MYSTERY BUYER
Missing a trick
Why aren’t TMCs addressing business travel needs in the SME market?
OING THE ROUNDS OF THE BUSINESS TRAVEL SHOW back in February, I was struck by the number of TMCs boasting about their SME-friendly credentials. These days, it seems, just about everybody in the travel management sector is jumping on the SME bandwagon. Except they’re not. None of those I spoke to appeared to have any idea what constitutes a “small- to medium- sized enterprise”. I didn’t keep an exact record, but the general idea seemed to be that an SME is a company that spends in a range of between £2 million and £5 million a year on travel. To be fair, one company I spoke to said they’d be interested in an SME that spent as little as £500,000 a year, but that was – as far as I can remember – the bottom end of the scale, and I’m not sure they’d got their sums right. Without being dismissive, this doesn’t bother me, but it does trouble my other half, who runs a (very) small business and is plainly jealous of the rates that I can command through my TMC. According to the European
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Commission, a “small” business is one that employs fewer than 50 people and has a turnover below Ð10 million; a “medium-sized” business employs fewer than 250 people and has a turnover of less than Ð50 million. Frankly, if you turnover Ð50 million (the EU’s upper limit) and you’re spending Ð5 million a year on travel (the upper level that I gleaned from the show), you’d better file for bankruptcy. According to the Federation of Small Businesses, SMEs account for 99.9 per
52 BBT May/June 2018
cent of all private sector companies in the UK. “Small” companies represent 99.3 per cent of the total. Sure, the vast majority of them don’t have any travel requirement, let alone a travel budget – I’m guessing that plumbers, sheep farmers, cheese- makers and the like (not that I’m an expert in any of those fields) don’t have to travel far, or regularly. However, there will be a few who do have to travel. Four times a year to New York, maybe, Paris every other month, Newcastle to London and back every fortnight. It’s never going to add up to £500,000 a year, let alone £5 million. I can see where the TMCs are coming from. If you look at their client retention rates, none of them is going to admit to anything below 90 per cent. Big corporate accounts don’t move often, if at all.
PICKING UP CRUMBS Every so often, a mega-corporate might switch from one mega-TMC to another, but that’s the exception rather than the rule. The next tier down appears to be only marginally more volatile – TMCs have become adept at identifying the flaws (if any) in their service offering and promptly putting things right. All of which leaves TMCs – and particularly the smaller ones – scrabbling to pick up the crumbs. My contention is that there aren’t too many £5 million crumbs to be picked up. In fact, there aren’t that many £500,000 crumbs, but it would seem there are an awful lot of £50,000, or even £20,000, crumbs.
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Surely there’s a case here for some sort of collaboration between TMCs if not between corporates? My other half needs to go to New York on a given date, for example. How many other “small” businessmen and women have to take the same flight? Is there not some way that they could tap into a central database of discounted corporate fares? Could they adjust their travel plans to achieve the lowest logical fare that meets their requirements? The simple answer is, obviously, that they could. It’s the business travel equivalent of charter flights – we’ve got a plane, and it’s going from Stansted to Santorini next Tuesday – all aboard! Translate that into the business- critical environment. The airlines wouldn’t lose any money and would be guaranteed bums on seats. The “occasional” business traveller gets a preferential rate (and may even pay for it, in the same way that personally we happily pay for railcards). TMCs aren’t even beginning to
address the SME market. A minimum spend of £500,000 a year – let alone £2 million to £5 million a year – is aiming way too high, and I suspect they know it. Combine forces and come up with a collaborative deal, whereby smaller clients can be married with another’s smaller clients, and you’ve got a business proposition.
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