Why now is the perfect moment for review

You know those controversial moments where a political situation or a rogue Executive move takes over the media for a few days? The majority get wrapped up in the debate and worry of the situation and the astute minority look for what might be hidden beneath or where an opportunity may lie.  It feels like that may be happening on repeat at the moment in almost every country and every sector. Covid-19 and its impact on Business Travel has become the longest Groundhog Day ever, meanwhile change continues and some of it goes unnoticed.

At FESTIVE ROAD, we have been heavily involved in supporting Travel Managers through their return to travel planning.  It has been a tough slog for all those involved, and we’ve done our best to simplify the mass of effort required.  In the back of my mind I’ve been thinking how much Covid has taken over as the number one travel management priority, allowing other changes in the industry to pass on by. Or potentially high value opportunities get pushed to the side due to lack of time available.

In 2019 we supported a number of organisations through a travel strategy review process and it never ceases to amaze me how much vision, change and energy you can drive from just a 2-day strategy session. I love seeing the light bulbs illuminating above people’s heads, those moments where the Travel Manager/Management Team audibly say “wow” and “this all makes sense now”, otherwise known as the “aha moments”.  We purposefully review current/future internal state and then guide the clients through an external review process and it’s at this point we share our view of the 4 different Travel Management strategies each company could deploy.  So, now we have a number of companies off plotting their own path into the future we figured it was time to share the travel management strategy models we see…

The Four Travel Management Strategies – ©Festive Road International Limited 2020

But why share these now? Well, quite simply, Travel Management and therefore Travel Management Companies (TMCs) have come a long way in the past 5 years making these options possible.  I see these as the core drivers of change:

Micro services: whether it’s the improvement in third party data providers, the proliferation of re-shopping technologies or new entrant services that tackle niche customer needs such as recruit/guest travel, Travel Managers can now patch together a quilt of niche services in an integrated way

API capability: outside of travel, the use of API’s to connect different technologies is just the norm. Travel has been playing catch up with the likes of NDC piping in new airline content or OTAs pushing their hotel content into OBT’s, all enabled by these new API “pipes”

Supplier strategies: no longer does any travel supplier, such as an airline or hotel want to show up one dimensionally on a screen, they expect control over their brand at the point of shopping/booking, just like any retail product of the same value (think handbags, watches anything the equivalent value of an airline seat)

Consumer demand: Business Travellers are first and foremost consumers. They don’t expect to have one set of slick experiences outside of their company and then a set of clunky service experiences at work.  I believe this is now a given, but many companies are yet to catch up prioritising the employee (maybe a silver lining of Covid will be a huge focus on the “consumer”)

Organisational demand: the need for control and visibility still exist and in general expectations of what a Managed Service looks like are at an all-time high.  Simply managing the booking and servicing of a flight, hotel, car or train booking is no longer enough.  Frankly, it was never enough.

Four Travel Management Strategies

In the past 5 years I believe some TMCs have done a good job of reinventing their core offering. As this reinvention has occurred so has the way TMCs think of themselves and position their offerings.  Two years ago, we issued a challenge called the TMC Identity Crisis and it has been great to see TMCs sit up and realise they need to be able to differentiate to avoid the race to the bottom on price. Now, in 2020, some TMCs are fighting to survive, others are doubling down on their long-term investments and every variant in-between.  So where does this leave the travel buyer?

I believe the most important question they need to answer is “In this changed world, what TMC strategy should we deploy?”

So how to decide which of the 4 TMC Strategies to deploy? This table should give you a good start:

Strategy
Description
Upside
Downside
Closed shop

The TMC acts as a conduit for all Travel Management services.

The appointed TMC controls the tools and services your company uses. This is the traditional and most prolific model in play today. Whether it’s data provision, re-shopping tools or visa providers the TMC either provides this service via proprietary tools or select 3rd party tools (e.g. an OBT via a reseller agreement)

Less supplier management resource required

Lack of buyer control

Tools and services limited to those the TMC wishes to support

Open shop

The TMC acts as a conduit and agent for all Travel Management services.

The TMC contract additional services on your behalf. They’re open to whoever you want to include and will bring on new providers as long as information security and quality needs are met.

Less supplier management resource required

Access to a broader range of services

Speed of implementation

Ability to negotiate with add-on services

Limited choice in the market

Department store

The TMC is one or more “departments” in a buyer defined construct

The TMC is appointed for a reduced set of services (e.g. booking/servicing only) the remainder are then contracted directly, e.g. booking tool, data services, re-shopping etc

Buyer control

Tailored solution to exactly meet buyer needs

More supplier management resources required

TMCs may not be open to this model reducing the choice

BYO

Build Your Own

The majority of services are contracted directly and a TMC is only used to manage the “long tail”

Ultimate in buyer control

Potential for favourable commercial terms

Greater speed of implementation

High level of management resource & IT resources required

TMCs may not be open to this “long tail” model thus reducing the choice of providers

Is now the right time to be thinking about your Travel Management strategy and which model would best suit your organisation? Is now the time to have these discussions?

We would suggest the answer is a big YES!. It’s a bit like questioning whether you need a new job; a good look around may just confirm you’re exactly where you should be.  A strategy review may demonstrate the need for change, but it may also confirm you’re exactly where you should be (we have absolutely seen and supported both).

Either way you’ll be able to confidently share your position with your travellers, executives, stakeholders and suppliers, you will be able to proudly exist above the noise and gain further respect for your Travel Management strategy and you.

Don’t let your today be another Groundhog Day!

Written by Caroline Strachan, FESTIVE ROAD, UK