Business travel: How TMCs can thrive in the downturn

Business travel: How TMCs can thrive in the downturn

Travel management companies are hoping that their role will still be secure as clients look to them to cut costs and maximise value.

Hogg Robinson Group UK managing director Ian Windsor said: “Our role will become more important and accurate reporting is crucial for travel buyers so they can make valued judgements and decisions.”

Issues surrounding travel policies in the downturn is still causing headaches for businesses and TMCs. Travel buyers prefer to ask TMCs to reduce their fees rather than push through an internal travel policy that potentially could save them more money – since external costs can be easier, and less controversial to control than internal ones.

Guild of Travel Management Companies chief executive Philip Carlisle said: “To make that travel policy work there needs to be a great deal of education as well as enforcement, to make sure the business traveller sticks to it.”

“There is sometimes a clash between individuals’ likes, as well as beliefs, and the policy the company wants to have in place. Loyalty cards and adherence to favourite brands can be the enemy of a travel policy.”

Yet with the recession biting hard, more businesses are forcing their executives to toe the company line.

As Eurostar marketing director for the UK Emma Harris explained: “When corporate policy is combined with an individual’s consciousness of spend – which is now thrifty – it is incredibly powerful, because people are not slipping through the net.”

However, travel suppliers, especially airlines and hotels, have made sure they have built individual loyalty rather than corporate loyalty, since it is easier to focus on human beings, who swap careers as well as mix leisure with business.

Advantage director of business travel Norman Gage said: “It will be a brave financial director or purchasing manager who puts a block on executives travelling, where they earn the most air miles.”

Certainly the business travel sector is in a new, very dynamic phase where senses and business acumen are heightened. Virgin Atlantic general manager for UK sales Paul Wait said: “There has been a seismic shift in the market everyone in this environment is now highly competitive.”

Harris added: “Even when the economy recovers it is going to be very difficult for people to justify going back to the days when people spent huge amounts on luxurious hotels.”

Last month’s Business Travel Show at London’s Earl’s Court was reflective of the business travel industry as a whole. The marketing spend was up, there was a greater presence from the Middle Eastern carriers and people were working harder for business.

The event manager of the show David Chapple said: “There’s a degree of uncertainty in the market, people were cutting out the frills on the stands. The fact is you have to keep innovating and be hungry for business.”

Trends: Business travel in the downturn

Smarter travel: Be more selective about travel – day trips instead of overnights, travelling on cheaper shoulder days, one executive going instead of two, non-direct flights, using non-flag carriers and booking more restricted fares.

Hubbing: Expect business travellers to have more meetings at airport hubs. Accor Hotels’ chief operating officer Michael Flaxman said: “We will see clusters of small meetings around Charles De Gaulle, Amsterdam and Heathrow that are contributing via video-link to large international conferences.”

Discounting: Don’t panic. Amadeus Hospitality Group managing director Antoine Medawar said: “Remember what happened after the September 11 attacks? The trade panicked, and began discounting and giving away inventory to third parties.” Good yield management and booking tools could be the answer.

Technology: Skype conference calls, video and teleconferencing will be used more frequently. Free or low-cost high-speed internet on the road is crucial. Don’t expect executives to be using business centres as much – everything is on the BlackBerry, laptop or a virtual network.

Who will thrive during the recession?

  • Travel management companies that help clients drill down on costs and encourage them to plan travel in advance in order to get the best deals.

  • Corporations that force employees to adhere to travel policies and buy from preferred suppliers. If individual loyalty cards are aligned with corporate loyalty then there is likely to be less conflict.

  • International brands. In an economic downturn, corporations turn to tried and tested sources.

  • Budget, mid-market and independent operators that provide a consistent service are increasing their share of the business travel market.

  • TMCs with good agents who can arrange complex itineraries. Advantage director of business travel Norman Gage said: “Don’t be fooled into treating business travel as a commodity. Service is the key word and this word has a multitude of interpretations.”

  • Everything from car hire firms to serviced apartments are allowing business travellers to cut costs by offering value services.


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