UK Study: Travel Management Companies (TMC) Face Cost Conscious Business Travelers
Ugur Akinci, PhD
February 14, 2008
The first victim might very well be the Travel Management Companies (TMC) that cannot accommodate the new corporate travel choices, according to a new FTSE Index Company study.
The "2008 UK Companies Business Travel Report" was conducted by PULSE Research for HRS - Hotel Reservation Service. Researchers contacted 300 businesses (50 FTSE 500 and 250 Middle Market companies, that is, those employing more than 200 people) during November and December 2007.
Here are some of the highlights of this eye-opener survey:
TMCs seem to be losing their dominant role in corporate hotel bookings as the decision-making for business travel gets decentralized.
For example, the number of FTSE companies using only a single TMC to book travel arrangements fell from 61% to 47% within the last year. The fall is more pronounced among the FTSE 500 companies.
71% of FTSE 500 companies now allow individuals and separate departments make their own travel plans, representing an increase of 23% over the last year.
This has of course led to dropping management fees for TCMs. On the average, the TCM fees paid for booking a flight fell 15% from £27 to £24 in one year. The fee for booking a hotel room fell 30% from £18 in 2006 to £12.50 in 2007.
One reason for turning away from TCMs seems to be the perception that TCM agents might be biased in their booking practices. 61% of company executives surveyed said they believed they were "steered towards using specific suppliers by their agents." A year earlier, the same number was 55%. Yet 46% said they did not have a clear idea about the financial stake the TCMs have in steering their company towards certain packages.
There is a 25% increase in the use of specialist agencies as an alternative to TCMs. Grant Appleton, the Commercial Director of Hotel Reservation Service (HRS) web site is quoted by the press as saying "TMCs need to address their business models. Corporate clients are seeing the benefits of using specialist agencies and booking direct."
The pinch is on.
20% of the UK companies included in the survey have a policy that demands economy class for all its business travelers, up from 12.5% a year ago.
Only 25% of the companies upgrade their senior managers to more expensive rooms and suites, compared to 42% a year earlier.
33% of UK companies now mandate the use of Group A rental cars. 59% insist their employees travel in Economy Class when traveling by train, compared to only 42% a year earlier.
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To read the full report (PDF file) visit http://web3.hrs.de/media?mediaID=65161
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