Staff shortages, widespread travel disruption and rising costs affect all corporates, but are small companies facing a bigger challenge?

Agile and less burdened by processes and procrastination, small and medium-sized businesses spearheaded the return of business travel – that was the consensus of TMCs and suppliers as the industry emerged from the pandemic.

Now, as we lurch from one crisis to another, are SMEs’ attitudes to travel changing when faced with a climate of disruption, TMC staffing shortages and rising costs? The jury is out.

“High demand, reduced availability and price hikes in all walks of life are driving a renewed cost focus for SMEs,” says Reed & Mackay’s director of global client experience, Max Hensser, of the TMCs small and mid-size customers.

Some are cutting travel back over the summer months to avoid disruption, adds Hensser, but “far more” are turning to the TMC for help “navigating the current disruption and securing the greatest value from their spend”.

Abby Penston, chief executive of the Focus Travel Partnership, whose TMCs serve largely small and mid-market clients and are themselves SMEs, believes short-term concerns will give way to continued recovery.

“Some SMEs are being put off travel in the current circumstances. They’re frustrated by it, absolutely, and some of the prices out there right now… it’s just not sustainable,” she says.

Nevertheless, Focus members are still forecasting “the normal autumn upsurge” in business travel, says Penston, while Tim Fitzgerald, a Travel Counsellor with some 30 SME organisations on his books, says the autumn is “already looking insanely busy”.

“For the last four months I’ve been trading at an almost identical level to 2019 as a franchise unit, but a third of that is new business so there’s still a big hole for some companies. Some are travelling at 120 per cent [of pre-Covid volumes] and others are at 20 per cent. It’s impossible to generalise,” he says.

“I don’t think SMEs are necessarily going to travel less in the long term, but I do think there’s less discretionary travel among small businesses now. The focus is on value, sustainability and duty of care,” says Fitzgerald. “Trips will always be signed off if the potential ROI is significant enough. You’re endangering your own business if you’re not seeing key clients or meeting potential new business.”

But rising travel costs are making some companies think twice about travelling, he believes. “I think the difference is that if you had to jump on a plane to Hamburg tomorrow it could cost you £700 right now – if you can get a seat – so you’d expect it to be business critical, whereas pre-pandemic it would have cost £200 and you wouldn’t have given it a second thought.”

One SME travel manager told BTN Europe they have “scaled back on what we do” after an initial surge in business travel but added that was due to increasing scrutiny of trips and, they said, made them no different to many companies, regardless of their size.

“I’ve been pushing internally not to look at trip savings but instead to focus on what we’re getting out of a trip – the ROI,” they said. “If a trip is necessary but not urgent, then I can see a lot of people putting off trips to the autumn given some of the disruption we’re seeing.”

The buyer’s view

Staff shortages have been evident throughout the travel industry and across Europe, with much made of slow response times and declining service at some travel management companies. Some commentators have gone as far as to suggest larger TMCs will be concentrating their efforts on their larger customers right now, leaving SMEs more prone to slipping standards than others.

The UK-based SME that BTN Europe spoke with said critical travel had continued during the pandemic “when service was fantastic” but now “travel is coming back in a big way and service is considerably worse.”

The company’s travel manager, who wished to remain anonymous, said they have had a change of account manager foisted upon them and seen response times stretch out, but did not attribute that to their diminutive nature amid a sea of large corporates at a UK top-ten TMC.

“I don’t necessarily think we’re having a tougher time of it than larger companies,” they said. “But from talking to other travel managers, some do feel that TMCs might be deprioritising smaller customers so they can focus on bigger companies.”

The buyer’s previous account manager is among innumerable TMC staff to have jumped ship this year as agencies outbid each other in the race to recruit experienced hands.

“We appreciate the rapid return of business travel has caught a lot of people out. Every TMC is having to adjust to the additional work involved in every booking right now. What’s been interesting is the different communication levels among TMCs,” they explained.

“Ours has been quite transparent about staffing issues but only after we started jumping up and down about it. Now they’re letting us know what they’re doing and how many staff they’ve recruited each week, but it takes time for them [new staff] to learn about us and our particular needs.”

The company, which initiates most bookings by email, says response times at their TMC have stretched out considerably. “We’re used to sending an email at, say, 8am and hearing back by 1pm – right now it’s often more like 1pm the next day. Our normal SLA is a two-hour response but we’re not going to penalise them. They’re taking action and being transparent,” they said.

“All TMCs are in the same position and our travellers are generally sympathetic of what’s going on. It [travel disruption] is all over the press at the moment.” Has serviced slipped to a level at which it is considering its future with the TMC? “We’ll probably extend [our contract] again. For us, it’s important to maintain continuity and confidence for our travellers as we get going again.”

The TMC view

While few TMCs that BTN Europe spoke with said they were seeing a significantly greater level of movement among SME customers, two developments were noted.

Firstly, according to Focus’ Penston, many of the group’s members have won new customers that have not previously worked with a TMC but are now “seeing the value in having their travel properly managed” due to current travel complexities and duty of care concerns.

Mark Smith, head of business development at Simplexity Travel Management, confirms the assertion having “picked up several companies recently from an unmanaged background” which are “turning into some nice business for us”.

He continues: “They use to do their easyJet and BA bookings themselves, but with everything that’s going on right now they want to be able to speak to someone and not queue for two or three hours on the phone to an airline when there’s problems.”

The significance of SMEs is not lost on Europe’s largest travel management company, American Express Global Business Travel, which is “continuing to see significant growth in new SME business”, which it defines as organisations spending less than $3 million annually on air travel.

“They are looking for support with cost control, visibility and reporting, disruption management and traveller support, duty of care and risk management – all benefits of a managed travel programme,” says Rachel Tonge, GBT’s UK vice president and general manager.

“As well as being a major slice of business travel spend, the SME sector is dynamic and growing, with huge potential,” she continues. “It would make no sense to deprioritise this sector.”

Penston’s second observation is that “some small and mid-market TMCs have won business off larger TMCs as contracts are coming up for renewal.” The reasons for doing so are varied, but service woes on the TMC’s part and corporates’ shrinking volumes are seemingly among them.

Smith says some companies’ volumes have dropped so much they no longer need a large TMC. “If you’re a four-million-pound business and suddenly you drop to a million on travel they [the TMC] are not going to be as interested in you and I think that’s why some people are moving around.”

Meanwhile, one TMC leader speaking with BTN Europe who wished to remain anonymous, said their mid-size agency had recently won two clients “off two of the megas” because of their incumbent TMCs’ waning ability to adequately service them.

“They weren’t just contracts that were expiring,” said the TMC representative. “One of them [the business wins] came about because they’re opening up a new office in Eastern Europe and the incumbent TMC said they couldn’t service it. We got in on that and we’re now being implemented by them in other locations too. The other company was struggling with terrible turnaround times.”

The winning of those two clients has opened new doors for the TMC. “We’re picking up a number of larger customers that we wouldn’t previously have expected to win. We were very comfortably winning business of two or three million [in annual travel spend] but now we’re having more conversations in the six to 12 million bracket.”

With a note of caution, they added: “Travel managers are wondering if the grass is greener, which I welcome, but some need to be a bit more realistic too. A lot of TMCs are really struggling getting people back.”

Their company has also welcomed customers appointing a TMC for the first time. “We used to recommend that if a company was spending less than £100,000 on business travel they should manage it themselves, but everyone wants TMC expertise now. We’ve taken on a number of accounts around the £50,000-£100,000 mark, mostly offline. They used to do it themselves previously but now feel it’s a service worth paying for. We had one come onboard recently worth £250,000 where we were the only TMC to reply to their enquiry.”

They also pointed out that they were currently meeting response time SLAs for all their customers, but added: “Of course, we need to service it all [the new business] but we think we have the capacity to do it.”

TMCs’ recruitment woes

And therein lies the challenge faced by TMCs large and small. With the swift recovery of business travel, Focus’ Penston concedes many TMCs have struggled to recruit to the necessary level. “Many now have the staff they need but onboarding them doesn’t happen overnight. They have such a big skillset – you can’t just flick a switch. We certainly heard a lot of noise a few months ago but it’s stabilising now.”

The surge in travel has caught airports and airlines out, with the knock-on effect of well-documented disruption creating extra work for TMCs and exacerbating staffing issues.

Travel Counsellor Tim Fitzgerald says: “If you took ten minutes to manage a booking it’s now more like 20 to 30 minutes because of all the schedule changes, cancellations and other factors involved.

“I used to get a couple of flight changes on a daily basis and occasional cancellations. Now the cancellations are daily. Some of them are quick to fix, but if there’s no other obvious options or everything’s full then it’s a problem. A lot of TMCs are really struggling because they can’t get the headcount back in and trained up quickly enough.”

Amex GBT’s Tonge says that the company's “robust recruitment programme is progressing well” and it has also launched a UK apprenticeship scheme offering on-the-job experience and qualifications. Its first 20 apprentice consultants will join the company in August.

The staffing problem is certainly not unique to large TMCs, with Simplexity also among the many agencies actively recruiting. “The challenge we have is purely down to staffing,” says Smith. “We need experienced people and we just can’t find them and get them onboarded quickly enough.”

He adds: “We didn’t lay anybody off during Covid and we still need to hire now. The [travel] requests are coming back thick and fast but people are now taking annual leave and there’s a lot of Covid about [causing absences].”

Smith argues that “it’s all very well a corporate jumping ship from one TMC to another but everyone’s facing the same staffing issues. We don’t want to take on business that we can’t service because it makes us look bad. We have to manage growth carefully.”

Our anonymous TMC contributor says their organisation is not struggling with recruitment or service issues because they did not make redundancies to the same extent as some large TMCs did. “Frankly, we couldn’t afford to,” they said.

It did make some cuts, however, and some staff chose not to return to the business when furlough support ended. “We’ve had a couple come back since then and they’re now seeing that we’re paying a bit more now. It’s more attractive. We have just a couple of gaps to fill.”

They continue: “I do think SMEs are in a better position right now. Look at the cuts some of the larger TMCs made. I don’t see an easy way forward for them and some of them are being quite selective about what they bid for now. How do you onboard so many people quickly? That’s their challenge.”