Agile and less burdened with process and procrastination, small and medium-sized businesses spearheaded the return of business travel – that was the consensus of TMCs and suppliers as the industry emerged from the pandemic.
Today, as we move from crisis to crisis, are SMB attitudes towards travel changing in the face of disruption, TMC staff shortages and rising costs? The jury is out.
“High demand, reduced availability and price increases in all walks of life are driving a new concentration of costs for SMBs,” says Max Hensser, director of global customer experience at Reed & Mackay, TMC Customers small and medium size.
Some are reducing their trips during the summer months to avoid disruption, Hensser adds, but “many more” are turning to TMC for help “to navigate the current disruption and get the most out of their spending.” .
Abby Penston, managing director of Focus Travel Partnership, whose TMCs largely serve small and medium-sized customers and are SMEs themselves, believes short-term concerns will give way to continued recovery.
“Some SMEs are put off by travel in the current circumstances. They’re frustrated with that, absolutely, and some of the prices going right now…it’s just not sustainable,” she says.
Nonetheless, Focus members are still anticipating “the normal fall upsurge” in business travel, Penston says, while Tim Fitzgerald, a travel consultant with around 30 SME organizations on his books, says fall “seems incredibly busy already.”
“Over the past four months I’ve traded at nearly the same level as 2019 as a franchise unit, but a third of that is new business, so there’s still a big hole for some businesses. Some travel at 120% [of pre-Covid volumes] and others are at 20 percent. It is impossible to generalize,” he says.
“I don’t think SMEs will necessarily travel less in the long term, but I do think there’s less discretionary travel among small businesses now. The focus is on value, sustainability and duty of care,” says Fitzgerald. “Travel will still be signed if the potential ROI is great enough. You are putting your own business at risk if you don’t see key customers or meet potential new business.”
But rising travel costs are making some companies think twice about travelling, he said. “I think the difference is if you were to jump on a plane to Hamburg tomorrow it could cost you £700 right now – if you can get a seat – so you would expect it to be critical for people. business, whereas before the pandemic it would have cost £200 and you wouldn’t have thought of it for a second.”
An SME travel manager told BTN Europe they had “cut back on what we are doing” after an initial increase in business travel, but added that this was due to travel scrutiny and, according to them, did not differentiate them from many companies, whatever their size.
“I pushed internally not to look at travel savings, but rather to focus on what we get out of a trip – the return on investment,” they said. “If a trip is necessary but not urgent, then I can see a lot of people postponing trips to the fall given the disruptions we are seeing.”
The buyer’s point of view
Staff shortages have been evident across the travel industry and across Europe, with many slow response times and declining service at some travel management companies. Some commentators have gone so far as to suggest that the big TMCs will focus their efforts on their biggest customers right now, leaving SMBs more prone to slipping standards than others.
The UK-based SME BTN Europe spoke to said critical travel had continued during the pandemic ‘when service was fantastic’ but now ‘travel is back in full force and service is considerably worse’ .
The company’s travel manager, who wished to remain anonymous, said they had been forced into a change of account manager and response times had lengthened, but did not attribute this to their tiny nature. amidst a sea of big business in a British top. ten TMCs.
“I don’t necessarily think we’re going through a tougher time than big business,” they said. “But talking to other travel managers, some think TMCs could prioritize smaller customers so they can focus on larger companies.”
The buyer’s former account executive is among countless TMC employees to jump ship this year as agencies outbid the race to recruit experienced hands.
“We appreciate that the rapid return of business travel has attracted many people. Every TMC has to accommodate the extra work involved in every booking at this time. What is interesting are the different levels of communication between the TMCs,” they explained.
“Ours was pretty transparent about staffing issues, but only after we started jumping up and down about it. Now they let us know what they do and how many employees they recruited each week, but it takes their time [new staff] to learn more about us and our specific needs.
The company, which initiates most bookings via email, says their TMC response times have increased significantly. “We’re used to sending an email at, say, 8:00 a.m. and getting a response by 1:00 p.m. These days it’s often more like 1:00 p.m. the next day. Our normal SLA is a two hour response, but we’re not going to penalize them. They act and are transparent,” they said.
“All TMCs are in the same position and our travelers are generally sensitive to what is going on. [travel disruption] is all over the news right now. Has the service slipped to a level at which it sees its future with the TMC? “We will probably expand [our contract] Again. For us, it is important to maintain the continuity and the confidence of our travelers as we leave. »
The TMC view
While few of the TMCs BTN Europe spoke to said they were seeing a significantly higher level of movement among SMB customers, two developments were noted.
Firstly, according to Focus’ Penston, many of the band members have won new clients who had not previously worked with a TMC, but who “now see the value in having their journey properly managed” due to the current complexity of travel and due diligence concerns.
Mark Smith, head of business development at Simplexity Travel Management, confirms the claim of having “recently picked up several businesses from an unmanaged environment” that “are turning into great business for us”.
He continues: “They used to do their easyJet and BA bookings themselves, but with everything going on right now they want to be able to talk to someone and not stand in line for two or three hours. on the phone with an airline in the event of a problem. ”
The importance of SMEs is not lost on Europe’s largest travel management company, American Express Global Business Travel, which “continues to see significant growth in new SME business”, which it defines as organizations spending less than $3 million per year on air travel.
“They seek assistance with cost control, visibility and reporting, disruption management and traveler assistance, due diligence and risk management – all the benefits of a managed travel program” , says Rachel Tonge, Vice President and Managing Director of GBT UK.
“As well as being a major part of business travel spend, the SME sector is dynamic and growing, with huge potential,” she continues. “It would make no sense to deprioritize this sector.”
Penston’s second observation is that “some small and medium-sized TMCs have won contracts from larger TMCs as contracts are about to be renewed.” The reasons for doing so are varied, but service issues from the TMC and dwindling business volumes are apparently among them.
Smith says some companies’ volumes have dropped so much that they no longer need a large TMC. “If you’re a four million pound business and you suddenly drop to a million on travel, they [the TMC] won’t be as interested in you and I think that’s why some people move.
Meanwhile, a TMC executive speaking to BTN Europe who wished to remain anonymous, said their mid-sized agency had recently gained two clients “out of two of the mega” due to the dwindling capacity of their incumbent TMCs to serve them adequately.
“It wasn’t just contracts that were expiring,” the TMC rep said. “One of them [the business wins] was born because they opened a new office in Eastern Europe and the incumbent TMC said they could not service it. We participated in this and are now being implemented by them in other places as well. The other company was struggling with terrible turnaround times.
Obtaining these two clients opened new doors for the TMC. “We’re getting a number of big clients that we wouldn’t have expected to win before. We were very comfortably making two or three million deals [in annual travel spend] but now we have more conversations in the 6-12 million bracket.
With a note of caution, they added: “Travel managers are wondering if the grass is greener, which I welcome, but some also need to be a little more realistic. A lot of TMCs really struggle to keep people coming back.
Their company has also welcomed customers naming a TMC for the first time. “We used to recommend that if a company was spending less than £100,000 on business travel they should manage it themselves, but now everyone wants TMC expertise. We’ve taken on a number of accounts around the £50,000-£100,000 mark, mostly offline. They used to do it themselves before, but now they feel it’s a service worth paying for. We recently brought one on board worth £250,000 where we were the only TMC to meet their demand.
They also pointed out that they are currently meeting response time SLAs for all of their customers, but added: “Of course we have to maintain everything. [the new business] but we believe we have the capacity to do so.