Perspective: 20 Years Of Change Augurs The Future

When Albert Taras established TCG Consulting more than 20 years ago in Miami, he had no way to predict the unprecedented changes that would occur across all facets of the corporate travel industry during the ensuing years.

"Back in 1994, the primary marketplace dynamics that impacted corporate programs included managing supplier commission reductions and new direct corporate agreements. Additional drivers include program evolution to global platforms and technology advances enabling new fare-search sources via the Internet," commented Taras.

As companies expanded and created multinational and then global operations starting in the late 1990s, the urgency to create and implement a strategic plan for global corporate travel was becoming apparent to innovative firms.

Initially, many advanced strategic concepts that originated in the United States failed to gain traction at the local market level globally. Today, a more regional and global approach is required.

Another trend, driven by technologies which have emerged since 2010, is the shifting role of travel agencies in the value chain. Taras commented on this change: "The traditional business model—companies engage an agency partner, inclusive of the agency's preferred support configuration of technologies and suppliers—now has the potential to be evaluated independently. Companies can choose to implement a 'build our own' strategy via direct sourcing of new tools based on unique and evolving reporting, financial, risk management and geographic segments. This unbundled company strategy across critical program components—global distribution systems and content, online booking tool management, security and risk management, account management functions, profile, mobility, sourcing and more—is redefining the role of the agency within corporate travel as a program and operational enabler."

The single-agency global support model strategy also is experiencing a shift. "In the late '90s and early 2000s, leading companies expanding globally saw 80 percent of their spend coming from 10 to 12 markets," Taras said. "In 2010, 80 percent of travel came from 25 to 30 markets. As of 2014, many program spend patterns have spread to the point that 80 percent of the total spend is spread among 60, 70, even 100 global markets. As companies continue to see spend concentration becoming diffused, many find a customized multi-agency support model is the optimal configuration. We are seeing upwards of 40 percent of our clients who operate a global platform using a multi-agency model."

The multi-agency support model does create challenges:

• Command and control: Localized support and customization benefits of a multi-agency model are tangible, but recent trends also show a potential "command and control" risk in certain circumstances, bringing higher costs due to supplier and multi-agency integration, complexity, overlap and coordination issues. Taras urged companies to "conduct effective due diligence and not be dissuaded from evaluating a multi-agency approach due to the significant benefits that may be available."

• Account Management: When delivered as a bundled solution, account management costs average between 11 to 24 percent of total agency fees, with 17 percent as an approximate average mean and benchmark. "Companies now desire a true and transparent program management cost/value analysis that can be measured and critically evaluated, especially where there may be redundancy in account management support functions," said Taras.

As the Internet and mobile technologies are now fundamentally altering how we interact and conduct business, what are some leading indicators of what the next 20 years might hold?

Demographics and mobility strategy: Millennials have never known life without the Internet, demanding the "always on" immediacy of new technologies, especially mobile. This trend must be addressed by corporate travel programs. An optimal user experience in corporate travel serves as an effective retention and recruitment tool and point of differentiation. In addition, as this generation advances into leadership roles, the willingness to adopt advanced technologies and strategies becomes much more pronounced.

Seamless integration of travel, meetings, payments and expense: Innovative tools are enabling companies to create a truly integrated strategy. Back-end data drives front-end strategy and decision support, including purpose-of-trip and demand-management functions.

Elimination or further reduction of corporate direct discounting: Industry consolidation, alliances and supplier discipline will all continue to perpetuate a supplier seller's market that started in 2008 and shows no sign of abating. Taras posed a question: "Could a next step include reduction or even elimination of corporate direct discounting? If this occurs, how would companies and other members of the corporate travel ecosystem need to alter their strategy, policies and processes?"

Meetings: Integrating transient and hotel spend and establishing integrated reporting and payment, common sourcing, contracting and risk policies—all are possible for a company committed to an optimized meetings strategy.

Harnessing big data: Effectively harnessing, filtering and applying big data as part of a company strategy will produce tangible results. These can be realized across cost control, policy, user experience, influencing behavior during trips, enhanced risk management and reporting, among other aspects.

When asked what the last 20 years of history could teach us about the future of the corporate travel industry, Taras replied, "While technology can serve as an outstanding enabler, corporate travel programs will only be as effective as the strategy they have created and how they align with the strategic imperatives of the organizations that they serve. This will include integrating systems, effective policy, detailed reporting, supplier programs and securing senior leadership support."