Buying Business Travel editor Paul Revel talks to David Radcliffe, chief executive of HRG, about his career in the industry
FROM COACH DRIVER to chief executive of a global TMC, David Radcliffe is a true industry veteran. He joined Hogg Robinson in 1978 but, he tells me, he was drawn to travel much earlier in life.
“When I was a teenager I took singing pretty seriously, and I sung in a youth choir,” he says. “We toured the continent once a year, and from about the age of 15 I would do their itineraries – that’s probably what got me into travel. I had to do all the waybills [international travel forms] for the coach company, and in those days you had passenger carnets [customs documents]. You had to get the paperwork right; you had to make sure you were at the borders at the time you said you’d be there. To be honest it really was fun.”
On leaving school, Radcliffe continued his unorthodox career path. “I’d always harboured an ambition to live on a boat, so I moved up to the Norfolk Broads and was running a travel agency for the AA.” He helped develop the agency’s group travel business, including booking coach groups on to ferry company Townsend Thoresen’s ‘dine and dance’ trips. “For the rich price of £4.99, people could catch a coach from Norwich on a Friday night and board the ferry, which would go from Felixstowe to Zeebrugge and back again. They would dance the night away, and those that weren’t dancing would be collapsing – they’d get a litre of whisky in the price.”
He also obtained his coach driving licence, and was often to be found driving coach loads of people around Europe. “I have to say it was the most fun I ever had. It was actually all good fun, doing part-time coach work and having a ball, but I was a bit irresponsible – I was living from one piece of income to the next, and sitting in a boat fishing at weekends when I could get away with it.”
So as he reached the end of his 20s, he decided he should be pursuing a career. “But by then I was hooked on travel and really enjoyed it. It had a certain cachet, especially with the girls...” So he started working for Hogg Robinson, running a branch in Waterlooville, with a mix of business and leisure accounts. Despite embarking on a serious career, life was not dull: in the frightened corporate exodus during the Iranian revolution in 1979 he found himself helping to get business travellers on board “one of the last VC10s out of Tehran, when it all went belly-up”.
HRG is now a world-spanning travel giant – it is ranked at number two in BBT’s annual top 50 leading TMCs with UK sales of £1 billion. After 35 years with the company, Radcliffe doesn’t seem particularly phased by the economic downturn that’s been grinding on for more than four years. “We no longer refer to it as the downturn – it’s gone on so long, now any organisation is best treating it as the new norm,” he says. “You’re trading in a different world now.”
He is, however, witnessing the effects on his clients: “We’re seeing increasing use of mandate, the enforcing of travel policies. But, interestingly, we’re also seeing that where clients don’t mandate policy – where following it is voluntary – there is increasing adherence by travellers, to the point where compliance percentages are almost the same as in a mandated environment. People want to support their company – they want it to be the one to survive and win.”
As well as observing the way the economic climate is affecting travel habits, including less overnight hotel stays and more use of rail in Europe, it seems the company is also seeing a change in the relationship model with its clients. According to a recent statement: “Increasingly clients are seeking a more consultative approach… where HRG is rewarded with share of cost savings.” So what does this trend mean for TMCs? “This is something we’ve done since the early 1990s – what we then called ‘open book’, where we returned all the commissions to the clients but were paid from the results we achieved. Over the years that model has become more honed in to individual clients – so you now get reward mechanisms totally linked to what that client is trying to achieve.” He thinks this performance-related model is now firmly “on the professional procurement list”.
Talking of economic climate changes, I ask David if he expects further consolidation in the TMC space – and is HRG on the hunt for acquisitions? He says the logic of consolidation “is compelling” but cites two major caveats: firstly, he divides TMCs, broadly speaking, into two types – one still driven by volume and supplier payments, with the vast majority of income from supplier payment. “It’s heading more and more towards just fulfilment – the client does the booking, the TMC just fulfils that booking.” The second type – which includes HRG – is where income is driven primarily by client fees. “Our revenues are over 80 per cent on this basis – in effect this demonstrates the success of our model.” Therefore, he says, acquiring a TMC still driven by the first, more traditional model would be “a step backwards” for HRG.
The second reason he gives for holding back from TMC acquisitions is that HRG now has a footprint everywhere in the world that it needs to be. However, he says, “we are keen to do more acquisitions on the services side”, following the buyout of expense management specialist Spendvision last year. He says more and more large corporates are looking for an end-to-end service – as are government departments, as demonstrated by HRG winning the Canadian government travel contract earlier this year. He adds that Spendvision gives HRG flexibility: “We can work with whoever the client wants – either as a TMC with another expense management provider, or vice-versa, or the whole package.” This gives Radcliffe a relaxed attitude to the competition. “One man’s enemy is the same man’s friend in a different environment.”
Why has HRG invested heavily in producing in-house technology, whereas TMCs often rely on third-party developers? “Many years ago, we were looking at strategies and the future of TMCs and the industry as a whole,” he explains. “At the time the OBT [online booking tool] had just arrived and the internet was still fairly new. We took a brave view – we didn’t know at the time, but we said: ‘The internet is very important but, eventually, will just become another route to market.’”
He says they looked to build a ‘super platform’ that acts as a chassis for all distribution technologies, but remains independent of them.
“What we designed was a pipe – one end of the pipe could go wherever the inventory is, and the other end wherever the client is. By definition, we can work with all methods of distribution.”
He says HRG is now reaping the benefits of this big investment in technology a decade ago. “It’s paying off because, unlike the majority of our competitors, when we bid, we can bid knowing that if we have to bend or flex, we can. Some of our competitors are in hands of third-party technology providers, often for whom travel isn’t necessarily their main business. So for us you’ve got this services group with commonality of corporate travel.”
This is why he insists that HRG’s title of ‘corporate services company’ is much more than a branding exercise. “It makes sense when clients see us talking about our online booking tool, tracker tool or expense management tool – all of which can work with other TMCs. Of course we are a big TMC, but we can go to see a client as a specialist in different services – they don’t have to buy everything from us.” He cites an example of a recent deal signed to supply technology to a global distribution system. “That’s not a TMC at work – that’s an industry technology company.”
A career in travel
David Radcliffe is chief executive of Hogg Robinson plc (HRG), an appointment he took up in 1997. He is also chairman of the HRG Worldwide Executive Board and of Business Travel International (BTI), which he was instrumental in setting up in 1990. He joined Hogg Robinson Travel (UK) in 1978 and rose quickly through the ranks. In July 2000, Radcliffe successfully led Hogg Robinson’s management buyout in one of the largest public-to-private deals at the time; and in 2006, he took the company back to being publicly listed on the London Stock Exchange. HRG is now represented, via owned operations and contracted partners, in over 120 countries. Radcliffe is a Fellow of the Institute of Sales and Marketing Management and a Companion of the Chartered Management Institute. Born in London in 1953, Radcliffe is married with two children, and is a keen power-boater.