Strategic Meetings Summit London, 26 September,
September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
Amon Cohen returns from the GBTA’s European conference in Prague with more than just talk of TMCs and NDCs ringing in his ears
THE TIMING WAS COINCIDENTAL, but the symbolism striking. Almost to the minute that the GBTA European conference wrapped up in Prague on September 25, American Express announced plans to sell a half-share in its Global Business Travel division – Amex’s TMC business – to an investor group led by Certares. The official statement said Certares will invest US$700 million-US$1 billion in a joint-venture to grow the company.
The announcement resonated because the overwhelming impression I took away from the conference was that buyers and other corporate travel professionals believe TMCs are drifting strategically rudderless in the storm of change blowing across our industry. I moderated a session in which I interviewed representatives of four stakeholder groups – airline corporate sales, a TMC, a global distribution system (GDS) and a buyer – entitled "Do I have a future?" All four, in my view, made a robust case for why they will continue to matter, but elsewhere around the conference the questions and murmurings continued.
TMCs are at a difficult juncture. I believe that earlier predictions I made about buyers’ choice of TMC becoming secondary to their choices of technology provider and data aggregator are starting to come true. The strategic visions of companies like Concur and KDS dominate buyer discussion far more than I can recall any TMC ever managing.
Another major headache in Europe has been the continuing loss of accommodation business to hotel portals – a further example of how other players innovated before TMCs did. And then there is the problem of commoditisation, which I suspect is why Amex has sought a 50 per cent investor in its TMC business after, as it pointed out in its press release, 100 years of travel agency ownership. Online booking tools now account for the vast majority of travel bookings in Amex’s US stronghold, and the fees TMCs charge to fulfil such transactions have been driven down substantially through cut-throat competition. Many TMCs rely, perhaps over-rely, on income from volume to drive better override deals with airlines and other suppliers.
The upshot is that TMCs find themselves boxed in. They know they need to regain the initiative through product innovation, But given that buyers are unwilling to pay for the services they receive today, they have little confidence customers would reach into their pockets for the innovations those same customers say are needed tomorrow. It will be fascinating to see what Amex’s new investor will spend its US$700 million-US$1 billion on, but how many others will successfully secure funding anywhere near that magnitude?
This time of flux is confusing for buyers as they figure out who their key partners will be over the next few years. When online booking tools debuted in the mid-1990s, I remember a technology expert from Worldspan warning travel managers not to wait for dust to settle, because it never does. He was right, and now the dust seems to be swirling faster than ever. Decisions may need to be made while still in the murk.
ANOTHER MAJOR TOPIC that arose time and again in Prague was the International Air Transport Association’s (IATA) New Distribution Capability (NDC) project. NDC is intended to create a much faster, nimbler platform for selling airline seats and ancillary products, such as checked bags and meals. All parts of the industry agree we need new, XML-based technical standards instead of old-fashioned EDIFACT and other messaging standards holding back airline distribution today. Where the arguments start is over whether NDC is just about technical standards or, as its critics allege, also smuggles in numerous commercial constraints that would make it very hard for GDSs and TMCs to offer transparent pricing.
IATA refutes these suggestions, but the problem it faces is that for years its attitude towards much of the travel industry – including TMCs, GDSs and corporate clients – ranged from indifference at best to outright hostility at worst. Communication was either haughty or non-existent. IATA has acknowledged these mistakes and says it wishes to become much more inclusive.
However, many in the travel industry say it continues to be divisive and, as a result, debate has focused much more on IATA’s behaviour than on the substantive issues. When NDC has been discussed, years of mistrust mean IATA has few supporters for its claim that no hidden commercial agenda lies behind the proposed standards. This toxic legacy has caused the entire project to become much more complicated than it needed to be, and positions much more entrenched.
Some experts believe NDC will fail to get off the ground in consequence, or will have to be watered down so much that airlines won’t consider it worth the trouble. I know I bang on a lot about communications, but the NDC story is a textbook example of how important true collaboration is in this increasingly interconnected world we live in. The lines between who are your competitors and who are your suppliers, customers and partners are becoming ever more blurred. Sincere consultation is the way forward.
TALKING OF INDUSTRY COLLABORATION, while moderating the openingsession on the last morning of GBTA Europe, I conducted a show of hands to see who had been out on the town latestthe night before. Magnificently, the winner, with a time of 3.30am, proved to be the travel manager for a well-known alcoholic drinks company. “I was out doing product evaluations,” she told the audience to hoots of laughter.
I MUST THANK GUY SNELGAR, of Get There, who sat next to me on the flight home. I was becoming increasingly irate because a passenger’s mobile phone alarm started ringing and its idiot owner either hadn’t noticed or couldn’t be bothered to switch it off. After about 15 minutes of listening to me snarling and muttering, Guy gently suggested I might check the culprit wasn’t in fact me. Needless to say, he was completely right. I guess that’s why he’s EMEA chief of a major travel technology company and I’m – er – not.