Travel management companies (TMC) must continue to adapt to survive, says the Guild of Travel Management Companies (GTMC)
”TMCs have changed their business model quite considerably over the last five years, and those that haven”t have disappeared,” said GTMC newly-elected chairman Maurice Veronique. ”Those that still haven't will disappear, because there is no place in today's market for people that don't understand there”s been a huge shift in the supplier, client and TMC relationship. We have to reposition ourselves as a body.”
A UK Companies Business Travel Report released on 5 February - commissioned by the Hotel Reservations Service - suggested larger companies are starting to use more specialist agencies, while TMC management fees are shrinking by an average of 33%.
”What we have to do as TMCs is bring better efficiencies with the application of better technology, content, training and relationships with corporates,” said Veronique. ”That”s where we have to invest - to make sure we still offer a company something that they won't get from the internet.”
Air and rail suppliers have cut commissions in recent years - drying up income streams - and Veronique admits these will continue to diminish, so the hunt is on for other revenue sources.
”What we've seen with larger TMCs is that they've become more of a consultancy, offering advice and additional services in return for a fee - the credit card issues, the accounting, the payment structures - all these things are in the embryonic stages. But they are a big investment, and I think we'll see in the next few years a big shift between the bigger multi-national players providing that, and the more specialist niche players going back to the service-supply relationship. There”s no market in between.
”That's where the great divide in the industry is, and there is a place for both sets of players,” he said. ”It's not a gloomy outlook - it means there's opportunity. Five years ago everyone was signing the death of the TMC when commissions were cut. Well, we're a pretty robust industry and we've been through an awful lot, and what we've learnt to do very well is adapt to the market conditions.”
Veronique is bullish about the TMCs fundamental product - to the suggestion that people might try to find their own cheaper deals, he said: ”In the long run the actual advantages of it, the consolidation of information and management of it, looking at travel trends, driving down costs - I don't honestly see and never have seen the credence in why a large procurement travel manager would want to work with four or five different suppliers for travel services. It just doesn't make any sense whatsoever to me.
”The corporations prefer to work with a one-stop shop where they can get their flights, hotel, car, rail, insurance, get everything - why are they going to go to five or six different suppliers to do that?
”And the biggest benefit is that when plans change, they make one call to us and we amend the whole itinerary. Otherwise, they have to go to five or six different people.”