As if the market wasn’t tough enough for business travel agents and travel management companies prior to the recession, it is now even tougher. Members of the Guild of Travel Management Companies have seen nearly a 30% year-on-year reduction in business travel budgets for the first quarter of this year.
This looks set to continue and is likely to have a major impact on how companies in the sector cope. GTMC chairman Maurice Veronique said: “Some serious decisions are being made on how to survive the downturn. Yet it is very hard to be innovative in a diminishing market. I believe we have not seen the bottom and it may well be another six to nine months before we see an upturn.”
Staff retention and travel policy compliance have been the recent buzz words in this sector, while comparing a firm’s performance with past years has gone out of the window since business prospects have turned sour.
Advantage director of business travel Norman Gage said: “The main thing we have changed is our own mindset and this is something we are trying to get others to do. What everyone should be focusing on is how we are doing against new expectations.”
One noticeable change is that no one in the sector is counting overtime anymore, as everyone tries to put in the hours and step up their game. Bath Travel managing director Adam White said: “My workload seems to have ballooned with all the revenue enhancing and cost-saving projects on the go – all to try to make some money and keep staff in jobs.”
One wish has come true for business travel agents and TMCs – company travel managers are being given far more support from senior management to make tougher travel policies and rein in expenses.
Now travel policies are compulsory rather than optional, and there is a renewed appetite to explore new ways to save money such as on meetings and events, as well as hotel programmes. Nigel Turner, director of public sector affairs at Carlson Wagonlit Travel, said: “In the current economic climate the travel policy is one of the winners.”
TMCs are quickly realising their role is not to persuade companies to travel more, but to make their clients travel more efficiently. Turner said: “We are keen to work with customers on a remuneration model that rewards us for reducing their travel budget.”
Many in the sector believe it is still possible for agents to uncover additional savings for their clients through driving compliance to existing travel programmes, tackling new areas such as meetings and events, or by changing travellers’ buying habits.
The focus is now on encouraging more advance bookings, getting clients to accept greater restrictions on tickets and travelling off-peak. Turner explained: “It’s no different from all the things we do when we buy tickets for personal use these days.”
Time to offer up the ‘bread and water’
Innovation in a downturn is not just confined to TMCs. Other areas of the business travel arena are also rolling out innovations to attract or retain business.
Hotel group Best Western is offering conference organisers ‘message-focused menu options’ to help companies ensure they deliver their event objectives. Their new ‘bread and water’ option is a good example.
This idea came from the US, where the chief executive of a major company arranged a meeting for his management team in a San Francisco restaurant, and fed them bread and water after reporting poor financial results – this marked a turning point in the company’s fortunes.
James Parkinson, corporate marketing manager for Best Western said: “We are not advocating that anyone should actually feed their staff on bread and water for a whole meeting or conference, but a meal of that sort certainly grabs people’s attention.”
Serviced apartments are also holding up well – perhaps not in rates, but certainly in volume – despite the downturn as business travellers turn away from hotels. Select Apartments marketing manager Adrian England said: “We have seen more than a 4% increase in the volume of business year on year, which must be attributable to companies switching their spending from over-priced hotels.”
Looking for the green shoots
Many TMCs are now looking beyond the recession. Many realise it is unwise to lay off good staff in this phase of the economic cycle, since they will be incredibly hard to replace when the downturn is over.
Senior management remember the last recession when talent was laid off, which then never returned to the sector – a strategy that stripped the industry of good people.
When better times return, those who have cut their pool of expertise and human capital will find it more difficult to sustain or boost service levels. Gage said: “It takes many years to train someone to be a competent consultant with an array of skills and knowledge.”
At the annual GTMC conference, Tony Pilcher of Pilcher Associates talked about the need to hug your customer in the downturn. In response, Gage said: “There is also a Chinese proverb that says: ‘Keep your friends close and your enemies closer,’ right now TMCs clients’ also double up as their enemies.”
Money-saving tips
- Ask clients to pre-plan trips and book well in advance to take advantage of airline discounts and rooms in preferred hotels where availability is an issue.
- For an overnight trip, suggest clients stay in a limited-service rather than full-service hotel and suggest turning a two-day trip into a one-day meeting.
- Be proactive, not reactive, in helping your client manage their travel costs by understanding their business more.
- Search for smarter and more cost-effective ways to keep business travellers on the road. Flag up where they don’t use preferred suppliers.
- Ensure clients use any unused airline tickets.
Leading the way: Innovators in the downturn
Don’t fail to communicate: Carlson Wagonlit Travel
Internal communications are vital at the moment to help ease staff concerns about the future, whether you are a big or small agency with one or multiple offices.
Carlson Wagonlit Travel has recently completed a series of regional roadshows and is sending regular messages to all staff about the current situation, as well as how CWT is tackling the challenges it faces. Turner said: “We need to make sure our team feel confident in our ability to thrive, even in difficult times.”
Diversify your offering: The Appointment Group
Maurice Veronique, chief executive of the Appointment Group said: “Those companies that offer a diverse portfolio of travel products are more likely to weather the downturn.”
This is what the Appointment Group has been doing, by offering music tours as well as business travel. It has seen the music part of its business increase by 60% in the first quarter versus last year. Veronique said: “Anyone with more than one core business is more likely to come through this downturn in better shape.”
Value your staff: FCm Travel Solutions
If you want to retain talent in the downturn, it is essential to invest heavily in good staff. FCm is touting its training academy, investing £25,000 in GTMC course places. The company runs the ‘FCm Global Ball’ where teams and individuals qualify to attend the prestigious event held in Hawaii last year if targets are met.
FCm Travel Solutions head of sales Graeme Milne said: “We have a very strong staff culture of accountability, ownership and recognition. This inspires people to succeed and develop a long-term career with us.”
FCm has also restructured its 33 business travel centres nationwide into 94 small team-based businesses, each with a maximum of seven consultants. Milne said: “Small team structure creates motivation, high service delivery and inspires greater personal success.
The future of business travel
Travel Weekly got in touch with a number of futurologists and business travel experts to get their views on how the corporate travel environment will evolve in the years ahead:
- Prepare for a leaner travel diet: It is all about trading down – premium economy instead of business; conferences at a local, less smart hotel; the five-star hotel giving way to a three-star. The glamour of business travel could evaporate quicker than people think.
- Expect more scrutiny: As a result of factors such as better technology and reporting, increasingly we will see all business costs being scrutinised. Unless a TMC can add value and go the extra mile, the client will feel they can do it themselves and save money in the process.
- Corporate social responsibility: Concerns over the environment and CSR will drill down into all elements of the procurement process. With more data and greater compliancy, even small and medium-sized enterprises will get in on the act.
- Finding new income streams: As the sector continues to become more streamlined and cost conscious, TMCs will have to identify new sources of revenue and use their resources, experience and relationships to add value.
- Technology is power: Databases, GDSs, search engines, mobile internet, location-based services – expect more. Peter Deane, vice-president of sales for technology firm Handy Group, said: “The question you need to ask is are you embracing them in a way which will enable you to provide added value to the business traveller?”
- It’s all about time: The future is about handing back to employees the most valuable commodity in today’s business environment: time. Potentially the train can get you there quicker while you work remotely or sit in on a video conference instead of boarding that transatlantic flight.