Traditional travel management companies (TMCs) are in danger of becoming obsolete if they don”t adapt business models according to the Hotel Reservation Service (HRS), following the release of its second annual HRS UK Companies Business Travel Report.
The report ” released today (5 February) at the Business Travel Show in London and which looked at 50 FTSE 500 companies and 250 Small and Medium Enterprises (SMEs) ” found that the number of companies that use a single TMC has dropped by 14% in the last year, with a 25% drop among the larger FTSE organisations.
It said a quarter of FTSE companies ” 12% more than last year - are using specialist agencies to some degree to secure better deals, and nearly three quarters (71%) leave individuals and teams to organise their own travel needs.
”There”s less use of TMCs now,” said HRS commercial director Grant Appleton. ”They need to address their business models if they want to be here in five years” time. Corporates are seeing the benefits of using specialist agenices and booking direct in order to get the best deals thereby making their budgets go further by reducing the cost of excessive management fees and financial kickbacks.
”In an age when at the touch of a button virtually anyone can compare the best deals around, TMCs must move swiftly in order to remain ahead of the game.”
Management and transaction fees have also dropped by an average of 33%, says the report ” the average fee for flight booking is down from ”27 to ”24, and for hotel booking from ”18 to ”12.50 ” and TMCs are ”feeling the pinch” and will be looking to recoup costs some other way, according to HRS.
”As they are being squeezed, they will look for new sources of income and recoup costs they are loosing,” said Appleton. ”With more pressure on TMCs to drive down rates, they will be in a panic. Business habits are changing.”