As travel content becomes increasingly fragmented, travel management companies are facing a battle to knit all parties together

Travel management companies seem always to have been the piggy in the middle – between buyers and suppliers, suppliers and distributors, distributors and buyers. They’re the bridge between suppliers (the travel providers) and consumers (the companies and their travellers). But their historical ability to distribute that content smoothly to its market has been disrupted for a number of reasons.

Areka Consulting’s CEO Pascal Jungfer cautions that despite the upheaval which the surge in NDC air content has precipitated, other business issues remain constant. “There’s always been a game of hide and seek between content providers. After 30 years problems still have not been solved – [in fact they’ve become] more complex. There’s always a generation of new content because of deregulation, new players, smarter marketing and packaging. It’s like herding cats. But it shows the value chain is moving and that is a good thing.”

One key element of travel management companies’ value lies in their access to air content which until recently came through one source – global distribution systems. It now arrives from multiple sources.

The issues may have begun with corporates’ use of low-cost carriers who only distributed via phone, originally, and then via websites. Data at best would be in a different format; at worst it would just be lost. But issues multiplied when Lufthansa announced that it was withholding some of its content and making it available only via IATA’s NDC channel. The upheaval it unleashed in the world of TMCs was interrupted only by the pandemic.

First of all, travel patterns have changed. Angel Gallego, executive vice president of distribution at Amadeus, says: “The hybrid workplace changed many of the fundamentals. We bring people into the office just to meet each other – we have needs for corporate travel that we didn’t have before.”

April Bridgeman, senior vice president, BCD Travel, also believes the overall profile has changed. “There’s now a drop in day trips and in internal travel but customer travel is back to where it was.”

“Covid was a shock,” adds Jason Clarke, chief commercial officer at Travelport, but he believes a corner has been turned as companies have been allowed to take stock of where they are in their life cycle and make choices. He shares Bridgeman’s positive reports on demand. “The good news is that we’re seeing companies come through that. We’re materially ahead on shopping transactions which we see as pent-up demand.”

Stefan Cars, chief executive and founder of Snowfall, which has launched an aggregator product called Junction, notices something different. “The last few years has seen an accelerated shift towards remote working and ‘working from anywhere’ which has resulted in ‘blended travel’ [also known as ‘bleisure’ travel] becoming a permanent feature in the modern business traveller’s lexicon,” he says.

Corporate travel patterns, demand and content sources and offerings are changing but the principles of what they want from TMCs nevertheless remain constant.

Rajiv Ahluwalia, executive vice president, American Express Global Business Travel, contends that corporate clients want three things from their TMC: access to content in a single place, to see it displayed in a transparent way so that they can make comparisons, and for that content to be serviceable.

“It’s simple from a traveller needs and client perspective. Our suppliers bring new things to the table – what we need to do is facilitate that. People need content parity and are looking for servicing,” says Ahluwalia.

The big picture has stayed the same but just as trip profiles have changed, content and the means of accessing it has changed massively.

Paul Tilstone, managing partner of consultancy Festive Road and formerly head of the UK’s travel manager body, the ITM, explains: “From the corporates’ point of view there is an increasing frustration at the lack of rollout of NDC. The TMC-GDS model is seen as the biggest source of the hold-up.”

When Tilstone said that, he just may have been thinking of Qantas. American Express Global Business Travel has introduced a three per cent surcharge on Qantas tickets booked in Australia. The move comes shortly after the carrier moved some content from the GDS to its NDC channels, but the TMC said the surcharge is not NDC-related. Rather it was to compensate for Qantas slashing its commission on its international flights booked in Australia from five per cent to one per cent in July 2022. “In recent times Qantas, Australia’s largest airline, has spoken publicly about changes to its economic partnership model with travel management companies. These changes result in Qantas shifting the cost to service its bookings to TMCs like Amex GBT,” said the TMC in a statement.

At the time of Qantas’ announcement in May 2021 the airline pointed out that the fee and remuneration structure needed to be updated. “It is expected this change will likely accelerate the growing industry trend towards a ‘fee for service’ model that has already taken place in many markets overseas and among several agency chains in Australia.  This compensates travel agents for the added value and bespoke service they provide customers beyond the logistics of booking, particularly for managing complex itineraries,” said the airline.

This shift in both cost and business models might be making TMCs and their clients jittery. But corporates have weathered such storms before. At the turn of the century many were forced to explain to their bosses why the travel department had moved from a source of income (agencies passing some of their commission back to the corporates) to a cost centre (the management fee model).

TMCs are also facing major challenges around how to provide content. With a nod to the increased demand for retailing, which no doubt was spurred by the explosion in the use of online shopping sites during the pandemic, Gray Dawes' Dave Bishop wryly observes: “Our competition is the website not other TMCs.”

The gap between the old technology and the new is also evident between suppliers’ provision of content via pipes and aggregators and what the customer is ultimately receiving. EasyJet’s head of business development, James Marchant, says that just because content has been made available to a TMC doesn’t mean that it is available to users.

“The way our content ends up with you [the user] is through our API. The biggest lesson we’re learning is that even if our content is taken by a GDS, aggregator or OBT, that doesn’t mean that’s what a consumer has access to.”

He continues: “For example, we launched the standalone cabin bag on our app and website and made it available through our API. But it takes time before being available to the end user, whether [that’s a] travel consultant or booked through the OBT.

“The booking tool has to be developed. If the OBT was built to consume red, yellow and blue but we supply green, they have to do something in order to be able to take green. It’s about how these were configured in the first place to take the content.”

The challenge Marchant is talking about is that self-booking tools were developed especially by GDSs for TMCs and corporates to facilitate access to GDS content. They were a new methodology for booking travel but they were tied to the legacy architecture which the web is not.

GDSs are not alone in seeing their world being turned upside down. The TMCs too are on a journey. They have moved from a world where all their content and a good level of their revenue (the difference even between profit and loss for some) came from GDSs to a multi-source environment. Hotel and rail content have always arrived at the GDS from aggregators’ pipes. Now there are aggregators who are providing them with a bundle from different carriers, say, both low-cost airlines and IATA members.

But have corporates’ requirements changed? Areka’s Jean-Michel Kadaner points out that “in comparison to other professions there’s no clear barrier between B2C [business to consumer] and B2B [business to business]. We’re using the same suppliers and products. There’s no differentiation on a low-cost airline whether I’m going on business [or leisure] from Paris to Dublin for the day.”

Travel management companies need to address three client requirements: an improved travel experience, optimising the client’s programme and improved servicing, according to Ahluwalia.

Amex GBT acknowledges the essential nature of servicing a booking by evaluating all its content under what they call MMP (minimal marketing product). Do fare T&Cs display? Can it be exchanged or rebooked? “We want to facilitate but not in a way that will not add cost or complexity,” adds Ahluwalia.

But this leaves business challenges. Bishop believes that travellers behaving like consumers means that TMCs must behave more like online retailers. “What we need to do is sell more of the trip components – if we make it easy for people to buy things from us, they will. We use Atriis because we want something that sits above the GDS and have all the content available to both agent and customer.

“If you’re a good retailer you need to make it appeal to direct and indirect customers – make it easy for the agent to book and give more value to the customer. We couldn’t have done this in the old structure – it wasn’t compatible.

“I don’t know how a TMC can add value for a customer and margin to the TMC without some form of aggregator technology. We’re never going to be in a position where a GDS offers everything.”

GDS functionality is not the whole story. Enhancements may improve revenue prospects but they might also add cost. Bishop pondered the consequences: “We know what the GDSs are doing but we don’t really know what it’s going to cost. Fares might be cheaper but there might be a cost to this change.”

But for travel management companies change is undoubtedly on the way. IATA’s distribution director Yanik Hoyles believes that “at some point it won’t make sense to have 50-year-old technology coexisting with new pipes. How long [that lasts] will depend a lot on the airlines and technology providers. Once everyone’s onboard, keeping the old plumbing won’t make sense.”