November 28, 2022
 

Back to basics

After an initial surge in demand, SMEs are regaining control of their travel budgets and approval processes in a changed world, says Gill Upton

As restrictions began to lift in January it was no surprise to witness a rush back to travel for those SMEs keen to replenish their business pipelines.

Six months on, however, and that race to see customers and colleagues again, with scant regard to travel policy, pre-approvals and budget caps, has faltered as the cost-of-living crisis has taken hold. 

Flight prices have risen by 20% and hotels by nearer 25%, reinforcing the message that travel needs tighter management if travellers are to continue with face-to-face meetings.

“They’re saying, ‘Crikey, we’ve already spent this year’s budget’; we’re getting a bit of a reset to put back in tighter approvals,” says Adam Knights, Regional Managing Director Europe and Middle East for ATPI. “The historic practices are coming back in.” 

Julie Oliver, CEO Europe at Reed & Mackay, says current high demand and reduced availability “is driving a renewed cost focus”.

Flexible travel policies are disappearing and TMCs are being asked to provide their traditional panoply of services and products, from account management and data analytics to uncover non-compliant travellers and savings opportunities, to revising policies and approval processes, mitigating travel risk, setting budget caps and switching on online booking tools as confidence grows.  

“The initial spike post pandemic has settled down a little now and we’re receiving more RFIs,“ says Leanne Fowler, Agiito Director of Account Management. She says the most common requests the TMC has received over the last two months have been to increase the cap rates and to look at tightening the approval process. 

Numbers up

Donna Joines, General Manager of SME specialist Corporate Traveller UK, says the world of travel has changed “and so have some of the concerns and challenges that clients face, from increased costs, less choice and more emphasis on duty of care resonating with many”. 

But despite the concerns, she says the TMC is back to 100% of pre-Covid travel “with our clients travelling more than ever”.

Nick Pratt, Head of Sales at Blue Cube Travel, also reports brisk SME business.

“We’re still seeing that initial surge continuing and we’re up 15-20% in sales volume compared with levels in 2019.”

Amex GBT’s earnings report for Q2 2022 saw SME transaction recovery in June reach 84% of 2019 levels, while overall transactions reached 76%.

“We’re saying to our clients that if they want to keep the same people on their TMC team, we need to put prices up, otherwise we will have to lose people”

Buyers are keen to buy more TMC services in order to gain control of their spend. 

Agiito’s Fowler cites taxis, visas, car hire and car parking. “They want to consolidate it all into the OBT to have greater visibility of the booking,” she says. 

New buyers are entering the fray from the unmanaged space, keen to capture leakage, manage disruption and mitigate risk. ”They want to understand their profile and spend and want to jump on an online system if anything goes wrong so they can track their travellers,” says Agiito’s Fowler.

Paul Tilstone, Partner Festive Road, says the consultancy is being approached by SMEs who have grown to a point where they need to get a handle on their spend.

“We’re seeing SMEs with high rates of growth coming to us and wanting us to help them reset their strategy and help them think about their purpose. Their DNA may have changed and they need to take a step back and establish where does face-to-face bring real value to their business,” he says.

Cost control

The priority now is to go back to basics. “The travel eco system we’ve returned to looks very different,” says ITM CEO Scott Davies. “A lot of buyers are talking about methodologies for calculating savings.”

His concern is that rising costs may throttle the number of trips and suppress travel. “Increasingly conversations are taking place on the ROI of a meeting; it’s a tricky balance, particularly as the SME has less help and more responsibilities.”

SME travellers rely heavily on their TMC partners, which is a massive opportunity for TMCs to simplify the complex, but they are also having to deal with their own realities: near-empty coffers, recruitment challenges and more complex, labour-intensive and time-intensive travel bookings.

“Much more handholding is required now,” says ITM’s Davies. 

“Increasingly conversations are taking place on the ROI of a meeting: it’s a tricky balance, particularly as the SME has less help and more responsibilities”

Clive Wratten, CEO of BTA, admits TMC service is “still not where we want it to be” but insists: “It’s a short to mid-term issue.”

Many employees haven’t travelled for three years and need to re-familiarise themselves with how to use online booking tools and to be shown best practice again.

ATPI’s Knights says the TMC is spending time re-implementing tools and re-training new customer admin staff who joined since the pandemic.

“We have treated it like an introduction rather than implementation of the services and tech we offer,” adds Nicola Cox, Director Midas Travel. 

Agiito’s Fowler agrees. “We’re doing a lot of education around OBTs so travellers understand lead times and the optimum time to travel.” 

There are other changes in the relationship with customers, says Reed & Mackay’s Oliver. “We are realising that we need to look at different ways of engaging with customers. We look for multiple touchpoints within the companies, whether in HR, sustainability, compliance etc.”

Open to alternatives   

As this new world of travel unfurls, travellers’ priorities are many and varied: to become conversant with new practices, confirm ROI for trips to secure approval from more senior staff, and adopt different ways of travelling to absorb higher costs.

It may mean combining trips, which ticks the sustainability box, avoiding peak times of travel, advance booking and being open to using alternative airlines, alternative routes, non-preferred and lower category hotels, less convenient hotel locations and optimising reward programmes. 

Higher air fares are difficult to circumvent as the lowest booking classes are almost all closed out months ahead.

However, one positive is that airlines are quicker to complete refunds and the voucher nonsense has ended.

Midas Travel’s Cox says travellers are open to these alternatives as they try to bypass changing airline schedules, cancellations and reduced availability. Julie Oliver says these are the only ways “to get the greatest value right now”.

Pratt at Blue Cube believes travellers are booking closer to departure date over uncertainty whether there is another Omnicron variant around the corner, and foresees pushback on advance booking.

Supply chain issues is at the root of the disruption. At the time of going to press, there had been strikes on TFL, strikes with EasyJet Spain, changes to Avanti’s routes and BA’s suspension of short-haul flights. It’s no surprise to learn that the current travel experience isn’t what it should be.

“Buyers are reporting that typical trips are difficult and they don’t want to repeat that experience,” says ITM’s Davies.

The annual SAP Concur Global Business Travel Study on SMEs reinforces this picture, citing delays, cancellations, concerns over travelling to certain parts of the world, health and safety concerns and heightened levels of stress.

“SME employees want to travel and they’re willing to move employer if their schedule doesn’t improve,” says Ami Taylor, Senior Director Global Product Strategy at Concur.

The data also suggests that more travel is falling on fewer shoulders and that travel will become a talent retention issue.

“Buyers are reporting that typical trips are difficult and they don’t want to repeat that experience” 

“Employees are really seeing travel as an optional rather than mandatory part of their role. First and foremost they need to feel safe,” adds Taylor.

The SAP Concur survey also found SMEs are more worried about inflation and rising prices than their bigger counterparts.

“SMEs are operating with less margin for error whereas larger enterprises have more room for manoeuvre,” explains Taylor. 

Steady does it

The outlook is one of cautious optimism. “Any employer will be pretty unpopular to push through a travel ban, not now at least,” says Blue Cube’s Pratt. 

He cites one C-suite recruitment client who adopted video-conferencing during the pandemic unlikely to revert back, yet private equity clients who will only do business face-to-face and, overall, a pent-up demand for travel. 

Another spectre on the horizon is a rise in transaction fees. “TMCs are doing so much more work for buyers now,” argues BTA Wratten by way of justification.  

Adds ATPI’s Knights: “We’re saying to our clients that if they want to keep the same people on their TMC team, we need to put prices up, otherwise we will have to lose people.” These client conversations will accelerate at the year end when staff pay reviews take place.

Ever the pragmatist and voice of reason, ITM’s Davies advises SMEs to think twice about switching suppliers if it’s about operational issues as he believes it is a temporary situation.

“Reach out to your peers for sense checking and benchmarking,” he says.

“Cost is going to be an issue for everybody,” concludes Wratten. “What you need is knowledge and, ultimately, that’s what TMCs deliver.”