November 27, 2021

ilpuntontc

Just Do Travel

Making the Case to Ditch Corporate Travel Agencies Forever

4 min read

Skift Take

Here we have proponents of a future where companies employ their own “travel architects” and agencies become obsolete. But it’s hard to gauge how long it will take for the technology to catch up with their vision. Nothing moves fast in the world of corporate travel.

It defies a certain logic for a company to cut ties with its travel agency in these uncertain times, but it’s exactly what one consultancy is advocating.

In fact, U.S.-based Partnership Travel Consulting has claimed there’s never been a better time for company travel managers to build their own program, taking back direct control of their technology and traveler services.

The rationale is that companies will otherwise miss out on innovative new platforms from many startups, while technology has advanced enough that it’s simple to plug them in. And it’s also an ideal opportunity to make the change as most organizations are in a phase of “Covid reset” as they emerge from the pandemic.

Yet the concept goes against the grain at a time when employees perhaps need the human touch as they begin booking their first business trips in a long time. Vaccine regulations and border restrictions still linger, despite some countries relaxing their rules.

Total Dependence

Partnership Travel Consulting defines three stages in order to “build your own” travel program: light, deep and total.

Light is where there’s a travel management company in place, but the sourcing, online booking tool and profile management system are run internally. The “deep” phase is the weaning-off process, where the travel agency no longer deals with rate negotiations or traveler tracking as they all get brought in-house. But they would continue to manage any offline bookings and 24-hour support.

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The travel agency manages no services in the third scenario, except to help recruit the company’s new in-house travel team, or offer help to acquire an International Air Transport Association licence, which is need to issue airline tickets. Having been told their services are no longer required, it’s debatable how many would stick around at this point.

Ditching a travel agency is not only for the brave, it’s for the bigger spenders too. Partnership Travel Consulting recommends a company would need to spend at least $10 million on travel per year to see the efficiencies.

If only it were that simple, argues one procurement expert.

“It’s a classic case of make versus buy,” said Chris Pouney of Severnside Consulting. “Essentially, this build your own program approach feeds off what the Kraljic matrix — a method used to segment the purchases or suppliers of goods or services — is saying: if it’s expensive, or too simple, or there aren’t enough quality suppliers, you might want to consider doing it yourself.”

He added some companies have been running similar exercises, due to business continuity concerns. They’re assessing what would happen if their own travel agency collapsed.

“If you spend a lot on travel, ask what it’s like if we do it ourselves,” he said. “But what’s interesting here is that there’s a risk. What if a company employs 10 people, but only needs five. With a travel agency you can flex the numbers a bit more. And the reason companies don’t tend to do this is because it’s not their core business, there’s a risk.”

On the money side, Partnership Travel Consulting argues in its whitepaper that companies can save more money because they divert hotel commissions away from the agency into their own pocket.

Early Adopters

One company has already embarked on this journey, and as a result its travel manager is seeing her travel agency “open up” to the idea.

“The agency can continue to play a role,” said Katharina Navarro, global category manager travel at Gapgemini, during a recent conference. “We see them opening up a bit more. Rather than them doing it all and owning it all, it’s about creating a new governance structure. The travel management company has a place to play as an interface, bringing things in, but bringing things in that I choose.”

Navarro has previously shared how Capgemini’s (pre-Covid) $600 million annual travel spend will likely be drastically reduced anyway.

One startup executive speaking at the same event said travel managers should be able to say “I’m changing from this to that, and I’m live now,” at a click of a button. “Sometimes there’s a great new idea coming out that you should be able to plug in without the traveler ever seeing you’re changing the pipelines,” noted Johnny Thorsen, vice president, strategy and partnerships at Spotnana — a new travel technology firm backed by Concur founder Steve Singh.

Thorsen believes company travel managers will soon adopt so-called micro services — in his words, services that are designed to do one thing extremely well, but also designed to connect with other services. “If you go down that path, and what that can mean, then we have a lot of products in the travel industry today that potentially will become obsolete,” he added, highlighting how the PNR, or Passenger Name Record, was past its sell-by date.

Travel managers in the future will then become known as architects or designers, he continued. “This is about being creative with a lot of capabilities … (it’s) the next step of being brave enough to go outside the historic travel management company set-up.”

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