Seven years on, corporate travel management companies, at
least those that still exist, won't be focused on processing bookings. Instead,
they will emphasize customer service and value-adds, find new ways to address
evolving client needs, properly handle and analyze data, and push technology
innovation.
"The smarter TMCs will start to recognize they need to
have a broader array of services, particularly around technology, particularly
around data," said HRG chief executive David Radcliffe. "Those that
have not got this already will be primed for consolidation because ultimately
they are headed to be a fulfillment company. There will always be a place for a
good specialist or for a large-scale, global-capable services company. But
there will be a number in the middle where the clients will just ask, 'Why?
What can you do for me?' "
One thing seems a sure bet: the ongoing reduction in the
number of bricks-and-mortar agencies won't subside. Seven years ago, according
to ARC, about 20,000 travel agency retail outlets processed air sales through
its systems. ARC's latest report, for September 2013, listed just over 13,000.
In another seven years that number may be down to about 5,000, speculated
Travel and Transport president and CEO Bill Tech.
"There definitely will be more domestic consolidation
of U.S. agencies," Tech said. "Not because they can't make money but
because many are individual owners, and I can only name a handful that have
their next generation—sons and daughters—involved in running their company."
Also clear is that there will be fewer live agents making
fewer reservations. Just one in 10 BTN
survey respondents said booking with a travel agent will have more relevance in
2020 than it does today. Via the phone or TMC-supported online booking tools,
agencies may be processing fewer business travel reservations in general. "The
typical transaction—a roundtrip to New York—that will completely go away,"
said Steve Reynolds, CEO of hotel booking site tripBam and a longtime corporate
travel industry tech executive.
(While others share similar sentiments, any recent decline
in agency transaction volumes has been modest. During the first nine months of
2013, agencies processed more than 111 million air transactions through ARC,
down less than 1 percent from the prior-year period. For the mega agency and "other"
agency segments—setting aside the primarily leisure online agency segment—such
volumes have been higher year over year more often than not during 2013.)
Tech said that mobile interaction between suppliers, TMCs
and travelers—including texts and digital chats, once a few security and
archiving issues are sorted out—also will reduce calls to TMCs. "It is
going to affect our industry and our staffing in 2020," he said.
Traveler self-service tools and other nontraditional booking
options for corporations already have impacted travel agencies. "We haven't
used them for years for booking rail, and there will be more things we won't be
prepared to pay them for," said Keith Mullineux, Europe, Middle East and
Africa travel manager for General Electric. "Agents are stuck in the
middle. They receive no commission, and we don't pay them for things we can do
by ourselves. Life will get immensely tough for them. Suppliers are coming to
us and saying, 'We want to reduce our cost of sale; can we give you a direct
link?' "
'More Than A
Fulfillment Partner'
To remain relevant in 2020, many corporate TMCs likely must
become technology innovators and integrators. "We can't buck new
technology," said Gloria Bohan, founder of Omega World Travel. "We
have to learn how to be participants."
Corporate TMCs still will come in various flavors, but the
successful ones of tomorrow will master data handling and provide superior
business intelligence and analytics. They will offer consulting services that
answer key questions and understand traveler behaviors. They will position
themselves as advisors to travel management professionals who interface with a
growing number of other internal departments. They will tie in—if not become
fully intertwined—with expense management systems. Perhaps most importantly,
they will continue to be a conduit to suppliers, obtaining for clients
preferential services and pricing that may not be available to them on their
own. And, they will do a better job explaining their value proposition well
beyond transaction processing.
"I have to be perceived as more than a fulfillment
partner," said Travel Leaders Corporate president David Holyoke. "We
ought to bring in more people from outside who are focused on overall program
management and program objectives. I have to find more ways to connect with the
traveler rather than just the buyer. Everybody else is marketing to my
customer."
April Bridgeman, managing director of BCD Travel consultancy
Advito, noted that TMCs "no longer are competing just against other TMCs
in the business for the business traveler. We are competing against the
consumer space in a lot of cases, and the expectations are being driven there.
We have to get a lot more modern in our service.
"The TMC can play a big part in an expanded managed
travel marketplace where the center of managed travel is not necessarily the
booking channel or shopping process," Bridgeman added.
As always, data will be the key. Agencies by their own
admission have failed to provide sufficient global reporting. Clients,
especially multinational ones, have been asking for it for a while, and maybe
by 2020 TMCs finally will have cracked that nut.
"It is a huge service that we can provide for them that
they are not going to want to tackle themselves," Tech said. "They
are not going to want to go to their branch in Japan to ask for detailed
information. They will want someone to consolidate that for them."
And clients increasingly will want data to paint a clear
picture. "We get a lot of customer service from our agency, but one of the
things that is lacking is that they're not able to provide that total cost of
trip," said Dan Cooper, global travel manager at Westinghouse Electric
Co., speaking in October at The Beat Live conference. Noting that some
travelers make bookings directly on airline websites, he said, "That's
where I want to see agencies and distribution partners make improvements, so we
can finally capture what a trip costs, from beginning to end."
Industry veteran Ellen Keszler agreed that no one yet has
really solved the data problem. "There is a real role for helping
corporations normalize data on the back end, and get actionable information
used to make decisions and for negotiating better deals," she said. "Big
data is still really important, and the travel management companies seem to be
well-positioned to facilitate that."
Keszler discussed a scenario in which a corporate traveler booking
on an airline website is properly recognized and offered the negotiated
corporate bundle of services. "It's all communicated on the back end to
someone—potentially the agency, which is much more focused on data and
reporting and not booking."
In such scenarios, surviving corporate travel management
companies in 2020 will be technology integrators if not also developers in
their own right. Some see the move by American Express to propose a business travel joint venture with private-equity firm Certares (positioned to pony
up as much as $1 billion) as a means to accomplish just that. Amex CFO Jeff
Campbell in October suggested as much on a conference call with analysts,
saying the capital influx would "really help" the corporate travel
business "do a better job than frankly it's been able to do in the past
few years at growth and investing in technology."
Farelogix president and CEO Jim Davidson said by 2020, the
handful of remaining agencies offering traditional managed travel services "will
be technology companies." That would include Concur "as one big TMC,"
he said. "If there's going to be others, if there's going to be an Amex or
BCD or Carlson, they're going to be big technology companies. In order for it
to be self-service, you'll have to invest heavily in the technology."
Radcliffe intends for HRG to be one of them. "You are
almost getting three tiers of TMC," he said. "In the top tier are the
likes of us and Concur—technology providers with a TMC capability. And the
second tier you will get TMCs with various services capability. And the third
step you are getting a TMC that is mainly a fulfillment company."
Finding Answers
To prove their worth, successful near-future TMCs will
cultivate consultative services in various areas, notably in helping clients
optimize their travel dollars.
Hans-Ingo Biehl, executive director of German travel
management association VDR, suggested that while it no longer may be logical to
pay a transaction fee for a point-to-point booking that travelers could book on
their own, he asked, "How do I know I am getting the best deal? No one
really knows the answer yet."
TMCs will search for answers. "Ultimately we need to
drive strong, insightful, deeper and on-demand analytics more so than we have
in the past," said Advito's Bridgman, noting the need for "better
data visualization tools, algorithms, multi-source data."
Speaking generally, Tech said that 20 percent or 25 percent
of Travel and Transport's clients use consulting services, but he envisions
that rising to as much as 80 percent by the start of the next decade. "Analyzing
and recommending air, hotel and car supplier deals ... so much of this has been
outsourced to procurement," he said. "While we have been doing this
for a number of years, I really see it jumping tremendously as procurement gets
more involved and says, 'We are a manufacturing company, not a travel company,
so we will pay you to do that but you better give us results.' "
Tech also emphasized the role of customer service. "With
more online booking tools and other things that we don't control—that are
third-party—it doesn't matter if they use ABC Travel or XYZ Travel if they are
both going to offer Concur," he said. "The question is, what other
services do you provide for them? We are not going to have any better tools
than the next guy. Service will be the differentiator, and corporations will
understand that they'll need to pay more for better service."
As they do today, such services will relate to senior
executive support, complex international itineraries, recommendations and
assistance for travel to unfamiliar locales and assistance with disruptions and
emergency situations. "Elements of travel disruption will still need to be
managed offline," predicted KDS CEO Dean Forbes. "Smart TMCs will
continue to be the trusted service provider to the corporation."
There also may be an ongoing need to hold clients' hands
when dealing with refunds and exchanges. Even though many see automation
accomplishing such tasks, the value-add there, according to Michelle Hunt, a
travel services category manager at DHL Global Business Services, is "understanding
and putting into plain English the rules behind an exchange."
'The Great TMC
Opportunity'
Indeed, automation can only advance a program so far. "The
brains have to come from somewhere," said Omega's Bohan. "Expertise
will always be required no matter what even as things become more automated. In
2020 you are still going to have to provide an overall service. If you want to
get an account, you have to know how to sell."
Darryl Hoover, chief technology officer for Directravel
Holdings, during The Beat Live opined that the travel management industry hasn't
evolved all that much in the past decade.
"We've had some new technology and the delivery of the
technology has changed a little bit, but at the end of the day it still comes
back to customer service," Hoover said. "The successful TMCs of the
future will be the ones that still value the relationship with customer, work
on that relationship and listen to the customer to deliver the products and
services they are asking for."
By doing so, and by proactively bringing to market "a
total solution" encompassing technology and content while addressing open
booking and issues related expense management and reporting, travel management
companies may regain the initiative, said Steven Mandelbaum, vice president of
information systems for The Advisory Board Co. Also speaking at The Beat Live,
he proclaimed that "the great TMC opportunity is upon us."
This report
originally appeared in the Nov. 11, 2013, edition of Business Travel News.