SMEs kickstarted business travel’s post-pandemic recovery but can they stay in the spotlight?

Travel management companies are reporting a marked increase in interest from small and midsize clients looking to newly implement managed travel programmes. Yet, as the post-pandemic world has enhanced SMEs’ managed travel needs, it’s also introduced some new challenges for companies looking to get such a programme going.

In the early days of travel recovery from the Covid-19 pandemic, suppliers frequently cited SME companies as the driving force of the revival, and even now they remain ahead of larger companies in terms of total recovery.

In comparing pre- and post-Covid budgets, TravelPerk – which has about 70 per cent of its business in the SME segment, which it defines as companies with between 50 and 2,000 employees – reports its SME client budgets are currently 10 to 15 per cent lower than pre-pandemic levels, while larger clients remain down between 30 and 35 per cent, according to chief revenue officer Jean-Christophe Taunay-Bucalo. It might sound odd, but the faster recovery actually stems from SME frugality, he says.

“They’ve always been quite cautious with travel, because they don’t have money left, right and centre, so they didn’t have that much they can cut,” Taunay-Bucalo said. “They actually need to travel, whereas with enterprise customers, there are probably a few trips that shouldn’t have existed.”

The office exodus

Just because SME travel has rebounded at a faster rate does not mean that those companies are returning to the office at a faster rate, however. TMCs report their SME clients by and large still are operating with a good portion of their employee base working from home.

Ben Hobbs, VP of customer success at Flight Centre Travel Group’s SME-focused Corporate Traveller division, says “definitely a majority” of his clients have hybrid working arrangements, with the exception of those whose jobs require them to be in person – biomedical research companies that need its employees in labs, for example.

Greg Ross, senior director of relationship management at AmTrav Business Travel, reported a similar trend, saying his team has started meeting with clients in person again, but they must be selective which days they go to their offices because “the bulk are hybrid.”

“We don’t have any of them that are going back to 100 percent in the office,” Ross said. “We still have a few that are 100 per cent work from home.”

As such, SME travel programmes are dealing with issues parallel to those of larger programmes, seeing increased internal travel make up for less ability for in-person office interactions. Hobbs says he saw a “huge wave” in the second quarter of clients getting together for sales kickoff events.

“We’re seeing extended trips, for longer periods of time, combining team meetings and client meetings or having several client meetings during the same period,” says American Express Global Business Travel's VP of business development Terri Buscemi. “That’s different to a few years ago, when we had a lot of same-day turnarounds.”

In some cases, SMEs were already moving to hybrid or remote workplace arrangements prior to the pandemic, but with larger companies widely adopting them, there is additional pressure on SMEs to offer such options for employees, says TripActions EVP and general manager Nina Herold. Otherwise, they could be at a disadvantage for recruitment. “Just because they’re smaller doesn’t mean they don’t need access to great talent,” says Herold.

Employee movement has been particularly prevalent in the tech space, with startups looking to raise funding and get off the ground but at the same time having teams that they need to get together for collaboration and planning. As in larger companies, SMEs are seeing shifts in who is traveling for business, with more travellers in roles such as engineering, product and marketing, says Herold.

As such, many SMEs are having to get back to basics with their employees. “We’ve been getting requests to train people and help relaunch travel programmes,” says Hobbs. “It’s sending targeted newsletters, industry updates, company updates and virtual training for customers as well.”

The end result will continue to push up SME travel volumes. “In some ways, we might end up with more business travel,” says David Mitchell, president of BCD Travel midmarket. “People were quick to relocate, if the message was that the office was closing, so we’re seeing more demand for small meetings and doing things like training. In the SME segment, that business is booming.”

With more volume to manage, more companies are looking to outsource the travel management role or major events as they hadn’t before, according to Amex GBT’s Buscemi.

Moving to managed models

This shift is part of what’s driving more SMEs to pursue managed travel, the TMCs report. TravelPerk’s Taunay-Bucalo says about 75 per cent of its customers come from what they would deem an unmanaged background.

“We’ve had a couple of wholly owned businesses that have had their best sales years ever, and a lot of that has been new managed business in the market,” says Mitchell. “They were unmanaged or lightly managed, using multiple booking websites, and they realised they needed duty of care, policy oversight, help on managing unused tickets and the complexities of trying to deal with the suppliers.”

SMEs seeking to implement a managed travel programme are usually driven by one of three factors, says Taunay-Bucalo. A company’s CFO might have a come-to-Jesus moment after a month in which travel expenses suddenly shoot to €60,000 when they were supposed to be only €20,000. Or, the person responsible for travel at the company – who, at most SMEs, will have other roles outside of travel management on their plate – will “get fed up with being a glorified customer assistant,” dealing with calls from frustrated travellers at all hours of the day. The current increase in travel disruptions, with increased delays, cancellations and customer service waiting times as suppliers deal with their own return-to-travel difficulties, is feeding that trend even more, he says.

“Their motivation is less about cost control and more about having a one-stop shop for travel,” says Taunay-Bucalo. “They just want someone to take it away from them.”

The third is simply those who are looking to have a central platform through which their employees can book travel, he adds.

At the same time, the recent travel challenges are reinforcing the need of a TMC for SMEs beyond just providing a great platform, says Pat Fragale, who recently joined SME-focused startup TakeTwo Travel Solutions. “It’s not just technology any longer,” says Fragale. “You need a travel advocate out there, and the SME market is starting to realise that.”

Resource shortages

All of this is combining into a bit of a conundrum for SMEs looking to manage travel – as well as the TMCs that would like their business. With SMEs travelling more and needing more help with travel management, they might have access to fewer resources as TMCs work to rebuild their own staff numbers and just might not have the bandwidth for additional business at the moment. Even as TMCs return closer to pre-Covid staffing levels, their current clients’ servicing needs are also higher, with a higher percentage of bookings needing servicing amid the disruptions.

“From a business demand perspective, it’s huge,” says Corporate Traveller’s Hobbs. “If we could hire another 50 people tomorrow, we would, because we have the demand for it. We went in the course of two years from saying, ‘We need business’ to saying ‘We can’t take any more business,’ so it’s certainly been an interesting place to be.”

Event planning is a similar challenge for SMEs. CWT Meetings & Events global head Ian Cummings says that because group demand has come back so fiercely, the priority has been around global business customers, and the TMC has to ensure it has the resources to service them. So, when SME customers who have done infrequent business enquire about help, they have to be turned away, and other agencies are doing the same, he said.

“We don’t want to take stuff on and find out we’re struggling for resources and doing a subpar job, so we’re literally refusing business at the moment, which isn’t ideal,” says Cummings. “None of the sales team likes to hear that, because they want to bring everything on, but we have to be honest at this stage and say across the whole industry – airlines, hotels, production companies, catering companies – we’re all suffering from a bit of under-resourcing.”

The growth in SME travel presents a “massive opportunity” for TMCs, though it will ultimately require a shifting of models away from transaction-based pricing, which will always favour business from larger companies, said independent travel consultant Bex Deadman at the recent Business Travel Show Europe in London. In the meantime, SMEs might be looking for alternatives to TMCs – duty-of-care management companies, for example – but the trend toward managed SME travel will continue, she said.

“You may not need to work with a travel management company, but you do need to have you house in order as far as knowing what your travellers are doing, where they are and having some form of control over it,” Deadman said. “There’s no excuse now.”