Last month we featured the results of our survey for the 50 leading TMCs and eight leading HBAs. Mark Frary reports
The May/June issue of Buying Business Travel contained the much anticipated 50 Leading TMCs supplement and its publication, as in previous years, has generated much interest and discussion.
At BBT, we are keenly aware of our role as a partner with the industry and have spoken to many of the companies involved since its publication, along with other key figures in the business travel sector, to garner feedback on the supplement and to discover whether it truly continues to meet the needs of the industry.
The use of business travel revenue to rank the travel management companies (TMCs) was a key area for comment. As with the rest of the information in the supplement, this figure is supplied by the companies involved and there were concerns that some TMCs may be massaging their figures.
Bill Pougher, of Grosvenor Travel Management, says: "The figures give a portrayal of the sales of the companies that participate. Ours are genuine but I don't necessarily believe all the others."
Philip Carlisle, chief executive of the Guild of Travel Management Companies (GTMC), feels there were some inconsistencies between the stated revenues and the number of transactions, particularly when you look at one TMC and their close neighbours in the list.
"Some people see it as an ego trip and see their competitors are exaggerating. It has always suffered from some modifications of the truth to suit people. They want to be seen by potential clients to be bigger than they are," he says.
Gary McLeod, of Traveleads, wonders whether TMCs should be ranked instead by total turnover, backed up by the latest company accounts.
"Asking companies to isolate corporate travel turnover exclusively is always going to present a problem with ensuring accuracy and a fair ranking, and whole turnover perhaps also gives potential clients more of a feel for the size of organisation they might be dealing with," he says.
Another TMC, which did not wish to be named, says that EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation), operating cash flow and number of transactions, calculated on a per employee basis might be a better yardstick. This would enable buyers to consider the performance of the business overall and whether it was more or less efficient than its peers.
Michael McGuire, of Eton Travel, concurs. "Revenue is important, but bottom-line profit is all that matters," he says.
However, not everyone agrees. David Thomas, director of sales for FCm Travel Solutions UK, says: "I think it has to be based on business travel revenue. I can't see any other way of measuring the ranking effectively."
Anthony Rissbrook, of Co-operative Travel Management, adds: "[Revenue] is the best indicator and, to be honest, it would get far too complicated if you asked for other information like gross margins. Everyone would report back in an inconsistent manner if you did that. Stay as you are, please." He also felt there were some clear bands developing in terms of this revenue - £500 million+, £200m to £500m, £100m to £200m and those below £100m. He feels that this should be highlighted in some way.
Eton Travel's McGuire suggests that those TMCs showing an increase in revenue above a certain percentage from year to year should be asked to prove it.
The introduction of a ranking of new business won was broadly welcomed.
Adam White, of Bath Business Travel, adds: "New business won is interesting but perhaps should be put as a percentage of the previous year's revenue to show who is really growing fastest. Clearly, business won through acquisition should not be included."
However, the GTMC's Philip Carlisle says: "If a TMC loses a £50m account but it has gained a £20m one, the company health may be suffering. Yet someone gaining a £2m and not losing anybody will be in a very good situation."
One respondent feels we should include average length of service of a TMC's staff. "This would give them an indication of the continuity of service/staff they could expect when using/deciding to use a TMC," they say.
"We feel it would be good for clients interested in consultant-led services to know something about the agency staffing, such as what is your average staff retention rate in years and what percentage of your staff hold industry recognised qualification for air and rail sales," says Traveleads' Gary McLeod. Some who gave feedback felt that there was too much space given over to internal environmental practices - "just greenwash", said one.
The level of coverage of technology was also brought into question. Some felt that below the multinational level, many companies, particularly SMEs, are not interested in self-booking tools.
Traveleads' Gary McLeod says: "There seems to be a bit too much focus, driven naturally by the bigger adopters of SBTs [self booking tools], on this technology and what it can 'offer' the users - sometimes ignoring the fluidity of markets and distribution/ pricing. A lot of 'sale' fares do not find their way into SBT territory due to distribution costs and timeframes to load via GDS [global distribution systems] - so experienced TMCs find other ways of encompassing market pricing into their offering to clients, whereas SBT-dependent people can be missing a whole layer of lowest cost distribution - something buyers are often woefully unaware of."
However, one respondent wanted to see the number of transactions broken down into number of transactions handled online and fulfilled automatically by SBT.
Some people were disappointed to see the ranking included inside the main magazine rather than in a separate publication, as in previous years. FCm Travel Solutions UK's David Thomas said: "I feel that it lacked impact and would be much more powerful as a standalone supplement. The stand-alone document is also better for taking to client meetings, rather than having to fumble through the magazine to find it."
Barry Baty, of Uniglobe, agrees. "I think 50 Leading TMCs should be published as a separate supplement as it is well thumbed by all within the industry having a competitive streak. Most would keep all previous years to monitor progress of significant competitors over time."
The inclusion and non-inclusion of certain TMCs and other travel companies were also questioned, the vast majority of respondents felt that it was important to include American Express in the ranking, for example, despite the need for us to validate the revenue figure through our own research. The majority believed this gave a fairer view of the entire market.
Others felt that we should also do the same for other companies who had chosen, for their own reasons, not to be included in the survey, such as Gray Dawes, Egencia and BJB. There was also a debate on whether certain companies should be included - such as Trailfinders, because of its general leisure focus, and Uniglobe, because of its franchise model.
But what do buyers think? Paul Tilstone, chief executive of the Institute of Travel & Meetings (ITM), said: "Any resource which independently lays out who the suppliers are in key markets is of use to a buyer in understanding what options they have. Of course, you cannot get a real picture of the ethos of a TMC from a paper report, but it's a great starting point.
"It's good to see transaction numbers listed, as this gives a greater idea of size as revenue can be so subjective to business type, and to see the larger hotel booking agents listed, too, as these days the divide between HBA [hotel booking agent] and TMC is becoming increasingly blurred."
It has been a very useful process to get this feedback and we welcome more debate in the run-up to next year's survey. Please feel free to contact me at mark.frary@journalist.co.uk with any input you wish to have in this process.