Next week over 1,000 corporate travel industry executives from more than 30 countries will meet in Munich for the 2019 GBTA EMEA Conference in partnership with VDR. It promises to be a lively week at what is probably the industry’s last major event before the holiday season begins at the end of November.
Many topics will be hot on the agenda, including NDC, data privacy/protection, sustainability, traveller wellbeing, meetings management, hotel programs & traveller security to name a few. 2020 promises to be a busy year, with the global political climate almost as turbulent as the environmental one.
Yet underneath all of this, a very familiar topic is gathering strength for many corporate travel managers – the selection and management of their TMC, technology and expense vendors for the years ahead.
We don’t tend to publish contract lifecycles as an industry. Its not really good business sense to begin with, but it’s also an area, especially in the TMC arena, where extensions, market developments, mergers and acquisitions can all play a part in moving the goalposts for many corporate buyers. That being said, 2020 looks like being a very active year in the TMC Sourcing business. Why is that?
A number of factors come into play here which are worth noting:
The need for choice
The bigger programs have always been influenced by the need for choice. The acquisition of HRG by American Express Global Business Travel in 2018 had a significant impact on the perception of choice available to the larger customers. It’s hard to say how many RFP processes were delayed, but some most certainly were. Emerging players such as TripActions were not necessarily ready for the big bids at that time, and there were areas of impact within the bigger TMC networks around content and profile management that needed to play out.
Many large programs have been focussing on other areas, most notably end-to-end expense integration, security and hotel program optimisation – not to mention the continuing shift to mobile and its impact across corporate policy in more areas than just travel.
Natural contract turnover
Another point of reference here is a more organic one. The majority of large programs are more likely to retain their vendor (barring disaster or bad performance) for a second, and often third, contract. Most TMC contracts are usually positioned around a three year term with a two year extension (the 3 + 2). Assuming two retentions from the original contract, programs that have been secure since the late 2000s will be now in a situation where good governance and market development simply forces an RFP process.
For many corporate buyers this will be the first time in a few years they go to market for a TMC partner; in many cases they may be questioning if they need one at all.
Given the factors above, 2020 is poised to be an interesting year for the travel consulting space. That aside, for the sake of those who are focussing on their TMC contract in 2020 and looking at the market, what trends can we predict? A few suggestions for your consideration below:
Mobile is now a reality for most TMC vendors and represents for most of them an opportunity for a more flexible and profitable future. As mobile applications flourish the impact and significance of the more old-fashioned self-booking tool environment changes and what we see is the integration of the booking tool into other offerings around expense and mobile.
Payment and expense are no longer optional extras but sit at the heart of most offerings. The TMCs have realised that payment especially is the key to driving policy while expense is the glue that links treasury, policy, compliance and mobile together. Technology has played a huge part here, and the ability to integrate tools and applications to customer-facing environments is driving a lot of choice in the TMC space.
Eco system warriors – “If you wanna be my lover, you better get with my friends” – so said the Spice Girls in 1996 and this is especially true in the TMC environment today. It cuts both ways, from the buyer driving third-party choices in technology/expense/hotel/mobility/security/data as a pre-requisite for any potential TMC partner, to the rise of TMC and expense-driven eco systems where entry to a mobile platform or expense tool allows access to pre-contracted and vetted third party suppliers or the ability, in some cases, to drive the ecosystem of choice.
Regionalisation is a thing and is gaining popularity in many global programs. Controlling your profile and policy while optimising your TMC vendor choice on a regional or local level is more possible now than ever – largely due to technology and your ability to control data and expense management.
Efficiency rules. There is very little fat left in the TMC fee. Supplier revenues need to be watched and monitored; inter-dependent relationships that limit buyer choice or policy control are equally prevalent. What we are seeing now, however, is the realisation that a different model of business is needed, and we can expect some creativity around subscription, profile management, call centre and mobile pricing proposals as a result. As traditional service models continue to centralise and automate, we will also see more and more specialist operators catering to niche markets at the upper end of the budget scale.
There are many other exciting trends coming, but perhaps these few will whet your collective appetites for what will be a lively 2020. At Nina & Pinta we are ready to assist you in your TMC sourcing and program assessments. Jo Lloyd and I will both be in Munich next week and look forward to hearing your views, whatever side of the discussion you are on, as we prepare for the year ahead.
See you at GBTA!