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Meet the top TMCs


Mark Frary introduces the annual Buying Business Travel guide to the UK’s leading travel management companies


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016 WAS AN EVENTFUL YEAR. On June 23, we saw the British people speak their minds and vote to leave the EU after being a member for 43 years. The result


came as a surprise to many, not least Prime Minister David Cameron who resigned, leaving the door to Number 10 open to someone else to bring about Brexit. The pound quickly plummeted against


most of the major currencies, meaning business travel suddenly became a lot more expensive for British companies. Business travel depends on economic growth. Travel spend with the leading 50 TMCs grew year-on-year, despite weaker GDP figures. In 2016, the UK economy grew by just 2 per cent, despite a healthy fourth quarter when GDP grew by 0.7 per cent, confounding those who predicted a slump caused by the Brexit vote. This compares to the 2.2 per cent in 2015 and 2.9 per cent in 2014. On the other side of the Atlantic, another surprise result – the election of Donald Trump as 45th President of the US – also had implications for business travel. Trump’s election marked the return of protectionism, never a good omen in the business travel sector, and the promise of stricter entry requirements for the US. The ranking looks different in many


ways this year thanks to a considerable amount of M&A activity. Corporate Travel Management (number


14 in the 2016 list), snapped up Redfern Travel (number 9) in a deal worth £40-50 million. Therefore, it climbs to number seven. The company already purchased Chambers Travel Management in 2014. The merger of Portman and Clarity by


owners Mawasem, creating a half billion pound TMC juggernaut, only saw the merged Portman Clarity rise one place in the rankings to number nine this year. Wings Travel Management has jumped to number 20, up from 45th in


70 BBT May/June 2017


2016 following its acquisition of former number 27, the fellow oil and gas specialist Grosvenor Travel Management. Gray Dawes (29th in the 2016 list) acquired TMG UK (36th), as well as Cambridge Business Travel, as it continued its acquisitive streak – it bought Travel Focus in 2015. The acquisitions means that Gray Dawes now stands at 21. The compilation of the leading 50


TMCs is always interesting for other trends that emerge. Evident this year is a focus among many TMCs on developing their own internal systems and processes to deliver better service to clients. On the technology front, more and


more are rolling out data analysis and mobile apps. There is also a growing number of TMCs who are offering rate- monitoring tools. What is clear is that TMCs are keen to


be dynamic and responsive to clients and they are looking forward to a good 2017.


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 in the charts on p73. TMCs are more positive for 2017 than


they were for 2016. Last year, one-in-five expected growth of 5 per cent or less; this year that figure has dropped to one- in-nine. Half of TMCs expect turnover growth of more than 10 per cent in 2017. Most TMCs expect this growth to come


from new customers, with just a small proportion feeling it will result from general growth in the business travel market. Many are hoping to sell extra products and services to existing clients. Almost every TMC we surveyed said


that winning new business was a priority. However, three-quarters of those asked also said they were focused on improving their product and service offerings during the year. A quarter of the TMCs in the survey said they were concentrating on


cutting costs, perhaps reflecting the more uncertain business environment. Meetings and events continues to be


an area in which TMCs are focusing their efforts to win more sales, with more than half of TMCs interested in tapping into this income stream in the coming year. In a year in which there has been


much M&A activity in the TMC sector, just over a quarter of those companies in the ranking said that acquisition was a business priority for them in 2017. We again asked our respondents on


what fee basis they charged clients. Every TMC in our survey charges some of its clients on a transaction fee basis with three-quarters of those surveyed being remunerated by management fees as well. Two out of five TMCs are making


money from consultancy fees while a quarter of those surveyed say they are getting income from other sources, such as gainshare. We ask our TMCs what their biggest concerns are for the year ahead. Last year, what kept TMC bosses awake at night was the potential challenge posed by direct booking with suppliers. Now just 10 per cent are concerned about this, suggesting that worries over the introduction of Lufthansa’s DCC have not had as big an effect as expected. TMCs continue to be concerned about recruiting skilled staff and, once again, forward-thinking TMCs have started to do something about it: Hillgate Travel’s CareerWay and Norad Travel’s Academy initiatives, for example. Many TMCs feel threatened by the


low margins earned in the sector, as in previous years. This is also compounded by a fear that their rivals will seek to undercut them. One in ten TMCs were concerned about


the possibility of Brexit in last year’s survey but now that Brexit is actually happening, fewer TMCs believe it will be a challenge.◆


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