Transatlantic Split: Regional Versus Global Management

A transatlantic split appears to be emerging in multinational travel management, with some experts saying U.S.-based corporations favor hiring a single travel management company worldwide, while European businesses prefer appointing TMCs regionally.

U.K.-based global travel management company HRG estimates that 80 percent of the multinational tenders it has received in the past 12 months have been regional, with the remainder global. HRG client management director Stewart Harvey also noted a significant trend for clients to offer TMCs a choice of bidding globally or regionally in their requests for proposals. Giving TMCs the flexibility to price on a region-by-region basis has also become more common, he said.

"Even among those which started as global RFPs," according to Harvey, "many did not appoint globally. Global bids tend to come from U.S.-based clients, although we have won some notable exceptions in recent months, such as Novartis, which is headquartered in Switzerland."

U.S.-based consultant John Caldwell, president of Caldwell Associates, also sees a transatlantic divide. "The theory of regional consolidation has been espoused by European travel managers, but I don't think U.S. travel managers are going down that route," Caldwell said.

Opinions on the relative merits of global versus regional are deeply polarized. Caldwell advocates global consolidation, arguing that working with different TMCs around the world is undesirable "because of differences in technology and the competitive atmosphere between them. I don't see it being a very strong trend because of the difficulties of handling different contracts and using TMCs with different GDSs. Accenture used to divide its business between American Express and Carlson Wagonlit Travel, but now it is going to a single TMC and GDS.

"If you talk to procurement, they say they want to see the same suppliers worldwide and they like the leverage of having a single TMC. However, it is possible to observe the 80:20 rule: If you put 80 percent with a single agency and the rest with regional players, that can work, and it leaves some room for regional variation," Caldwell said.

Tom Stone, director of the U.K.-based consultancy Sirius, noted fewer global travel managers today than five years ago, "and even those are supported more often by regional travel managers with real teeth," he said.

HRG's Harvey believes this reflects a growing perception among the buying community that travel cannot be managed in an identical manner worldwide. "There are different requirements in different regions," he said. "For example, there are still many client implants in Africa and Asia but very few in Europe or North America. Regionalization recognizes there are different levels of maturity."

"One size doesn't fit all," concurred Stone. "If you are already receiving the best-in-class locally, why would you get rid of that just to put the same name above the door in every market?" Caldwell, however, considers the quality argument a red herring, arguing that outside North America and Europe "all the TMCs are weak. Clients are poorly served by the global TMCs and the regionals, none of which have much control over their affiliates."

Another globalization skeptic is Brian Donnelly, EMEA regional manager for FCm, which has representation in 74 countries. While acknowledging that FCm finds it hard to compete with the four global mega TMCs on worldwide bids, owing to its smaller size in the United States, Donnelly said global client accounts are more successful when managed regionally. "It is when they are globally structured and managed that we have seen they are not always successful," he said. "Part of the reason is that the supply side of the business has regional weaknesses. Most airlines are structured regionally or nationally rather than globally and we don't believe we can use one GDS globally either."

Perhaps the key barrier to region-by-region selection is finding an effective way to consolidate data from different TMCs. While Caldwell is doubtful that this can happen, Stone has little faith that a single TMC can deliver fully consolidated data from around the world either.

Harvey regards the issue of connectivity as a profound one, going to the heart of how contemporary travel management operates. He sees the ability of a TMC to integrate as arguably its most important characteristic. Harvey believes travel programs today are unable to avoid aggregating data from a variety of suppliers through different channels, including not only air spend but hotel spending—much of it not obtainable through a GDS, especially outside North America.