Many corporate travel management companies during 2013
expanded through organic growth and/or acquisitions. As macroeconomic trends
improved, albeit unevenly across sectors and geographies, so did corporate
travel demand, though upward movement wasn't robust. According to a January
survey released by the American Society of Travel Agents (completed by 449
respondents), corporate travel agencies as a group last year reported increased
client activity, higher revenue and greater profits than in 2012.
Yet, 2013 was a mixed bag for TMCs. Nearly a third of those
agencies participating this year in BTN's
annual Business Travel Survey processed fewer transactions via ARC than they
did in 2012. For the universe of all ARC agencies, year-over-year ticket
transactions were down 0.3 percent during 2013 (though the dollar amount on
those tickets was up 1.9 percent). At some agencies, U.S. government travel
cutbacks were the primary culprit.
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Though government travel spending isn't likely to rebound
significantly in the short term, 2014 is off to a decent start for corporate
travel. The number of U.S. travel agency air transactions settled through ARC
increased 2.3 percent year-to-date through April versus the same period in
2013, and the total sales from those transactions were up 6 percent. Among
corporate TMCs owned by publicly traded companies, financial performance and
sales data improved in the first quarter of 2014.
"We are up year over year and seeing growth in all
regions, but maybe not quite up to the level we anticipated when we set our
budgets last year," according to John Snyder, recently promoted to CEO of
BCD Travel, which is neither publicly traded nor a participant in this year's BTN survey. "Region by region, the
Americas is actually pretty solid."
TMCs' Ups…
During 2013, most TMCs participating in the ARC-verified
program of sharing transaction and sales data with BTN experienced another year of growth. For some, that came from
both organic expansion—new clients and greater activity among existing
clients—and acquisitions.
Travel management company Frosch, for example, for 2013
posted a 17 percent jump in ARC transactions and a 21 percent increase in
sales, resulting from "a mix of acquisition and organic growth across our
business units," according to president and CEO Bryan Leibman. He noted a
late 2012 purchase of a majority interest in Globalpoint Travel Solutions, and
some smaller agency additions during 2013.
But at Fox World Travel, which showed a 48 percent jump in
ARC transactions, there were no acquisitions or big accounting changes. "It's
all new business and existing account growth," according to business
travel division vice president Lori Meress.
At Travel and Transport, when combining ARC and non-ARC
transactions, the total jumped 18 percent. Claiming one of its best years for
new sales, new clients in 2013 contributed most of that growth, with the
remaining growth coming from existing clients, according to officials.
Gant Travel Management saw its total transaction count soar
nearly 28 percent last year. President Patrick Linnihan said a "majority"
of that jump was driven by organic growth.
Also showing double-digit percentage transaction growth in
2013, Adelman Travel benefited from "record new corporate account sales in
2012," many of which were not implemented until 2013, according to
president and COO Steve Cline, who noted "today's trend of elongated
contract phases." Adelman in late 2012 also acquired Springfield,
Mo.-based Great Southern Travel.
Travel Leaders Group also had one of the highest ARC
transaction growth rates among participating agencies, up 23 percent year over
year. Part of that relates to how numbers were calculated: In 2013 the figures
include company brands Protravel, Tzell and Travel Leaders Corporate, while the
latter was excluded from 2012 figures. Another part relates to acquisitions:
The company in 2013 purchased Nexion Canada, The Leaders Group Travel and
Williamsburg Travel, which brought a combined $88 million in annual ARC sales,
according to Travel Leaders Group. A third part was "pretty substantial
organic growth year over year," according to an official.
Balboa Travel Management achieved growth of 8 percent and 12
percent, respectively, for total transactions and total sales. "Our core
business was up significantly, specifically within international markets,"
said president and CEO Denise Jackson.
Christopherson Business Travel straddled the growth line in
2013, with combined ARC and non-ARC transactions up about 3 percent year over
year but combined sales down marginally. CEO Mike Cameron attributed those
results to lower average ticket prices likely resulting from his agency's
changing business mix. CBT in late 2013 announced it acquired Birmingham,
Ala.-based All Seasons Travel, which helped it stay on track to achieve a
five-year goal of doubling sales by next year to $500 million.
... And Downs
Among agencies where transaction volumes declined, several
are government contractors. At Omega World Travel, for example, exposure to
government travel cutbacks dragged down ARC transaction volume by nearly 17
percent, following declines of 9.5 percent and 12 percent in the two previous
years. "Some of those [federal] agencies cut their travel tremendously,"
said Omega executive vice president Goran Gligorovic. "When we split
government and corporate, corporate is actually up year over year and is doing
well."
National Travel Service and USTravel are survey participants
that also serve the U.S. government. Like Omega, National's ARC transaction
volume slipped in 2013, down 16 percent from 2012. USTravel's reduction in ARC
transactions was more modest, just more than 2 percent.
Not a survey participant, Carlson Wagonlit Travel through
its CWTSato division is heavily exposed to government travel weakness. Overall,
CWT in 2013 claimed to manage 60.3 million transactions, down 2.3 percent from
a year earlier. But excluding military and government business, CWT said its
transactions last year inched up 0.4 percent globally and 0.9 percent in North
America. Overall sales volume fell 2.7 percent to $26.9 billion.
Other Nonparticipants
Along with CWT, American Express is among the world's
largest TMCs. The second half of 2014 likely will see significant change as the
company's Global Business Travel operation is poised to create a 50/50 joint
venture with a group of investors that pledged $900 million. Amex Global
Business Travel president and CEO Bill Glenn said the priorities for the JV
include investment in technology, improved information management and
international expansion that could include acquisitions.
In terms of recent performance, American Express now has
reported three consecutive quarters of growing global corporate travel sales
following a long downward trend. That metric ended 2013 at about $18.9 billion,
and inched up 1 percent year-over-year during the 2014 first quarter to $4.7
billion.
Expedia's Egencia, meanwhile, in 2013 handled $4.5 billion
in gross bookings, up 26 percent year over year. For the first quarter of 2014,
Egencia's revenue for the first time reached $100 million after a 13 percent
increase, and gross bookings volume increased 17 percent to $1.3 billion.
At U.K.-based Hogg Robinson Group, client transactions
during the four months through January 2014 increased 6 percent versus the
prior-year period, while client spending experienced a 1 percent increase,
according to HRG's interim management statement. The company's revenue fell 2
percent, but at constant currency essentially was unchanged. HRG reported
ongoing recovery in North America and the United Kingdom, but weakness
elsewhere.
Neither publicly traded nor a BTN survey participant this year, Mahwah, N.J.-based Direct Travel
has been among the busier U.S.-based TMCs. Recent acquisitions included Travel
Destinations Management, a business travel management firm based in the
Baltimore area that claims business "totaling more than $100 million,"
and Nashville-area Caldwell Travel. Direct Travel's stated goal is to create a
$1.5 billion TMC.
Methodology
Business Travel News
again this year asked travel management company chief executives and owners to
authorize U.S. bank settlement plan Airlines Reporting Corp. to release for
publication their agency's 2012 and 2013 ARC air ticket transaction and sales
data. Participants include those agencies that book via ARC at least half of
their business travel sales.
ARC data for each agency encompasses wholly owned home
offices and legal entities, including all branch offices and satellite ticket
printers.
ARC provided ARC air transaction and sales data and the
percentage of total net sales booked for domestic-only versus international
itineraries. ARC defines net air sales as the total airfare amount minus any
commission. All information is based on ticketed passenger data for tickets
processed during the 2012 and 2013 calendar years via ARC-accredited agency
locations in the United States, Puerto Rico and the U.S. Virgin Islands.
Information does not correlate to flown data, and refunds and exchanges are not
included. All other data are self-reported. Non-ARC sales and transactions may
include ticket purchases on airlines that do not participate in ARC, or through
direct airline websites, airline bulk-buy programs or consolidators.
Agencies that declined to participate include publicly held
American Express, HRG and Egencia (owned by Expedia); and privately held BCD
Travel, Carlson Wagonlit and several others.
This report originally appeared in the May 26,
2014, edition of Business Travel News.