. “The bottom line is that the TMC’s job is to analyse and demonstrate how corporates can further maximise the returns on travel budget, and then to implement its recommendations on behalf of the client,” he says. “Developing a travel management strategy is one thing, but it is only worth it if it is implemented and deployed the right way.”
Policymakers
The obvious example is the travel policy – TMCs should not only be involved in drawing up the policy in the first place (or evaluating and tweaking an existing one), they should also manage its implementation and track its success rates, using that data to strengthen the client’s negotiating hand when it comes to dealing with suppliers.
Shingles dismisses the notion that some companies can take the DIY approach to supplier negotiation. Even if they can handle the complexity of an airline contract, he says, few companies have any way of knowing if the carrier can deliver, and even fewer can benchmark the proposition against deals offered to other companies.
Portman’s Mike Hare underlines the extent of the TMC’s role in dealing with airlines, pointing out that not all spot purchases are as competitive as they’re cracked up to be.
“Spot purchases are often more expensive than negotiated rates, with variables by route, load factors and time of year,” he says. “A good TMC will help the corporate through this minefield, providing customers with business intelligence that allows them to measure purchase trends by providing advance purchase fare analysis tools that give the client the power to reassess their spend based on different booking lead-time profiles.
“We also provide benchmarking tools by industry group that are route- and class-specific, giving customers the knowledge that they are buying well, within their policy profile.”
Hotel hazards
It’s sourcing accommodation that really gets Shingles’ goat. “The whole hotel market is very complex,” he says. “There are multiple suppliers, there’s no world standard for hotel classification, hoteliers are very hot on their yield management techniques, and there are substantial rate disparities from country to country and even from town to town.
“Controlling hotel expenditure proves all the more difficult as the reservation channels are numerous and the information sources abundant. On top of all that, companies often then add a hotel policy that is both vague and imprecise.”
Expotel’s group chief executive, Ian Sparks, points to another hazard confronting the go-it-alone brigade. “Many clients work direct with hotels that have a close geographic proximity to where the HQ is, or where the procurement team is based, but that can in some cases restrict the agent’s ability to maximise the client’s savings through directional selling,” he says. “On how many occasions does the hotel, that knows it will get the business anyway, negotiate an improved deal? Working in partnership with local hotels is important, but it can lead to missed saving opportunities if not handled in the right way as part of an overall client programme.”
Which is not to say that all direct deals are a bad thing. Statesman’s Langley says: “TMCs should have a business model that allows them to support direct client-supplier relationships as well as direct traveller engagement. This can sometimes further the client’s objectives and enhance the traveller’s experience.
“There are, of course, risks – in the wrong environment it can encourage a loss of control, stifle choice, or add complexity. These are judgments that can be made more easily with the support of an experienced TMC that provides objective advice and analysis.”
Both he and Flight Centre’s Steve Norris – and just about everyone else who spoke to Buying Business Travel – also point out that elements, such as traveller tracking and round-the-clock emergency assistance, now an integral part of the TMC package, are not easily replicated in a middleman-free environment.
“Whatever the new business landscape may be,” says Langley, “it [duty of care] is a feature of business travel that will become more important – not less – in the future.”
Meanwhile, HRG Worldwide’s group commercial director Stewart Harvey cites meetings and events, carbon reporting and a host of other, relatively new components of the TMC offering. “Diversity and choice could almost be in danger of blinding some clients – often, they simply have too many options to consider,” he says. “For example, there’s a dazzling array of technologies available now. Clients are looking for expert guidance so that they can get on with their core jobs.
“Their demands are very different today. At HRG, we are not necessarily doing as many bookings as we were, and we are not doing as many negotiations as we once did, but we are spending a lot more time generating data, and analysing that data.
“We don’t see the need to put our energies into everything, indiscriminately – some things only need a light touch, others need more. And in some areas, you need an entirely different kind of touch, maybe even different skills. It’s a bit like reflexology – it’s where you touch that’s important.”
Will TMCs continue to evolve? Harvey is clearly an advocate of unequivocally plain – if slightly theatrical – English.
“Woe betide us if we don’t.”
This article was first published in ABTN's sister title Buying Business Travel, the award-winning magazine for company travel & meetings buyers and arrangers.
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