Business Travel March-April-2021

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TMCs / Consolidation
survival.
Developing new
products and
services will win over
corporates but sitting
back and waiting will not.
“TMCs have to provide a greater value
proposition after Covid as those are the
differentiators in the business,” says David
Chappell, Country Director UK at travel
software Midoco.
One potential growth area for TMCs is
those corporates in the unmanaged SME
space. Indeed, Corporate Traveller won 42
new SME clients between July and October
2020, with a combined annual pre-Covid
spend of £18.7 million.
Emergency measures
When Covid hit most TMCs acted quickly to
take their business models back to basics to
future-proof their organisations.
Next came redundancies and furloughing
of staff, along with mothballing of offices
and a move to remote working when the
technology and funds allowed.
Adapt or die has been their modus
operandi and Focus’ Penston believes that
technology will be the key in building back
TMC business in a post Covid world.
“Fuse that with their knowledge and
skillset and you’re going to see some
exciting TMCs,” she says. Focus, for one, has
been investing in technology, expressly
Pinpoint traveller tracking software and
Farecast data reporting tool.
Arguably, technology will eradicate the
need to bring back all redundant or
furloughed staff, according to one industry
observer who preferred to be anonymous.
“Everything can be automated. I won’t
need to bring back all my workforce,” she
says. American Express GBT used the
period last year to reset. It has expedited
technology launches, re-designed service
configurations, launched Neo1 for the
unmanaged sector, given its GMs more
customer focus and created global
customer partnerships.
Some 60% of Amex GBTs workforce was
already remote working so the TMC already
boasts a large flexible workforce.
“We have implemented many changes,”
says Jason Geall, VP & Regional GM EMEA.
“Our business response plan is in place.
We've had to look at the size of the
organisation and we've achieved most of
that reduction with voluntary redundancies,
making sure we’re ready for the return."
Reed & Mackay has also re-sized its
business. “We’ve cut our cloth accordingly
and protected as many jobs as we can,”
says CEO Fred Stratford. It has private
equity firm Inflexion behind it. “They see
the long-term value of our sector,” he adds.
Skills gap
One concern in the sector is the loss of key
skills, including those in centralised
management functions. The upside will be
leaner and fitter TMCs, layered with an
element of de-globalisation, a move
to be best-in-market and growth in
niche TMCs in industries such as
entertainment and oil and gas.
Chris Crowley, Partner at
consultants Nina & Pinta, neatly
sums it up as “specialisation,
regionalisation and marginalisation”.
As we come out of the pandemic,
corporates will be understandably nervous
about the financial viability of their TMCs
and are asking questions about business
continuity, cash liquidity and forward
planning for the most part.
“Some clients are nervous about the
stability of their TMC,” confirms Shelley
Mathews, GM Sales at CTM.
One concern in the
sector is the loss of
key skills, including those
in centralised management
functions. The upside will be
leaner and fitter TMCs"
“Are they ready to do business again, as
that really is a concern,” says Crowley.
He believes TMCs will have to move
forward with smaller management teams,
more central operations, less deployment of
technology, and centralised quality control
and payment processing, all geared to
diminishing the fixed asset cost. “TMCs are
focussing on cash containment and they’re
not at the end of that road," he adds.
So, how can clients be sure of a TMC's
viability? The general consensus is to ask
what reserves they have at the bank, how
long can they survive without income, and
ask them to share bank statements.
Transparency is key if the relationship –
yet alone the agency – is to survive.
Independent consultant Chris
Pouney says many customers are
making contingency plans should
the worst happen.
“Traditional financial instruments
such as reporting do not work well
here as it’s unlikely that a TMC in
distress would simply go under; more likely
that they (and more precisely their client
book) will be acquired.”
A rash of M & A activity this year will be
inevitable but to what extent nobody
knows. What most industry pundits do long
for, though, is BTA Clive Wratten’s
prediction for the year: “The industry is
relatively intact and I hope that 2021 will
not be any worse than 2020.”
12 THEBUSINESSTRAVELMAG.COM