1 November 2022, London Marriott Hotel County Hall
21 November 2022, Hilton London Metropole
November 2022, Virtual
HRG last week unveiled higher profits during the last financial year. ABTN talks to chief executive David Radcliffe about how the company has continued to prosper despite the difficult economic outlook
You increased profits and sales during the last year despite the fragile economy across Europe – how have you managed to achieve this?
We are very pleased with the way we have performed. If you look at the track record since 2008 (when there was the collapse of Lehman Brothers) we have managed to show growth consistently despite a pretty grim environment. Our model doesn’t depend on top-line volume growth, it very much depends on managing the margin and costs, as well as developing new sales opportunities with our clients.
How has the UK performed within your overall business?
The UK is a very strong piece of our operation. Frankly, in an environment where the client is asking us to save costs and add value, the UK will benefit from the fact that we have signed the clients we have. We signed the UK government last year and that is a substantial piece of business. The UK remains a very strong piece of the world for us.
But increasingly now, our world is driven by the client and they are no longer nationally-centric. Although the UK is still very important to us, we no longer break out our numbers by country. We’re still breaking out by regions (Europe, North America and Asia Pacific), but even that’s a little bit disingenuous because each of our regions would not exist without the other two. In the future, we may just show global performance.
Business also seems to be going well over the two months since your financial year closed in March?
It’s in line with our expectations. We believe the tough economic environment will continue and it will be more of the same on a macroeconomic level. But we think our product and model will continue to work in our favour, so we still see the year ahead as one of growth.
Our model plays to the advantage of any client that wants to save money and is willing to explore new opportunities to add value and also wants to get better control and use of their corporate travel and related spend. I have no doubt that in the year ahead, clients will continue to want to save money, look at being more efficient and want greater control of their expenditure – HRG is well capable of helping them with these things.
HRG now styles itself more as a corporate services provider than a TMC – does this mean you think the TMC model is outdated?
No – I think the TMC facility is moving in two very distinctive directions. Some of the TMCs in the market are positioning themselves on the fulfilment side with their business based on volume-based payments from their suppliers. Other TMCs are now turning far more into providing a range of different services, and that’s our model.
We are going down the service route where we offer a range of services – at one end is travel fulfilment and at the other end is Spendvision, which is an expense management process, and in-between you have the vast array of services we offer such as data analytics, online booking tools, the management of third-party booking tools and consulting.
The client can pick and choose from that range of services. We are not locked into one end of that service spectrum; hence we are describing ourselves far more as a services company that operates in the corporate travel and related expense space.
Many clients choose to have a contract that links itself to one type of service and then they will buy in additional services as and when they need them. Some clients will choose to have a more bundled array of services. Every client relationship is different.
You recently purchased the whole of Spendvision – what was the thinking behind that move?
We are noticing now that there is an early but growing trend to look at end-to-end solutions, particularly for large corporations and government-style type of clients. They want to look at a service product that not only spends the money but also manages and controls the money at the same time.
Spendvision is an online expense management process. It already operates successfully in other markets so what we are doing is keeping it operating successfully in those markets and bringing travel to it as well. It’s a bit like the Concur Cliqbook model – you will find us offering a far more integrated technological online solution with expense management as we move forward.
How important is the development of mobile technology for HRG?
I think it’s important in the sense that it is there and is an important part of individual communication. It’s still got a long way to go in terms of its importance in terms of corporate communications because some corporates will willingly embrace mobile and others won’t. It’s a little like the internet was a few years ago – it’s something we need to be capable of working with and we are very capable of working with.
Longer term, it will be another route to market and we need to be ready for that – as we will be for any other route to market. I think it will be particularly important for bookings and itinerary management.
I also think it will be used as a communication tool for security – we already use it extensively. For instance, we have a HRG alerts system which will alert our travellers if there’s an event or anything we think is going to affect their itinerary. Wherever they are in the world, they will get a message via their communication piece, whether it’s a phone or iPad or whatever, giving them that alert.
I think it will morph into different things for different clients. For some, it will be used more for basic communication, while others will use it as a far more integrated part of their booking tool.
Some buyers are concerned about employees using consumer-based apps to book travel services which are outside their travel programmes and policies. What’s your view on this?
One of the opportunities and advantages for HRG is to make that capability possible but within the corporate environment. If you talk to a lot of procurement specialists, they will be saying that as a corporation we don’t want to embrace it because it locks our corporation into outside social websites and we don’t want that. Different corporations are viewing this in different ways. The role of a company like HRG is to make sure we have the capability of operating whichever way the client wants us to.