Mike Premo
Mike Premo recently joined ARC’s executive team as vice president of sales and customer relations, charged with managing relationships with travel agents, corporate travel departments, airlines and others. He joined ARC from Navigant International, where he served as a senior vice president after Navigant acquired Sato Travel in 2001. Premo had run Sato as president and CEO from 1990 to 1999, after starting his travel industry career with Northwest Airlines, followed by Gelco Travel. Speaking this week with Management.travel, Premo said, "When I joined Sato, a lot of people said 'You're going where?' But it turned out to be a hidden jewel. I got some of the same kinds of reactions when people heard I was coming here, but I see many of the same kinds of qualities. When you look under the hood, the work that has been done at ARC is remarkable." A handful of Premo's big-picture viewpoints follow.
How has travel management evolved?
I started in corporate travel around 1983, after five years of airline background, and the big things I notice include a real emphasis on information, with the "e-izing" of the travel universe being the most fundamental change, and probably self-service being the second. The initial e-izing led to the ascent of the global distribution systems. Deregulation happened and fares proliferated, so the only way people could make sense of the fares available in the market was through the GDSs. That, as much as anything else, led to the explosion of automation into the travel community through travel agencies. That trend for putting data into centralized databases that were e-accessible became the ultimate enabler for self-service, and I don't see anything that will stand in the way of continued emphasis on automation and self-service.
How have the roles of travel management companies (TMCs) changed?
I always try to start from the customer perspective on this, and when you look at certainly the corporate travel arena, it's hard for them to imagine life without an intermediary, whether the corporate form of that intermediary is a legacy TMC or an online travel agency having a comprehensive travel management offering. So, I think the role is safe and solid. It's a competitive environment out there, and everyone fights like dogs and cats to win and keep business. I don't pretend to know who the winners and losers will be.
Everyone talks about consolidation and how prevalent it has been, but the travel management business is still fragmented. Have we seen anything yet?
We certainly seem to be boiling down to a couple of general categories: those who generally focus on larger clients and those who are generally servicing mid-market and other customers. I'm not sure what the differentiator is, but the growth in the midsize corporate travel market shows that [midsize agencies] seem to be having a lot of traction and success. We certainly have seen consolidation among the legacy TMCs, but the challenges of making money in that business don't seem to have deterred a lot of people from coming into that market from the online side, so it's very dynamic, highly competitive and probably still a buyer's market in the sense that customers have a lot of choices and derive great value from that.
How is government travel different?
What the government has to deal with includes scale. No one is as big, so when someone is writing a travel technology reporting tool, for example, the amount of information you have to deal with is really, extraordinarily large. That often introduces a challenge to technology infrastructures. When the government wants a picture of its travel spend, it's in a multi-GDS, multi-TMC, multi-back office environment. So, I'm sympathetic to the challenge, because it's difficult. The pursuit of an end-to-end solution is extremely challenging. There are a lot of legacy financial systems that are very difficult and expensive to change out, and yet require some kind of interface work to get information in and out. One size, in government, unfortunately doesn't fit all, but one size of regulations fits all. So everyone has to deal with the same entitlements, the same authorization systems. In some aspects, it seems to be simple, but in execution it's quite complicated.
What's your view of the traveler experience these days?
We can expect it will continue to be stormy seas. The need for most of the industry suppliers to operate at high levels of utilization, whether airlines or hotels or whatever, is a fundamental business imperative. No one can afford to keep supplies and inventory on hand, whether it be rooms or cars or airline seats. We certainly had a lull in that post-9/11 [was] a period of more capacity than utilization in almost all those industries. But I think we got a little bit spoiled about general accessibility of those services. This summer will be an eye-opener for a lot of people because it will be hard to get a seat and somewhat expensive when you do. Hopefully, that also will result in people acknowledging when [quality service] does happen, whether it's a warm greeting at a hotel desk or a flight attendant who takes extra time. It will take those kind of things to keep a civil travel industry going.