A striking statistic emerged when the UK-based Advantage Travel Partnership surveyed
its travel management company membership recently. Of the 74 per cent of TMCs
which have seen client numbers increase during 2023, “almost half of these new
business approaches are from companies that had previously organised business
trips in-house. This is a theme we are seeing consistently,” the partnership
reported in its quarterly Global Business Travel Review, published in September.
Advantage is not the only organisation witnessing this trend. American Express Global Business Travel
says 30 per cent of its small and medium enterprise clients signed in the three
months to 30 June were previously unmanaged. It is worth noting that Amex GBT
defines SME as clients with a travel spend of up to US$30 million. Likewise, some
unmanaged clients signed by Advantage members have spend as high as £2 million,
says Advantage global business travel director Guy Snelgar.
While it may be surprising that even relatively large spenders had come
this far without previously managing their travel, an assortment of trends have
aligned to prod them belatedly into the arms of TMCs, according to Advantage,
Amex GBT and Lufthansa City Center, which also focuses on the SME market. Here
are six key reasons unmanaged companies have made that change.
Lessons learned from Covid
“The complexity of travel during those more disruptive times certainly
was a big driver,” says Snelgar. During the pandemic, “companies booking their
own travel became a can of worms because it was as much about dealing with that
disruption as about logging on to a website and booking a flight. Cancellations,
changes, refunds – navigating yourself through all of that process certainly
drove a number of companies to say ‘We need professional help. The managing
director’s PA who books everyone’s travel can’t cope any more’.”
Employee shortages
The managing director’s PA may be overwhelmed – or they may no longer be
there at all. “In the past these new clients had secretaries whose job it was
to book flights and hotels, but many of those employees are gone, so now they
come to us and ask ‘Can you help?’” says Lufthansa City Center head of
corporate travel Stefan Pagel. “Travellers now have to book themselves, so we
offer them an online booking tool, which is very easy to use.”
The quest for efficiency
This was another, less obvious, consequence of Covid, according to
Snelgar. “A lot of businesses said:
‘Blank sheet of paper’ – we’re doing things differently now. Let’s take the time
to sort out some of those processes that have been a pain for many years’,” he
says.
In some cases, businesses are taking the opportunity to rethink not just
their travel but also their expense management all in one go. “Someone is having to
manually process those expense claims, allocate them to the relevant cost
centre and reconcile credit card statements,” Snelgar says. “Alternatively, a TMC
can give you an invoice at the end of the month for one sum for all of your
travel without your having done any work at all, in a statement with every trip
broken down by cost centre, department code, reason for travel or whatever
information you’ve chosen, all reconciled and squared off in one place.”
He adds: “At the same time you know every traveller is not only being tracked from
a duty of care point of view but any changes they make will automatically be
updated.”
Sustainability demands
“We’re seeing many queries about sustainability reporting, and diversity,
equity and inclusion metrics as well,” says Rachel Tonge, Amex GBT vice-president
of SME client management for Europe, the Middle East and Africa.
Some SMEs are dialling into travel sustainability because they want to. “Smaller
businesses take sustainability very seriously,” says Tonge. “When you think
about businesses that are started by younger, Gen-Z individuals, that’s at the
core of what they do.”
Others are doing it because they have to. “Sustainability has been a
topic for big companies for years but, due to new laws, smaller and medium-sized
companies now also need to report their carbon footprint,” says Pagel. “It’s
another reason companies are coming to LCC and asking for help. No one knows
how to report their carbon footprint. There’s no sustainability person within
their business.”
Snelgar considers sustainability one of the most influential factors of
all for converting unmanaged accounts. The smallest companies may not even be required
legally to report their carbon emissions. Yet, he says, they find themselves needing
to start tracking emissions anyway, when bidding for contracts from larger customers
that are obliged to report on the carbon footprint of their supply chain.
Working from home
Advantage no longer has a head office in London. “We have members all
over the country and now we can recruit people all over the country to liaise
with them, whereas previously they had to be able to commute to Old Street,”
says Snelgar.
Advantage’s experience is replicated across many businesses, adds Snelgar,
and “with this increasingly disparate and virtual workforce, it’s incredibly
important for businesses to keep track of them,” he says. He also notes that
bringing together dispersed employees for regular meetings is pushing up use of
business travel for internal purposes.
Saving money
In times gone by, managing travel was overwhelmingly about controlling
costs. But is that still a compelling reason to hire a TMC, given that smaller companies
with simple travel needs can stay frugal
by ordering employees to book low-cost carriers and budget hotels? “When we did
the survey, cost saving or better value was the lowest response in terms of why
these businesses are looking to work with a TMC,” says Snelgar.
Yet Pagel argues that price is increasingly a factor for SMEs, especially
in an increasingly fragmented distribution landscape. And even “when the
difference in price is not great, there can be big differences for the terms
and conditions,” he says.
Tonge also considers cost control important. “We’re seeing a lot of
macroeconomic pressures on pricing,” she says. “We’re seeing companies wanting
to have a managed travel programme to achieve savings. Working with a TMC of a
certain scale can provide access to better hotel rates and air fares.”