Peter Thomson
Travel Leaders Franchise Group this month announced new tools for its associate agencies, including a return on investment calculator and account review templates. Travel Leaders Franchise Group, according to the company, "can trace its beginnings to 1984 as the franchise system 'Ask Mr. Foster Travel,' which itself was North America's first travel agency chain, established in 1888." Now it is part of Travel Leaders Group, created in 2008 when Tzell Travel group merged with Travel Acquisitions Group. Other units in the group are Travel Leaders Corporate, Travel Leaders Leisure Group and Tzell. Travel Leaders Franchise Group associate agencies focus on corporate accounts that range in annual travel volume from a few hundred thousand dollars to about $10 million. According to CEO Roger Block, "Most of our agencies operate under a fee structure--account maintenance and transaction fees--and on top of that we do retain the overrides." The company this year has claimed nearly $90 million in new corporate business (without divulging net sales accounting for any lost business), most of which it attributed directly to new corporate travel programs and tools launched last year. The new account review templates, which total around 270, according to vice president Peter Thomson, reflect a recognition "that procurement and finance have a much larger position in clients' decision-making process. It is no longer about the transaction; it is about the value you deliver." After announcing the new corporate travel account management tools, Block and Thomson fielded questions from reporters. Excerpts of Thomson's comments follow.
Is technology driving the expansion of the business travel market?
Technology obviously plays a significant part in it. It goes without saying that the larger the account size, the more influence technology probably has. We have many accounts up to $1 million that really are not interested in a self-booking tool. They still value the interaction with the expert staff that our associates have onboard. Every client is very different. We are trying to teach our agencies to be very collaborative and engage a prospective client. Some of the smaller accounts may not need as much technology, but we have associates with accounts up near $10 million; there you have to have self-booking tools and mid-office technology, and you have to be able to report and do analyses. That is where the relationship with Travel Leaders Corporate really comes into play because they are in a slightly larger market space than us, so they have all that technology and we are able to leverage their relationships.
All of this puts an enormous burden on your ability to educate and train your agents and help them make the transition, yes?
Over the past 12 months, we have conducted over 20 training sessions, some virtually and some in person. We record all the webinars so they are available to our associates. We repeat the in-person training on an ongoing basis. It is a large learning curve for our associates, but by winning the amount of business we mentioned, they are learning quickly. It is all about embracing the strategy and understanding the key differentiators from the megas, from the online travel agencies, from the independents and regional players, and getting out there in front of prospective clients and articulating the value proposition, which changes them from being a travel agency to a travel management company.
For each account, how do you calculate ROI?
You can look at ROI in many ways. We look at it as the investment a client has in doing business with one of our associates. It is either the transaction fees, management fees or advisory fees they pay one of our associates. And then we look at that in relation to all the cost savings and cost avoidance that we have driven for them. Many of the smaller accounts that we deal with have been doing it on their own. They say, "Why would I pay you a fee when I can do it online myself?" Now we can articulate that, yes, you invest with us through transaction fees, etc., but we can deliver significant return on that investment through consultation, developing key performance indicators and service-level agreements, and all the things that go into a well-managed travel program.
In what other ways do you target the small business part of the mix?
Because of the leverage we have as an organization, there are many small business programs out there--air, car, hotel--that our associates can pass on to the small accounts. For those smaller accounts that may not really have any leverage, we can bring savings, cost avoidance in a way that they have probably never seen in the past. You bring on ten $100,000 pieces of air business, that $1 million for our associates is extremely valuable when you add in the incremental revenues that they can get on the back end [from overrides and rebates].
Regarding your 2011 business travel outlook, what are some of your expectations?
One of the big observations that we came away with was in regard to hotels. Pegasus came out with a stat recently that only 25 percent of hotels are booked through global distribution systems. That could be a disturbing number, but we look at it as a huge opportunity. We are working with our associates to really have strong initiatives around managing hotel spend. We are going to make that a huge emphasis as we move into 2011. That was the biggest 'aha' that we saw there.