Travel management companies face a tall order in staying current and preparing for what’s next. They must build or integrate lots of new technologies, consider new economic models and satisfy corporate buyers, program managers and industry suppliers. Mary Ellen George of Tramada Systems has some ideas on how they can accomplish all that.
If recent changes in the corporate travel landscape are any indication, our industry is in for several more dynamic and exciting years. New technologies are disrupting how nearly everything is handled, from ordering food in the airport to predicting flight delays to sourcing hotels.
IATA’s New Distribution Capability and One Order have finally begun to gain traction among suppliers and corporate travel managers. Artificial intelligence and machine learning are as commonplace as chatbots. Predictive analytics now are a “must have” instead of a “nice to have.” Every day we hear of more products and services powered by increasingly adaptive and intelligent technology. Then there are new offerings like blockchain that could disrupt contract management, payments and even the storage of personal records and sensitive information.
New developments in corporate travel — while in many cases requiring initial investment — soon will drive significant costs out of the ecosystem permanently. In this coming reality, if you’re a travel agency or TMC and you are not adapting, it’s clear you’re going to have difficulty competing.
Here’s what you need to do to prepare:
Invest in tech. It has been said that fortune favors the bold. Investing in technology in the way I’m suggesting is certainly bold. I’m talking about a full-scale retooling of the pipes of your agency or TMC – yes, a somewhat daunting prospect, but one that delivers increased productivity and improved margins once embraced. This would offer a solid foundation to connect with the new kids on the block (i.e., integrating with different APIs without the pain of writing new patches for each new individual integration). It also would deliver one central source of real-time data. Such a comprehensive data repository allows agents/advisors to more efficiently and accurately complete tasks required today. It also gives them access to the information they’ll need to offer more advisory-type services required of agencies and TMCs in the future (more on that below).
Invest in your people. Trade association ASTA in August 2018 changed its name to the American Society of Travel Advisors. It used to be the American Society of Travel Agents. The change was based on the profession’s expanding role. “They have become trusted advisors – akin to financial agents and CPAs,” according to ASTA. If travel agencies, TMCs and their employees want to remain relevant, they should take heed and embrace this outlook. To provide services above and beyond simply fielding questions, troubleshooting issues and performing routine “blocking and tackling” to get corporate travelers where they need to go, agencies and TMCs will need to lift their game and invest in enhanced training for their employees. Account managers and agents alike will need a more holistic understanding of their clients’ managed travel programs. They’ll need to offer proactive (dare I say predictive?) solutions to drive savings and improve satisfaction for programs at every level. There is already an established and growing need for these types of advisory services, and if agencies and TMCs don’t make this investment in people development, others will step in to fill that void — whether suppliers, third-party consultants, technology providers or a combination of these. If that happens, I can foresee clients asking, “Why do I need to pay a TMC?”
Adapt or die. You may have heard this analogy used before, but because it is so valid I felt it appropriate to use here: At one time, I (and likely you) used Microsoft for everything – Outlook for email, Explorer for browsing, Word for document drafting, Excel for finances … the list goes on. Today, I utilize not only Microsoft but also 10 to 15 different specialized technologies for tasks throughout the workday and in my personal life: Google Mail, Slack, Adobe Acrobat, Chrome, Facebook, Instagram and many others.
Like Microsoft, the TMC at one point was really the only game in town. Along with the GDS, it served as the central hub through which everything travel flowed – airline tickets, hotel bookings, car rentals, basically everything in the ecosystem. Today, how many different aspects of corporate travel programs are handled by specialized technology providers?
The danger of not adapting is in losing that central position. If it becomes easier to directly connect these specialized technologies, TMCs will be left out of the picture.
Will corporate travel go the way of the grocery? Agencies and TMCs have faced threats to their positions before. The introduction of online travel agencies was supposed to herald the “death of travel agencies.” It didn’t happen, but OTAs certainly fragmented the ecosystem and left margins razor thin. Will the next industry disruption again squeeze margins, this time to the point where it doesn’t make economic sense to continue operating?
As a possible foreshadowing of what could be in store for TMCs, let’s take another industry known for thin margins — the grocery business. In recent years, the grocery sector has been squeezed on multiple fronts via competition from online retailers like Amazon, low-cost suppliers like Costco and new alternative providers like home meal kit delivery services. The result has been a wave of mergers and acquisitions, some successful, some attempted but abandoned and some in progress. Most were initiated by traditional competitors, but not all, notably the Amazon acquisition of Whole Foods.
Will the corporate travel sector go the way of the grocery? My guess is yes. With growing pressure on all fronts, agencies and TMCs have limited choices: adapt by investing in technology and people to remain relevant, acquire new entrants (like American Express Global Business Travel did with Mezi) or be acquired themselves. Choose your path now and wisely!
• Mary Ellen George On NDC And Why We Need To Focus On The Plumbing
• Mary Ellen George On Making Sense Of The Travel Technology Space
• John Harvey On A Next-Generation TMC Model
• Pedro Ceron On Creating The 21st Century Managed Travel Platform
• Mark Hollyhead On Capturing More Customer Value In Business Travel
• TMCs Get To Work On NDC