BTN Europe spoke at length with Paul Abbott, CEO of American
Express Global Business Travel, about the post-Covid return of corporate travel, the TMC’s
strategy moving forward and wider industry issues. Read on for the highlights.
Tell us your views on business travel's post-Covid recovery
“We firmly believe that travel is a force for good. That's
never been more evident than it is right now. We have to get the economy moving
again and, to do that, we've got to get the world moving again. So we see the
restart of travel as being a real defining moment for our industry.
“We also recognise that the restart is going to be more
complex than lockdown. There are going to be inconsistencies across countries
and inconsistencies even across individual states or territories within
countries. And it's going to be subject to potential interruptions and
reversals, so it’s much more complex than lockdown.
“To manage it successfully corporations are going to need
travel partners that are experienced, well-drilled and are proven at solving
global problems in emergencies. And also, critically, that travel partners that
have the resources to manage through the length of the recovery.
“I think the stakes are very high for all of us, for
travel managers and for TMCs. I don't mean to sound dramatic, but the wellbeing
of our customers is at stake and, frankly, the safe return of our industry is
at stake.”
“We know we need a different approach to travel in this
new era and we have to learn to travel smarter and then, at the foundation of
that, we think building trust and confidence is going to be essential.
"TMCs in general are designed for moments like this. We're
uniquely positioned. And I say that because I think TMCs really are the only
players focused on the entire end-to-end travel experience. We're uniquely positioned to cut through the complexity
for travellers and travel managers and to build the trust and confidence that's
required to get the world safely moving again.
“Everyone understands that the travel experience will be
different and what travellers and employers really want is trust and confidence
in a consistent, safe experience, knowing exactly what to expect and then a
consistent delivery of that experience.”
“At this moment, clarity and consistency is far more important than competitive
advantage. The reality is there are very few business travellers for us to
compete over right now. So let's focus on the primary objective, which is
getting our existing customers back traveling safely and building the trust and
confidence that is required to do that. And we know that that's not a simple
task.
“We need governments, industry associations and service
providers to all unite with this common goal of building confidence for the
safe return of the industry. Never have our goals been more aligned than they
are today. We need to get all of the parties working together to build the
trust and confidence that's required.”
What will really turn on the ‘green light’ for business travel?
“We have to accept that Covid-19 is in different phases in
different parts of the world. We have to acknowledge that reality and we have
to expect a staggered restart and we have to expect some inconsistencies. I
think that's just a practical reality of the situation that we're in pre-vaccine.
“I was encouraged to read that the World Health Organization
believes AstraZeneca and the team at [the University of] Oxford are progressing
well with their vaccine. I think there's over 200 different vaccines in
production of which 15 are quite advanced. Like everyone else, we hope that a
vaccine can come along. If I had to name one thing, it would be that. But I
don't think we can plan on that. I think we have to plan for an inconsistent
staggered approach.
“There are certainly areas where there can be a single
approach and I think major airlines and airports can definitely implement a
consistent set of protocols. They are some of the practical, short-term
priorities that I would highlight.”
What do you make of the UK’s air bridge plans?
“Well, it's encouraging. I think we have to wait and see
how many countries are included in the scheme. I think that the quarantine
measures in the UK didn't seem rational or well thought through. So I think it
was inevitable that the government was going to have to make a change to that
policy. I just hope it is a clear, immediate and fairly broad change to that
policy so that we can focus on the safety protocols to get people traveling
safely again.”
Is there pent-up appetite for travel among your clients?
“In a recent set of interviews we conducted, 82% of
business travellers said they would consider traveling this year if they had
access to health and safety guidelines and reliable information about what to expect
on the trip.
“Certainly on the leisure side reports have said that
bookings have increased dramatically since the government has announced the
creation of these air bridges.
“But as you know, I think companies want governments to announce
more than air bridges. They want to know that there is a system in place to
ensure their travellers can travel safely and that there are protocols in place
with the TMC and with the company. There's more complexity to unlock that demand
for business travel but it is definitely there.
“Do I think we'll get back to pre-Covid levels? Yes. Identifying
when is more challenging. Most of the reports would suggest that it's going to
be a gradual recovery over the next 18 to 24 months.”
As TMCs become more service-based and consultative, how
will pricing models change?
“I think some of our pricing structures worked very well
through this period, particularly management fee structures which have really
aligned the interests of the client and the TMC.
“We've made no decisions about how we respond to what are
very different circumstances, but the fee model hasn't worked so well in these
circumstances. And that's because the transaction fee model assumes a certain
level of demand.
“When we've gone into transaction fee arrangements we
obviously model out what would happen if it was 20 or 30 per cent less, but
nobody really has modelled out what happens at zero for a period of time.
“We provide a lot of services that are not transaction
based, but in many cases, those have been included in the transaction fee. So I
think what you'll see is those services being priced more independently which
actually makes sense. And I think you will see new pricing structures emerge
whether it's management fees, whether it's subscription fees, whether it's
software as a service for some of the technology that we provide. Most of those
sort of exist in some form today, but I think you'll just see those structures
really scale.”
And how does the current shift from online to offline
impact you?
“It's early days, but we're seeing demand come back in a
number of markets and we are seeing more offline than online in terms of the
mix. That's understandable in these circumstances - we're seeing a higher calls
to transactions ratio.
“Of course that means it's higher cost, but it's also
higher value. The products and services that I just shared with you [see below]
are increasing the value that we deliver. I think there will be discussions
between us and clients in the coming weeks around what the right structures are
for this next phase.
“So far, those conversations have been very, very
constructive. And honestly at the end of the day, clients will decide whether
the price/value equation is right. As I said, I think you will see an
acceleration of some of the trends that existed in a pre-Covid world.”
Like many TMCs you will have furloughed staff - how is the
workforce shaping up now?
“We did take advantage of the furlough schemes wherever
possible. We have started to bring people back in markets where the demand is
returning, but obviously the demand is still… I don't mind sharing that two
weeks ago we had close to 50% of the domestic volume back in China. Domestic
transactions in continental Europe – France, Germany and the Nordics – we have between
10 and 16 per cent of volumes back.
“In other markets like Australia it’s into double digits. We’re
all seeing volumes return but as the volume is returning, the call volumes are
returning faster than the actual transactions so we have to make sure we have the
right staffing levels to deliver the service that our clients expect.”
Have you had to make redundancies?
“No, we haven't. Honestly, we had a three-phase approach to
our business response plan. We had a response phase, a reset phase and now the rebound
phase. It's a marathon, not a sprint, and so we wanted to make sure that we
took our time to really evaluate what we think the demand is going to be like
in 2021.
“I think we're going to learn a lot more about that in the
coming 30 to 60 days as we get a bit deeper into the restart. We're fortunate
to have very supportive shareholders and we want to make sure that we take our
time to make those kinds of decisions. You don't want to make those decisions
in the peak of uncertainty. You want to try and get as much information as you
can about how we see 2021.
“We're in the process of really developing our plans for
2021 now, but they're not final. I do think by the end of August, particularly
early September, we're going to have a better view. We decided that we would
take the next 60 days before we put any kind of formal numbers on 2021.”
How do you see the wider TMC market emerging?
“I think consolidation is likely. It's obviously a very
difficult time for the industry. I think that consolidation is probably
necessary for certain organisations to strengthen through this next phase.
“And I think most people, as I said before, expect a kind
of gradual return over an 18 to 24-month period. That's challenging for the
industry to navigate. So yes, I do think consolidation will take place but as in
any industry, consolidation requires buyers’ and sellers’ expectations to
align, and these conditions may look like a good time to buy, but they're not necessarily
a great time to sell. So whether those expectations can align remains to be
seen.”
Would you like to comment on GBT's relations with the GBTA currently?
“No, only that I'm pleased to see that the board has initiated the independent
investigation and I think we will await the outcome of that investigation
[before commenting further]. I think that's the appropriate thing to do and
we'll obviously share our position at the end of that independent
investigation.”
Where does Brexit sit on the agenda for GBT and its UK clients now?
“It’s a very good point. It has sort of gone down the
priority list. The impact of the pandemic is everybody's priority focus. Right
now I would say it’s not the primary focus of our discussions with clients, but
I do expect that to change over the coming months as it becomes clearer what
path the UK is likely to take and the implications of that path.
“A lot of planning was done to prepare for Brexit before
the end of 2019. We've got very clear contingency plans in place as have, I
think, many of our customers. It's
actually not easy to push those plans a level further without knowing the next level
of facts. When we get more reliable information about exactly what the next
phase looks like, I think it will pick up again.”
Tell us about GBT’s approach to the ‘restart’…
“TMCs have got to adapt and we've focused on four areas.
The first one is a change of mindset - every trip will be an event and we have
to make sure we're with you every step of the way.
“The second one is really around information. Trip
information is going to be central to building trust and confidence. The third one
is around real time reporting and monitoring and then the fourth is really
taking a kind of mobile-first approach.
“For the foreseeable future, every trip will be an event
and we're going to have to manage each trip just as we would plan an event. Door-to-door
was sort of an aspiration for the industry, but even that isn't enough now. The
role of the TMC now begins when the need to travel is first identified and ends
long after the traveller’s returned home.
“So we're adapting our products and our services to
provide support every step of the way to both the traveller and to the travel
manager. Information has got to be at the foundation for cutting through the
complexity and building trust.
“I think we have to recognise Covid has changed traveller
and travel manager needs and so we have to adapt. So for example, as soon as people
think, well, can I fly to that destination? What are the immigration
restrictions on arrival at the destination? And also for the first time ever,
we're probably thinking, well, what are the re-entry immigration conditions to
come back into my country? That's something that people have really never had
to think about before. What are the safety protocols on the ground and in the
air at that specific terminal in that country or for that specific airline? What
documentation do I need to complete? Will the flight have a meal service or a
drink service?
New hub is 'a single source of truth'
“We have to be the single source of truth in a world where
the facts are changing daily. It’s not a simple task, but it's a challenge we're
tackling head on. What you're going to hear about in early July is that we're
launching a new service that aggregates all of this information into a single
database.
“We're using API feeds from hundreds and hundreds of
different data sources: governments, airports, airlines, risk management
partners, rail companies, hotels, car rental providers. We're providing this
dynamic source of data that will be updated daily, and then importantly, put it
into all of our channels, whether it's the website, whether it's our app,
whether it's our messaging service, whether it's Neo our booking tool or third
party OBTs, or of course, when clients call our travel counsellors.
“The system can then also identify infection hot spots,
and that's using our risk partner feeds. And that will also inform when their
restrictions are tightened or eased. And we can set up alerts to go direct to
the travel managers so that they can do risk management and an overall
governance. So that's one important change that we’re making to ensure that our
travel counsellors and also our clients have access to all of the right
information. It's a database of vital travel information.”
Keeping track of travellers
“Reporting and monitoring is an area where we've also made
a number of investments. So for example, where our weekly report may have been
effective before, you now need a daily alert. Where travel managers may have been
monitoring select high-risk locations, they now need an always-on global
monitoring solution. And where travel policies were adjusted quarterly, sometimes
annually, now policies are going to have to change potentially daily or even weekly.
“There are real opportunities to improve compliance. I
think we're going to see that really moving. Pre-trip and daily alerts are
going to the travel manager to identify where there are missing hotel or ground
arrangements, because if we don't know where you are, we can't take care of
you. And now is the time for companies to drive full programme compliance.”
Enhanced mobile platforms
“We are
adapting our mobile capabilities. We've had a messaging service through the app
for two years, but now we want to really drive adoption because we're in a
period where people need dynamic access to information. The best way to do that
is through the app and through mobile tools. And so once you've made a booking
with the travel counsellor, that booking information obviously transfers into
the app, and then there'll be a kind of ‘know before you go’ tab, which you can
click on, which will give you a link to all the information I talked about
earlier.
"As I said earlier, this is a defining moment for the
industry. We have to have a united and consistent approach. I do believe TMCs
will play a central role in building trust and confidence, but we have to adapt
and we have to recognise the needs of the traveller and the travel manager are
changing. And so those are the things that we're doing to make sure that we are
adapting."