In a blog post, Paul de Villiers, SVP global business travel accounts at travel technology specialist Amadeus reports that there "appears to be a consensus" that business travel will return in the wake of the COVID-19 pandemic, "however it may well look different than before".
The biggest challenges and opportunities facing TMCs
With that in mind, Amadeus has explored what are the biggest challenges and opportunities facing Travel Management Companies (TMCs), how they can not only recover but grow in this new world, and what the practical solutions are that will drive success in the months and years to come. These are all addressed in a new e-book: 'Rebuilding Business Travel - Insights from global TMC leaders on the business travel industry outlook and recovery strategies for 2022'.
A year since the release of its 'Reboot, Recharge, Rethink Business Travel' e-book, Amadeus has again taken the pulse of TMCs to try to understand where their priorities lie, but taking insights from 250 TMC executives around the world, through a quantitative survey and 1:1 deep-dive interviews. The findings certainly identify some major trends, business opportunities and the obvious challenges that remain while living and working through a global pandemic.
A shift from unmanaged to managed business travel
Staring with a positive, most of the executives Amadeus spoke to saw several opportunities on the horizon. Half of the respondents believed a shift from unmanaged to managed business travel is underway, partially because of the rising logistical challenges of travel and high chances for disruption, the increased focus on optimising travel spend, and the renewed emphasis on duty of care.
More than half of the TMCs forecasted stricter travel policies, and one quarter anticipated increased demand for additional transactions that complement an airfare and encompass the whole travel journey.
Sustainability central to TMC partner offering
The report findings also shows TMC executives see corporations increasingly requesting sustainability services as a central part of their TMC partner offering. The pandemic has "intensified their determination to be more conscious in the choices they make," it says and many will rely on TMCs to guide them towards greener travel options and expect them to provide emissions data.
New travel patterns become evident
The report also supports the growth of blended travel itineraries as part of a clear shift in travel patterns. TMCs are seeing a growth in bleisure trips; noticing fewer trips but longer stays, with a higher spend per trip; and that companies are willing to allow direct flights and premium cabins to ensure traveller safety.
In addition, the report highlights that the small and medium enterprise market has proved "more resilient" than larger corporations, offering a new customer segment for TMCs to focus on, it notes.
New revenue sources a top priority
Diversification to new revenue sources is the top priority for nearly 70% of TMCs, according to the report. This could involve attracting new types of customers, selling a deeper pool of content (which 42% of TMCs intend to do) or creating additional services (40%). In addition, the report identifies that TMCs are looking to improve their accommodation offering and sales, and are relying on new sustainable travel management tools, whilst also developing leisure and bleisure sales.
To support this growth, TMCs are looking to upgrade both customer-facing and enterprise technology, and to reboot corporate strategy. "This includes new ways of working: to hire and retain the best talent, some TMCs are looking at new work from home policies, automating manual tasks and recruiting new skill sets," it says.
Business is better in real life
Even if the whole world got used to videoconferencing and digital meetings throughout COVID-19, the value of spending face to face time with clients, prospects or partners has only been reinforced by the pandemic, according to the Amadeus research with a large majority of the TMC executives agreeing there is no adequate substitute for face-to-face meetings.
The TMCs identify the impact of videoconferencing on business travel depends on the reason for the trip, and there is strong consensus that physical customer interactions will be prioritized, with only 22% considering these type of meetings will be mainly replaced by videoconferencing, compared to internal meetings at 77% and trainings/onboarding with 73%. The figures are even lower for consulting missions (20%), conferences and fairs and exhibitions (17%).
Increased focus on cost control
In 2020, during the height of the pandemic lockdowns, travel spend reduction took a back seat, with only 40% of TMCs saying it was an evolving need or expectation for corporate clients in last year's 'Reboot, Recharge, Rethink Business Travel' publication from Amadeus.
One year later, that figure has shot up to 57%, placing spend control as the second most important priority behind duty of care. Additionally, a similar level (56%) considered it likely that corporations will impose stricter travel policies, which would increase the need for TMC services.
"Chief Financial Officers have seen travel shrink to become a minor expense during the pandemic. Now they will look to TMCs to dampen the shock as business trips resume," notes the report. This will especially be the case if there is higher spend per trip because of upgrading and other measures to keep travellers safe.
Is the glass half-empty or half-full?
The Amadeus report says TMCs see their glass half-full with the view that business travel will rebound - albeit in a different shape. "Growth might be slow," it says, and will be dependent on several external factors that are out of the hands of the TMCs, but there is the silver lining "that companies that engage in business travel see the value of TMCs more than ever before".
It is clear that in this current environment new needs are emerging, and corporate clients are looking to TMCs to help meet those new demands - to provide a whole new level of service and information, to manage sustainability issues, and to keep travel costs under control.
TMCs need to find new ways to grow profitability
"There is no question that TMCs need to find new ways to grow profitability, but the industry's top leaders are embracing the change, and are already exploring new avenues to expand their horizons: whether it's with new customers, more content, new services, different staff profiles, better technology, new business models - or all of the above," explains Mr de Villiers in his blog post.