Coming full circle
Consolidation and the arrival of newcomers has dramatically changed the TMC landscape but haven’t we seen it all before, asks Gill Upton
Around 100 TMCs are operating in the UK in 2022, roughly the same as before Covid. The names may be different, as consolidation and new entrants have changed the line-up, but what a result! Plus ça change, plus c’est la même chose, as the French would say.
Take Two, Equinox and Coco+ have entered the fray while others have succumbed to takeovers, including Omega Busines Travel, Eton Travel Group, Reed and Mackay, Click Travel and Egencia.
Meanwhile CWT has emerged from Chapter 11 bankruptcy with new investors and money to spend and Agiito (non-core to parent Capita) remains up for grabs.
Barry Fleming, former Head of Marketing for Blue Cube Travel, believes history is repeating itself.
“Recent new entrants might be catching the buyers’ eye but let’s not forget that 20 years ago Egencia was the disruptive newbie on the block. Now it’s owned by the world’s largest TMC (American Express Global Business Travel).”
Clients looking to build new tech solutions caused some of the volatility as TMCs scooped up tech companies, including NexTravel, Shep, Troovo, Roadmap, Pana and Lola. The rapid growth of mobile-first tech solutions group TripActions says it all. “Where other companies use people to solve issues we use tech solutions,” says Ciara Govern, Chief Customer Officer.
Chris Thelen has made the decision that big isn’t necessarily beautiful and is effectively re-creating Chambers, his former small boutique TMC, as Take Two.
“I question whether corporates feel that their existing TMC knows them personally anymore or what they need as travel returns. Our reason for launching TakeTwo was because there is a clear gap in the market for a client-centric, independently-owned TMC who can deliver bespoke service to international SME clients where travel is a vital component of how their business operates.
“We have won business in recent months because clients felt that their incumbent TMC didn’t know them or seem to care about their needs. As an independently-owned business, we are also not shackled by VC-ownership or the mega TMC model of call centres or online chatbots.”
“I question whether corporates feel that their existing TMC knows them personally anymore or what they need as travel returns”
Priorities certainly changed for TMCs over the last 18 months, having to do more with less resources, so service levels suffered.
“Many TMCs have restructured and service may be delivered slightly differently to before the pandemic, so perhaps you no longer have a dedicated team,” says Clarity CEO Pat McDonagh.
Industry observers agree that 2022 will not see the end of M&E activity. BTA CEO Clive Wratten says: “There is a more volatile time to come I think. Size doesn’t really matter.”
ITM CEO Scott Davies agrees: “There‘s no reason to think that it won’t continue, organically or through acquisition.”
Adam Knights, ATPI Managing Director Europe and Middle East, advises clients to always ask TMCs about their ownership structure, “particularly if you’re about to sign a three-year contract”.
The recovery stage is the next acid test for TMCs. Do they have the right staffing levels to match client demand as corporate travel ramps up to coincide with the expected reopening of offices in the spring?
Volumes are increasing now that border restrictions are easing and approval levels relax, compounding the challenges of a reduced workforce, decimated talent pool, cash flow issues, selling-in new financial models and demand for more flexible working practices.
“Established TMCs will understand what size and shape they need to be and both parties need to look at what good looks like now,” says Steve Banks, CCO at Agiito. “It’s incumbent to have good communication and to know where the pinch points are.”
Julie Cope, Managing Director TakeTwo Travel Solutions, says too many corporates are reporting long wait times on the phone, slow turnaround of email requests and poor customer service in general.
She advises travel buyers to talk to their TMC about their service level agreement and address whether their TMC can still comply with the agreed terms.
Corporates are understandably nervous and need to continue to be patient when it comes to service levels, something that Carol Fergus, Director of Global Travel at Fidelity, believes will happen.
“Work with your TMC,” she advises. “Have a discussion, as it will depend on what was originally contracted. It will take a while for them to ramp up.”
“Our industry is navigating its way back to recovery, requiring a level of adaptability never experienced before”
Corporates have much to consider. Trip volume is low but the cost of each trip is higher while more advice is needed pre-trip regarding duty of care and sustainability to reassure travellers.
Clarity’s McDonagh says now, more than ever, TMCs must maintain high levels of service to instill confidence among their corporate clients. Technology is still crucial, he says, but it must be underpinned by the support of experienced and knowledgeable people.
“Our industry is navigating its way back to recovery, requiring a level of adaptability never experienced before,” he adds.
A different service provision may be needed and if it’s not delivered that frustration may turn into an RFP.
In ITM’s ‘Appetite to RFP’ survey, 21% of buyers said they intend to RFP for a TMC this year, which compares favourably with 36% in 2019, so it may be more a case of benchmarking than moving.
“Buyers can find themselves taking on a new service partner and it’s difficult. It’s going to be a tricky time,” says BTA’s Wratten. “Working together is key as we come out of this. Most TMCs are now in recruitment mode and they’ve got to stay ahead of the curve.”
Fred Stratford, CEO of Reed and Mackay, knows this more than most after his company was acquired by TripActions. His strategy is simple: “It’s vital to stay in touch with clients and engage with them through the process. Tell them what’s next and what the road map is.”
With this in mind, Reed and Mackay recently held a client event for 800 people to communicate their plans for 2022.
“Buyers can find themselves taking on a new service partner and it’s difficult. It’s going to be a tricky time”
The whole travel infrastructure is being re-built by TMCs, says Kevin Harrison, MD of Good Travel Management.
“More and more things are chargeable. We need to monetise duty of care solutions, sustainability and support in those areas, and projects to deliver improvements in travel processes that were previously worked through by account management that are now evolving into travel consultancy.”
TMCs are looking for different skillsets for account managers, broader than purely relationship management as they deal with HR, risk and finance departments.
Some are setting up new departments, such as Reed and Mackay’s Advisory Team.
“Clients no longer want just a booking service,” says CEO Stratford. “We are like a professional services-based company.”
In the meantime, buyers are getting a really good deal, says ATPI’s Knights.
“They’re taking up a lot of resource for the same fee,” he says.
Which brings us back to the thorny issue of unsustainable TMC pricing models and the question of whether fees must be increased, not just to reflect the new travel complexities but also to help TMCs cover the cost of an industry-wide talent shortage.
“Salary levels have already increased and we see them increasing further,” says Lynne Griffiths, CEO of Sirius Talent Solutions. “Financial models are being revisited.”
The Business Travel Magazine‘s 2022 TMC Guide and Directory is out now