SURVIVE AND THRIVE
Mark Frary introduces the annual Buying Business Travel guide to the UK’s top travel management companies
2015 WAS A YEAR OF CONSOLIDATION. In 2014, economic optimism had returned to the UK and GDP grew by 2.9 per cent. Although this is in the low single digits, the UK was looking in reasonable shape compared to its global competitors, particularly those in Europe. In 2015, things were not looking quite so
good. GDP growth for the full year came in at 2.3 per cent – still not bad compared to other Western economies, but far from convincing. More worryingly, the growth in GDP came largely from the services sector. The hoped-for return to health of the production and construction sectors had not materialised. By the end of the year, clouds were begin- ning to gather on the horizon – a decline in growth in China and the slump in oil prices have cast a shadow around the world, and the UK is not immune from these factors. GDP and business travel are linked, but the question remains whether economic growth comes and business travel follows, or whether it is the flitting of road warriors across the face of the globe that inspires growth. In reality, it is probably some combination of the two. TMCs are always up for a challenge and
there has been an element of reinvention for some of those in our annual listing. For some this has meant consolidation and a number of names have disappeared from our ranking this year as TMCs try to re- engineer themselves for the new global reality, driven by a relentless buyer focus on low fees, as part of larger TMCs or as a UK cog in a bigger global machine.
62 BBT MAY/JUNE 2016
Changes in technology continue to drive much activity in the TMC sector, as more and more business travel is booked through online booking tools, and increasingly by business travellers themselves on the road using a smartphone app.
What is clear is that online booking is not the only answer. TMCs continue to thrive by focusing on high-touch personal service, with the interaction between client and agency very much a human one. Whatever type of TMC buyers want
to work in partnership with, there is a plethora of options open to them and we hope that this supplement helps companies understand that, somewhere out there, is the perfect fit.
OUR SNAPSHOT SURVEY Each year, we ask our surveyed TMCs for their views on the state of the market and the year ahead. Their aggregated answers are shown on page 64. TMCs are slightly less positive for 2016 than they were for 2015, although almost half of all of those surveyed expected growth of more than 10 per cent this year. When it comes to where this growth is going to originate, TMCs overwhelm- ingly expect it from new customers, with just a small proportion believing it will come from general growth in the business travel market. Almost every TMC that we surveyed
said winning new business was a priority. However, 87 per cent also said they were focused on improving their product and service offerings during the year. Perhaps
reflecting a better year than in recent times, the proportion of TMCs that said they were prioritising cost cuts fell by a third. Meetings and events continues to be an area in which TMCs are focusing their efforts to win more sales, with three out of five saying this was a priority for them; and among the other priorities highlighted by TMCs this year were investing in new technology and global expansion. We again asked our respondents on what fee basis they charged clients, and transaction fees remains the most preva- lent method. However, a growing proportion of TMC income is coming from consulting (4.7 per cent in 2015 against 1.7 per cent in 2014) and other sources of income (3.6 per cent in 2015 against 0.4 per cent in 2014). As has been the case for many years,
TMCs say one of their biggest challenges is recruiting skilled staff. Most students study- ing travel and tourism in the UK rarely hear about the opportunities in business travel and are taught about the ‘more exciting’ world of leisure. An increasing number of TMCs are establishing their own academies and training programmes to nurture new entrants to the market. The threat of clients and their business
travellers booking directly with suppliers is a fast-growing risk, according to our snapshot survey. The imposition of Luf- thansa’s Distribution Cost Charge (DCC) is an obvious driver of this fear but other sup- pliers are promoting the direct channel, too. TMCs have also expressed their concern over Brexit and continuing low margins in the sector.
BUYINGBUSINESSTRAVEL.COM
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