Using a travel management company won’t be for everyone, but it could bring more benefits than you realise. Marisa Cannon reports.
James was due to travel to Manchester for a conference that he attends every year. He began searching for two nights’ accommodation, comparing prices through an online travel agency, but was called away before he could make a booking. He went back to the site a few days later to find the prices had shot up by almost 20 per cent. Panicked, he booked the cheapest room he could find before the prices rose any higher.
Sound familiar? The past few years have seen online travel agencies come under fire for malpractice in the form of advertising false discounts, bending search results and adjusting prices based on user history. Yet another minefield for customers that already feel slighted by the seemingly growing list of hidden charges associated with travel.
Enter the travel management company (TMC). Tony McGetrick, director of sales for the UK and Ireland at BCD Travel, says: “We think that some of the websites that remember your IP address will cleverly increase the prices to pressure you into a quick purchase, where, in fact, the price hasn’t increased at all. We’ve found for the systems that we use, the prices don’t increase unless the properties or airlines become fully booked.”
Keeping costs down is a priority for any business, but especially small to medium-sized operations. Some companies may not feel comfortable outsourcing a task that can easily be done in-house, while travellers often resent being restricted to certain airlines or hotels, or believe they can save money by booking their own trips. Still, Jason Geall, vice-president and general manager for the UK at American Express Global Business Travel, explains that the costs can often end up appearing elsewhere.
“The time that employees take to research and book their own travel is not productive,” he says. “They spend an hour shopping online, comparing different prices and so on, which then means there are capital costs to think about.”
There’s also the possibility that a travel programme will come with what employees perceive as “unnecessary” add-ons, and will feel compelled to find a better deal on their own. Paul East, chief operating officer for the UK, Europe and Americas at Wings Travel Management, suggests this could be a false economy. “They think they are getting a better deal but in reality the booking may have change or cancellation fees, or may not include added-value extras that can be negotiated as part of the travel policy with preferred airlines and hotels,” he says.
It’s in these negotiations that TMCs can show their worth, by leveraging the relationships they have built up with airlines and hotels to get SMEs special fares and upgrades that they might not find elsewhere. McGetrick says that BCD Travel encourages suppliers to tailor programmes for groups of SME clients that wouldn’t otherwise benefit from special rates because their individual spend would be too low.
For small companies whose business depends on travel, this is good news. But as is the nature of SMEs, revenue will ebb and flow and it’s important that companies know the termination clauses of their management contract before signing up. Some TMCs might expect a commitment beyond one year, so if this is too demanding, it’s better to pursue a contract where both parties can get out if they need to.
A TMC’s data collection services could prove particularly useful. Stuart Birkin, director of account management at Corporate Travel Management (CTM), says: “If your company sticks to its travel policy guidelines for all bookings, your TMC can benchmark and deep-dive into data to analyse your spend and identify future productivity opportunities and savings.”
Many of these savings come about when the system identifies travel policy non-compliance. Julian Mills, commercial head for global corporate business at ATPI, says: “This is an issue when travellers are used to doing their own thing.” This is much trickier to do when a TMC can record maverick spend, and report it back. Convincing employees to keep to the policy is a case of explaining the logic behind it and encouraging them with reward programmes and incentives, he adds.
McGetrick says TMCs can also help to identify tax relief that SMEs could be eligible for. “There are significant benefits to streamlining the billing process so that all of a company’s costs come to us,” he says. “This way, we can recover any extra VAT they might be paying. This is quite common with SMEs, and there’s often a gap where they can recover tax on a number of items.”
In the past year, AMEX Global Business Travel has seen the number of small businesses signing up to its services increase fivefold. Geall says it’s difficult to pinpoint the main driver behind this but the recent surge in global terrorism seems to be a key motivator.
“There’s no question that security is now the most important concern for companies of any size,” he says. “We recently surveyed this and, in the past year, safety has moved from number two to number one as the most important consideration for companies investing in managed travel programmes.”
The value of a TMC is never more apparent than when faced with a major event such as a terror attack, kidnapping or natural disaster. But it’s not just these risks that need accounting for, Birkin says. “All too often, companies overlook the less obvious but often more frequent incidents such as car accidents and medical emergencies. On top of that, consider the stress to your travelling employees and lack of productivity caused by flight delays and lost baggage.” In such instances, a TMC will take control, acting as a point of contact and rearranging bookings where necessary.
East says that duty of care plays an even larger role for Wings, a specialist in the oil and gas sector, clients for which are often required to travel to high-risk markets such as Angola and Nigeria. The company’s global emergency centre, Wings24, is open around the clock, handling last-minute changes as well as emergencies.
While security ranks high for most companies, small businesses are perhaps more willing to take a risk on disruptors such as Airbnb and Uber, which may cut costs but who lack the accountability and quality checks often required by larger companies. Tapping into this, American Express Global Business Travel, Carlson Wagonlit Travel and BCD Travel have partnered with Airbnb for Business in the past year, a self-service portal for corporate bookings (see our Airbnb feature from the September issue).
McGetrick says: “We’ve found that SMEs will take advantage of an Airbnb property if the price and location are right.” BCD Travel is also working with Airbnb to nominate vetted properties for its own booking systems.
What do SMEs get if they sign up? Travel management companies have caught on to the demand for tailored solutions, with BCD Travel offering a customisable landing page for small businesses through which employees can search for company-approved options. This is connected to a platform called TripSource, which stores itineraries and contact details, and provides travel alerts and reminders on corporate policy.
For those that want an entirely bespoke programme, ATPI has introduced a “no commitment travel management service” where clients can pick and choose the services that they need for a single transaction fee. Its On the Go app also lets travellers store their airline and hotel loyalty details and check live currency.
AMEX’s Expert Care technology can locate employees by tracing their last credit card transaction. There’s also a tool that can anticipate a delay caused by, say, a strike or inclement weather, and automatically amend an itinerary and any affected bookings without the need for human intervention.
Last year, Wings launched its GoData app, with interactive country maps, details of air and hotel departures and arrivals, plus an incident-free index that measures how well each supplier is performing.
Launched in 2013, CTM’s SMART technology this year won the Guild of Travel Management Companies’ and Travelport’s Innovation Award. Along with data capture and booking functions, the tool can help travellers to arrange parking at the airport and alert them of opportunities to share taxis or rental cars. It also offers a world map of country-to-country risk levels.
A TMC can offer security, savings and transparency, but it’s more often than not the cost that puts companies off. Still, if your business is driven by travel, it’s worth considering. n
PROS AND CONS OF USING A TMC
- Special rates and upgrades
- Tracks travellers during incidents and delays
- Can identify policy non-compliance
- Could find potential savings
- Detailed reporting
- Saves employees time
- Transaction fees
- Limited freedom to book when and what you want
- Paying for unnecessary services
- Could miss out on time-sensitive deals or offers
- May be tied into a long contract
- Might be pushed toward unsuitable suppliers