2023 Brings TMC Recovery & Renewed Role

Travel management companies in the past three years have shown they can take a punch. The evaporation of corporate travel demand during the Covid-19 pandemic didn’t lead to a wave of TMC bankruptcy or dissolution or consolidation, all options that seemed on the table three years ago. In fact, several TMC executives in recent months have noted they see the corporate travel demand accelerating, and some can see a full return to pre-pandemic levels of corporate travel spending on the horizon.

But returning to 2019 in terms of demand doesn’t mean returning to 2019 in terms of structure, responsibility or philosophy. The pandemic changed things, some for good, and one might be the role of the travel management company in the business travel ecosystem. Certainly, TMCs then and now work as fulfillment and consultative partners to corporate clients, but the information they’re expected to provide, the tools they’re expected to deliver and role they’re expected to play all have evolved. TMCs seem willing to play.

Bounceback in Progress 

BTN in February surveyed 32 travel management companies about their recovery status and outlook for 2023. Among those surveyed, corporate travel represented anywhere from 75 percent to 100 percent of their total turnover in a typical year, with a mean of 87 percent corporate volume across all TMCs surveyed. 

More than half of the TMCs BTN surveyed indicated their clients’ business travel sales in the prior six months had at least matched 2019 levels. Among that group, three-quarters said such sales exceed pre-pandemic levels. 

Granted, prices are up from 2019. Still, about 39 percent of those surveyed indicated their clients’ business travel transactions since August 2022 now match or exceed 2019 levels. Only 13 percent said such transactions are worse than 25 percent lower than pre-pandemic levels, and only 6 percent said the same in terms of sales.

That squares with recent statements from executives at publicly traded TMCs that corporate demand is on the rise. 

Corporate Travel Management in its latest earnings report noted “strong momentum” in corporate travel activity since the beginning of the 2023 calendar year and expects full recovery is within sight. The first half of its 2023 fiscal year, which ended Dec. 31, showed total transaction value had more than doubled year over year, reaching $2.9 billion and revenue increased 79 percent in the same period.

Flight Centre likewise reported a “strong recovery” in corporate travel for the first half of its 2023 fiscal year, with corporate travel revenue back to 88 percent of pre-Covid-19 levels and transactions 90 percent recovered. Newly public American Express Global Business Travel reported fourth quarter recovery at 72 percent of 2019—26 percentage points up from the fourth quarter of 2022. 

Change Is in the Air

Even in a strong recovery environment, TMCs aren’t dealing with clients precisely as they did before the pandemic.

“Customers are not asking TMCs to be anything other than TMCs,” said Nick Vournakis, EVP and chief customer officer for mega agency CWT. “Our reason for existing is the same today as it was pre-pandemic. How you build around the edges from that perspective is absolutely changing.”

Corporate clients’ priorities in the past few years have shifted, in some cases dramatically, Vournakis said. That shift requires TMCs to alter some approaches to meet those needs.

“The relative ranking of priorities is absolutely different today [vs.] 2019. Today, sustainability is at the top of everybody’s list,” Vournakis said. He noted clients now look for TMCs’ ability not only to deliver information on carbon emissions at the point of sale and evaluate carbon footprints based on travel suppliers used but also to consult on the effect of how sustainable business travel is for employee health and well-being. 

Just this month, BCD travel announced a tech integration with TripKicks that overlays more accurate carbon emissions into the Concur booking environment. It’s a move that shows a TMC taking more control over their clients’ experience within a booking tool not developed by the TMC, but getting enhanced by the reseller. CTM announced in late February new traveler-oriented analytics that keep a recent history of overnight and weekend flights, time zone changes and other factors to score individual travelers' wear-and-tear on a scale of 1 to 100 and help them mitigate burnout. 

Such trends were percolating quietly prior to the pandemic but had not yet hit a conversion point. Agiito (at the time, Capita Travel) introduced a similar traveler well-being tracker in 2017, but it failed to get traction. Emissions reporting similarly was sputtering along prior to the pandemic but awareness of travel’s impact on the environment now seems ubiquitous. 

For TMCs, these new priorities bring new considerations. For example, how can they help companies analyze the nature of business travel and whether some travel can be avoided? The explosion of virtual conferencing in recent years has put that proposition front and center. Is facilitating a non-travel option really in a TMC's best interest? There's unlikely to be a transaction fee attached to that. Yet it may be serving the best interests of the client, so what value does the industry place on travel avoidance? These are questions many TMCs will need to answer.

Provisioning Travel Programs

Along with these answers may come new capabilities. Vournakis cited the rapidly changing offerings in corporate travel technology as key to the TMC’s aim, adding that “the ability to offer choice is core to our value proposition and part of our investment strategy.” 

To that end, TMCs are working hard to provision new processes and technologies required to book and service New Distribution Capability airline content. They are working with clients on omni-channel strategies and finding partners to help them report off-channel bookings. And while most of the time the TMC still represents that trusted core partner to their corporate clients, in some ways they are being asked to re-orient their position within the travel ecosystem. 

With that, potentially comes new ideas about technology integrations, but also new fee structures with clients and potentially new commercial structures with industry players.

Looming over any discussion of the role of the TMC in 2023 is the development of OpenAI’s ChatGPT artificial intelligence platform, which shows promise as a conversational intelligence-gatherer. Could it redefine the TMC value proposition? 

“We’re about to hit the Wild West with OpenAI,” Executive Travel founder and chairman Steve Glenn told BTN, “so you better get on your saddle and get lynched up tight, because it’s just going to be a fun ride from here on out.” 

Before we instinctively ‘cowboy up’ for a tech-dominated future, Festive Road’s Lora Ellis offers some advice to TMCs and their clients.

“It may not be the TMC itself that’s so different after the pandemic. I think it’s the travel program that’s different. We’re still figuring out what travel programs will look like and how they will function—with so much remote work and other new dynamics. All that is still evolving,” she said. “My advice to TMCs is to listen. Listen to what the corporate is trying to achieve because it may not be a standard offering or an off-the-shelf standard technology. You may be able to make something better together by collaborating. And it may be a digital solution, but it may not be. TMCs are still about service, and it’s not all technology. That’s it. Listen to what the client is trying to achieve because that will drive change and innovation.”