The size of a company's spend does not necessarily reflect its approach to managing travel. Although there are many generalities relating to policy, program configuration and supplier deals, each company may have a different set of needs and goals, and therefore a unique approach to working with a travel management company, online booking tool or both.
"We find that a company's culture and leadership environment are more of a factor than company size in driving needs and preferences," said Gant Travel Management president Patrick Linnihan.
Picking The TMC
It's not that the biggest agencies disregard smaller-spending accounts, but small and midsize agencies that fry few large fish are happy to focus on smaller ponds.
"If you go with a mega [agency], and you are a smaller or midsize company, you do tend to get lost in the shuffle," said Sean Parham, director of procurement and sourcing at Corinthian Colleges, a post-secondary education company with about $6 million in annual air spending (and another few million related to meetings). "I just don't feel like in the past I have gotten the attention from the larger ones. And there's also all the bureaucracy. It's nice to be noticed by your TMC and not just pushed aside."
But for TMCs, small doesn't always mean easy business. For starters, many SMEs do not have a dedicated travel management professional, which might mean TMCs have a tougher sell. When working instead with CFOs, controllers, HR personnel, administrators or assistants, the agency has to decipher for those contacts how a travel program works and derives value.
"In a lot of those cases, they are going from a completely unmanaged program into a managed program, either through the launch of an online tool or an expense tool—or both together," said Balboa Travel Management executive vice president for corporate travel solutions John Cruse. "You have to continually show the value, because a lot of times people get hung up on the fees and not necessarily recognizing what is coming along with it."
Casto Travel COO and president Marc Casto views the SME segment as "much more challenging" than others. "Like in any company and in any industry, one of the factors we consider on the sales side is: Who is the decision-maker?" he said. "Among SMEs, the decision-maker is manyfold, and no one person holds the relationship or can execute or contradict the relationship between the TMC and the company. It becomes a necessity to play to the needs of multiple people at the same time."
Structuring A Program
Because they are less likely to directly employ a full-time travel professional and therefore more likely to outsource functions to the TMC, SME accounts may need consultation and some hand-holding. A key early challenge is determining what's being spent on travel and where.
"First and foremost is to identify what the challenge is," Casto said, adding that's usually a combination of making the travel program more efficient, controlling costs and abiding by internal audit procedures.
He frequently notices that at SME clients, "travel is only lightly managed and the integration into back-office reporting systems is nascent, at best. They also are less likely to have consolidation of their travel spend within one or even a couple of TMCs. It's often an 'anything goes' type of environment."
At Christopherson Business Travel, "smaller clients start with a bit less consultative account management services and as they grow we layer on more service bundles for them," said CEO Mike Cameron. Those can relate to travel pattern analysis, program compliance and online booking adoption, savings opportunities with suppliers and duty-of-care considerations.
In terms of setup, most SMEs aren't provided a dedicated TMC account manager. At Adelman Travel, "almost all" smaller clients are serviced by a shared corporate travel consultant team, each of which never exceeds eight people, according to president and COO Steve Cline. "All accounts regardless of size have unique objectives" and therefore require custom configurations and management support structures, he explained.
Support requirements may differ based on the account's number of travelers, the nature of its travel, its travel policies and its industry sector, according to Gant's Linnihan.
"For example, a company of 500 employees with $800,000 in air spend, whose employees travel as technicians in the oil and gas industry, with detailed travel policy and supplier needs, might have support needs equal to those of a company with $10 million in air spend," he said. "Thus, small spend doesn't necessarily mean small support requirements. Moreover, a president of an SME firm expects service equal to that provided to a large firm; having a high number of SME accounts requires a TMC to have a system capable of supporting a large number of executive travelers."
Therefore, travel management company customer service is key for securing more modest programs, just as it is for larger ones, and important for retaining them. By their nature, small accounts can more easily switch providers when service lags.
"Smaller guys get a lot of the same access, a lot of the same tools and benefits," said Balboa's Cruse. "It's tough to segregate because everybody just expects everything."
Corinthian Colleges' Parham said that travel management companies "learned years ago that what sets them apart from everybody else is customer service and technology. Especially on customer service, if they can't deliver I'll go to someone else."
The Booking Tool
Arrangements for an SME account's online booking tool also don't seem as dependent on a program size as much as company culture and goals. While many—perhaps most—SMEs use an online tool through one of their travel management company's reseller agreements rather than a direct contract, the same is also true at some larger companies.
At Balboa, Cruse estimated that about 90 percent of SME clients using an online booking tool do so through the agency's reseller deals. "But we have seen people in that space and that size do direct agreements, especially with Concur," he noted.
The decision often relates to Concur's expense reporting product.
Answering the question about direct versus reseller deals, Casto said it's "wholly a function of the client's (irrespective of size) focus on automated expense management. If their focus in this is high, then they likely will seek a direct relationship. If not, it is very likely that it will be serviced under the agency reseller agreement."
That's the case at Corinthian Colleges, which uses Concur through its agency reseller deal, but is looking toward a direct deal. Parham said the organization first went the reseller route as a means to receive TMC support for online booking customer service—and also because it's been using a homegrown Excel-based expense system. But now, Corinthian is considering Concur's expense system. "When that takes place, and our contract through the TMC comes to an end, we will look at the idea of having [Concur] host the entire thing," Parham said. He noted that without any policy mandates, online booking adoption at Corinthian is around 80 percent.
For SMEs using booking tools furnished through reseller deals, the TMC typically handles site administration and support. "The TMC also sets the price a corporation would pay, either directly for the OBT or bundled into some other fee such as online booking and fulfillment," according to Yannis Karmis, vice president of Sabre Global Corporate Solutions, which includes the GetThere corporate booking tool. "When contracting for an OBT through their TMC, the TMC provides client support for the tool. TMCs have different models for this, including allocating headcount or providing a pool of available hours. OBTs have similar support models where we provide ongoing support based on hours, dedicated headcount or monthly maintenance fees."
Karmis noted that smaller firms "typically have more modest requirements" [than larger ones], noting a lesser need for multilanguage capabilities, "multiple subsites" or "specific workflow and business rule requirements." As such, implementation is easier. But support, Karmis added, varies by number of travelers, worldwide office locations, country-specific customization and number of agencies used: "In short, the more variable the requirements—often a proxy for size —the greater the support that is needed."
Alternatives
About a decade ago, online-originating agencies Orbitz for Business, Expedia Corporate Travel and Travelocity Business began making inroads with smaller-spending accounts (and eventually some very big ones), and brought new competition to traditional TMCs—both megas and the more modest-size service providers. Those three players still exist (with the latter two under a different brand name and different ownership, respectively), but now there is a new breed of systems available to those interested in a "travel management-lite" tool.
Rocketrip, for example, challenges travelers to beat what it determines to be fair market rates and uses emailed itineraries from travelers to enable clients to keep tabs on spending and employee whereabouts. Similarly, TripScanner monitors off-channel bookings to determine potential policy violations, provides reports and uses online travel search engines, including tripBam, to look for prices cheaper than what initially had been booked. It alerts travelers and travel arrangers when better deals are found. TripScanner recently struck a deal with Hickory Global Partners, a network of agencies that serves many smaller accounts.
TripScanner founder and CEO Ethan Laub has stressed that his product complements an organization's use of a TMC, but in cases in which a TMC is not used, TripScanner will pursue direct business. "A lot of the small businesses that I speak to, they might have a dozen or two dozen travelers, and at this point they're just not ready to take this leap and adopt a full managed travel program," Laub said. "This is kind of a gateway."
This report originally appeared in the April 14, 2014 edition of Business Travel News.