TMCs Expand Consulting Services
The urge among travel management companies—both online and traditional—to be viewed as strategic partners of corporate clients rather than tactical service providers became even more evident with Travelocity Business' recent announcement that it has established a travel management consulting division. Whether driven by increasing industry uncertainty, the complexities associated with a rapidly globalizing travel economy or the influence of procurement practices in the travel management space, the need for travel managers to prove and add strategic value has become paramount and the cultural shift among agencies palpable.
"As we grow and concentrate on larger-market clients, there was a need for us to be more strategic and provide some of the value-added services that they could purchase from some of the larger TMCs," said DeAnne Dale, a 20-year industry veteran and travel management consultant who recently was appointed vice president of strategic account management and consulting services at Travelocity Business.
Though the services available through the agency's yield-management tool will be available to all T-Biz account managers, consulting services—such as program sourcing, procurement and negotiations—are considered value-added.
"Clients want more strategic account management and they don't want to outsource all of those things," she said. "If they want us to provide our hotel or car rental sourcing, that would be a value-added service. The pricing will really be based on the scope of the work. It will depend on what the client wants and can be very flexible."
Though online-originating agencies may be making their first official forays into management consulting, traditional agencies acclimated to the evolution in service requirements over the past several years. Carlson Wagonlit Travel projects consulting, program management and business processing outsourcing services by 2007 will account for 10 percent to 15 percent of total revenue, a striking increase from the 4 percent to 5 percent of revenue those activities generated in 2004. Atlanta-based WorldTravel BTI, which operates its consulting services through separate groups with distinct subject-matter expertise, is restructuring and consolidating the division.
"We're looking to put it all under one umbrella" said Thomas Lacny, senior vice president of strategic relationships at WorldTravel BTI. "Clients are saying, 'I want to take this whole umbrella of capabilities, I want to be able to look at them all and lay out a plan.' Every single client and every single prospect says, 'I'm being held to be more accountable in my program, so I need to validate that my capabilities are best-in-class, and if they're not, I need to demonstrate that I'm on a road to get them to be.' "
While traditional agencies compete on price and technology competitive against their online-originating counterparts, it might seem that time has given them a slight edge in this leg of the race to the middle. "In many cases with such services, for the ITMCs, it's creating the middle that doesn't exist. From our perspective, it's just continuing to expand our services and enhance that which already exists," WTBTI's Lacny said.
That evolution, said Tom Wilkinson, senior vice president of Princeton, N.J.-based Partnership Travel Consulting and former global director of agency services for Travelocity, represents a logical extension of services for all online-originating agencies. "There's no secret in the industry that all the ITMCs want to be fully competitive with the full range of services offered by travel management companies. Their account management resources are quite well-developed and are starting to bump into these customers who expect that some of these services will be offered on a standard menu," he said. "It shows that the ITMCs are developing into full-service travel agencies, but no more than what the TMCs are doing. It's another step, but I do believe there's still a difference, specifically in the area of experience. Traditionals have been managing these accounts for a generation, and the new entrants are doing some complex work and growing fast."
Wilkinson said large agencies for years have offered consultative services with mixed results. "They have fundamental limitations in that they're owned by vendors of travel management services that can impact the purchase of services."
As TMCs continue to move more aggressively into the consulting game, corporate clients seeking those services may be forced to question those limitations. While T-Biz's Dale noted that Travelocity consultants won't assist in fulfillment-provider selection and said there remain certain things best left to independent, third-party consultants, travel managers still may question the objectivity of agency-owned advisory practices.
"The questions buyers have to ask are: How neutral is the advice? How competitor-deep or market-rich is the knowledge base? How will conflicts of interest be resolved in the buyer's favor?" said Will Tate, vice president of Norwalk, Conn.-based consultancy Management Alternatives. "Companies are looking for help from preferred suppliers as to best practices, and the lessons learned across clients can provide some added value, but travel managers should remember that they'll get a deep, vertical look into one supplier's viewpoint. They'll get a tunnel, rather than a landscape. All of these TMCs are trying to find their place in the new market. They see there's clearly a need for some counsel in the marketplace and this is another way they can try to build that bridge."