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TAINTED LOVE

It may have been St Valentine’s Day last week but some travel manager/travel management company relationships are in trouble. And that’s because relations between travel managers and their travellers are also in trouble.

“For some travellers it’s their personal sport to challenge the travel manager that they have found a cheaper fare online,” says Christian Elsaesser, Germany-based managing partner of the consultancy ExpenseBrain. But what was once a game is becoming a serious matter.

As the notes from a recent Buyer Knowledge Exchange conducted by the UK & Ireland’s Institute of Travel Management put it, “The buyers on the call noted that both themselves and their travel programes are being challenged, with blame often directed at the TMC for not being able to access the right fares. ‘I can get it cheaper’ conversations between travellers and buyers are coming back with a vengeance, and further question the need for a TMC.”

Elsaesser has not observed a similar outbreak of disharmony in the DACH (Germany, Austria and Switzerland) region, although he thinks it is coming. However, one global travel manager, also based in Germany and speaking on condition of anonymity, is experiencing in several markets the same challenges as the ITM buyers. Like them, he also attributes drastically increased traveller noise to the accelerating withdrawal by some airlines from EDIFACT channels that traditionally pipe fares into the global distribution systems used by TMCs.

As a result, where travellers once found cheaper fares than TMCs by comparing apples with oranges, for example with more restrictive cancellation conditions, now “travellers will more often be right in saying they found an apples-to-apples cheaper fare online,” the travel manager says.

Clive Wratten, CEO of the Business Travel Association, which represents many of the UK’s leading TMCs, half-agrees with this metaphor. “It is slightly different to previous times, and it is comparing apples with apples, but it’s comparing a Bramley with a Cox’s,” he says.

Wratten contends that the fare may now occasionally be cheaper outside the TMC (although he says some TMCs are introducing lowest-price guarantees), but those who book through a TMC receive much better service.

He switches to a different analogy. The same tin of beans, he points out, can cost more in different supermarkets. “If you were unfortunate enough to faint in a discount supermarket, they might just walk over you or push you to the side,” he says. “If you were to faint in a mid-range supermarket they would give you a chair. If you were to faint in an upmarket supermarket they give you a chair, call you an ambulance and call you when you get home to make sure you are okay. That’s the difference, which is hard to convey to a traveller.”

ITM head of programme Kerry Douglas agrees service is paramount. “Buyers still see a TMC as a valued partner,” she says. “They want it to be that guiding light that can guide and support them.” Surveying by ITM consistently identifies service provision, such as 24-hour assistance, as buyers’ number one requirement of TMCs.

Yet ITM buyers are also identifying TMCs’ inability to access a full range of fares as their number one challenge, and that critical shortcoming is indeed, as Wratten puts it, hard to convey to a traveller, however good service may be.

“Travellers’ expectation are that they should be able to access the most competitive fares through the TMC channel,” says Douglas. “One buyer shared that a traveller challenged them to put their name against ignoring a considerable saving that could have been achieved by booking direct.”

Buyers are looking for workarounds but few are proving satisfactory. One ITM member’s TMC is booking fares on airline websites and then feeding them into passive segments into the GDS, but, the ITM noted, “this creates more work and transaction fees.”

Another option is trying to explain the situation to travellers and other internal stakeholders. One buyer, Douglas says, created a two-page summary explaining why the airline distribution upheaval is making it hard to obtain lower fares but travellers must continue to book through the managed travel progamme anyway.

But, says Douglas, “Bringing that conversation back internally is a major challenge for our buyers. They are talking to stakeholders who do not understand the travel industry, and why should they? Some buyers are hesitant. They don’t necessarily want to draw attention.”

There is another, simpler solution. Both ITM and Wratten are seeing an uptick in TMC requests for proposal, fuelled in part, they believe, by distribution upheavals. “If TMCs want to stay relevant, they must modernise their distribution,” says the German travel manager. Some TMCs have done exactly that, he believes, so in certain markets clients can find a TMC which will deliver the full range of fares they expect.

The problem he adds, is that for a large multinational programme like his, he does not yet see a TMC offering both global coverage and modernised distribution. “The only thing you can do is switch your programme in three to five countries” where TMCs that have modernised can be found, he says.

Douglas has considerable sympathy for TMCs which have not yet found a way to source all air fares. “There are a number of partners involved in this situation as distribution strategies change and it’s not a quick fix that can be done without considerable investment,” she says. “Airlines are moving at different speeds and there are different interpretations, which makes it tricky for TMCs to invest in what is required to deliver that content to their buyers.”

The German travel manager believes buyers also have to take a hard look at their own behaviour. “In fairness to TMCs, the context is we still are not willing to pay the right price for the product,” he says. “Transaction fees are much lower than cost, so they must get 60-70 per cent of their revenue from other income streams. TMCs rely on GDS kickbacks to cover their costs. We are asking them to source the better fares from elsewhere but we are not willing to give them fair compensation.”

Perhaps surprisingly, Wratten does not fully support this argument. “Clearly if you are paying more money to a TMC and they can invest it that will help but I don’t think that is the simple solution,” he says. “TMCs have invested. I don’t think that’s what has hamstrung the development of technology. Those that have invested in their own tools to take content or in aggregators have invested massively but have been let down by airlines not delivering the content they promised or deciding to go after direct business.”

One particularly worrying development both Wratten and the German travel manager draw attention to is the availability of Ryanair content which has disappeared for many corporates since aggregator Travel Fusion stopped providing the low-cost carrier's content to TMCs. If airlines only sell direct in future, as some believe, there is little TMCs can do under any circumstances.

Wratten believes the only way ahead is more understanding and engagement from all sides. “TMCs are in transition,” he says. “Some are further ahead. All of them realise there is some pivoting to be done. I think most clients are satisified with their TMCs but would like to be more satisified and that is what they are aspiring to this year.

“We need to drill down to what the problems are. We are keen to work through this with buyers. We’re not hiding away from it. We want to get stuck in and make the difference,” says Wratten.