With all four mega agencies—American Express, BCD Travel, Carlson Wagonlit Travel and HRG Worldwide—jockeying for a position in the global travel management consulting arena, industry observers are watching closely to see how each travel management company differentiates itself and how the competition will play out in a market populated with veteran independent consultants who specialize in business travel and boast 20 years or more of experience.
"As agencies start leveraging relationships and capabilities to support companies with a broader range of services, they're going to start to bump up against some major league competitors, like Accenture or IBM, who have been doing exactly this for a long time and for the first time the big agencies are going to start to deal with competitors who are even bigger than they are," said Tom Wilkinson, president of TRW Travel Consulting in Pennington, N.J. "That will truly be interesting to see if the agencies can create new value or whether they might ultimately start to get squeezed on that end of the service spectrum as well."
According to Hubert Joly, CEO of Carlson Wagonlit and a former executive at high-technology company McKinsey & Co., mega agencies may not feel much pressure from the likes of Accenture, IBM and McKinsey, because travel is so complex and the level of expertise required to understand it and be able optimize spend is astounding.
"Accenture, McKinsey, IBM—their consulting is going to be very broad," Joly said. "They are in many ways a model for how to establish a consulting practice, how to go to market and how to charge fees to clients. McKinsey and Accenture are clients of Carlson Wagonlit Travel, so we respect them tremendously, but in the area of travel, the depth of our expertise is much greater than any one of these firms."
How then, do consultants at travel management companies differ from independent consultants? "The major difference is that when I sit down with executives of our clients and talk about their travel program and things to put in place to capture savings, then we're able to deliver and follow through to results," Joly said. "I'm not saying independents don't do more, but we're consultants in action and we're able to drive results. It's one thing to identify the potential and drive the levers, it's another thing to drive it through."
This seemingly sudden mega TMCs consulting trend is not only by customer demand, but also by the need for additional revenue streams, given an environment of lower transaction costs, many noted. "The profit is not where it was when agencies had commission structures," said Carol Ann Salcito, president of Management Alternatives in Norwalk, Conn. "They need to make money, so as part of their service platform they're offering consulting services." Members of the TMC segment don't disagree. Mary Ellen George, general manager of BCD Travel Consulting, said, "The TMCs are finding that they can provide value and generate some alternate revenue streams, but truly unbundle the services from that low-cost transaction."
Of the megas, Carlson Wagonlit's is the veteran global consulting group, established in 1998 as an independent arm of the travel management company's client services organization. American Express in May at the Association of Corporate Travel Executives conference in Atlanta announced the creation of its Global Advisory Services unit
(BTN, May 15), followed by BCD Travel's June announcement of a global consulting practice
(BTN, June 19). HRG Worldwide in April acquired Princeton, N.J.-based Partnership Travel Consulting, led by Andrew Menkes, and will formally introduce Menkes as president of consulting for HRG North America at this week's National Business Travel Association conference in Chicago
(BTNonline, April 6).What initially drove the creation of CWT's consulting group, according to Nick Vournakis, vice president of CWT Solutions Group in the Americas, was a changing industry brought on by the switch from commissionable to net-net airline deals. "The basic question when a customer got a new contract was, 'What does it mean to me?' " Vournakis said. "The analysis was tailored to help our customers make informed financial decisions."
Eight years later, the industry is changing once again, as more travel buyers expand their programs to far-reaching European and Asia/Pacific regions, consequentially pushing their travel management companies to provide more value and global services. "The sourcing world has really evolved from a more regionalized perspective to one that is more global," according to Vournakis.
Independent travel management consultants also are extending their global reach. Caldwell Associates in Washington, D.C., last week joined forces with IF & Associates, led by Ian Flint in the United Kingdom. Management Alternatives last week also announced an extension of its multinational affiliation, Management Solutions International Group, by partnering with Jeff Eager and Ian Carew-Reid in Australia.
However, a strong global footprint is more of a requirement than a way to differentiate, so robust data and accessible technology seems to be the key for each travel management company to distinguish from the rest. "We offer a tool set called Program Optimization, that helps a customer manage their suppliers and travelers and the demand side of their business at the same time," CWT's Vournakis said. "This is really how we've evolved our offer over the last two years. We're arming buyers with a really clear picture of what's going on in the market and how they stand out and how they're performing with each of their suppliers. We're very well-positioned with resources on the ground in the local markets to help buyers."
American Express' Global Advisory Services clients can look forward to a technological focus across all markets, with a specific emphasis on meetings. "Because Amex is so mature, we're developing and bringing solutions to market for every segment of our business," said Global Advisory Services vice president Mike Streit. "These solutions have such great global applicability. We're just now coming out with a policy program for the middle market in the U.S., which is a good representation of the middle market. This isn't something that is highly labor-based, it's more template-based, and integrated with our client services organization. We've got an online meetings solution that we're bringing out, so there's a lot of foundation here that we're leveraging off of as we bring this organization together."
Streit said being integrated with American Express Business Travel helps Global Advisory Services effectively assist clients in implementing a travel program. "That takes us beyond a consulting firm," he said. "You get one consistent service level that helps you achieve your objectives."
BCD Travel's consulting group, helmed by George, also is focused on providing more strategic solutions for customers. "From a competitive standpoint, this is a direction we see some of our competitors taking, so we're leveraging the expertise that we've had," George said, adding that the group was formed from consulting practices established by TQ3 and WorldTravel several years ago. "This isn't something new that we decided to do today. We've been providing consulting programs for Pfizer, Kodak and Deloitte for years."
George said customers are responding to their data offerings through the consulting unit, as are independent consultants. "We're certainly a source for them. We have some that actually outsource to us today and we can see growing that," she said. "Some of the larger consulting firms use some of our services as well, and that's growing. We're looking at creative opportunities to create 'co-opetition,' to use one of Danny Hood's legacy terms," said George, melding the words cooperation and competition. "Consulting is going to be the meat behind providing strategic solutions, which we see as a huge value proposition."
HRG's Menkes said technological capabilities are one of two things that will differentiate HRG's service offering from the independent consulting offered through the former Partnership Travel Consulting. "What we are doing is applying a lot more specific technologies to our various consulting projects," he said. "These are technologies that Hogg Robinson Consulting in the U.K.—which has been around for half a decade—has had under their belt for some time, and we've now integrated that into our systems here in North America."
Menkes said the technology affords him the ability to work with HRG North America clients in a number of areas, such as benchmarking and best practices. "What we've picked up is a global expertise, which, by definition would not be present in a U.S.-only consulting company," he said, who is joined at HRG by former PTC consultants John Asselta and Barry Lemley. "We also have the addition of human resources based in Europe as well as the technical resources that are much more expansive than what PTC had on our own."