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Future of TMCs ‘uncertain’ – ITM
Travel Management Companies face an uncertain future, according to corporate travel buyers.
A poll by the Institute of Travel Management claims that TMCs are still failing to quantify their value to the business travel procurement process.
Two thirds of respondents believe that TMCs will either diminish in importance or fail to flourish.
Despite increased TMC fees, buyers are not seeing an accompanying rise in effective savings, the findings suggest.
The survey – the latest to be conducted by an ITM panel of 90 buyers with an annual combined travel spend worth more than £800 million – suggests that there is little to choose between TMCs.
Sixty five per cent of respondents have changed their TMCs just once, or less, in the last 10 years – and many RFPs are purely benchmarking exercises.
The issue of additional savings is most pronounced in global travel programmes. Sixty per cent of respondents cited financial considerations as the primary driver in ‘going global’, but only 38% believe the bottom line to have improved as a result, compared to 52% who believe that their secondary objective – that of a single data source – has improved.
ITM executive director Paul Tilstone said: “The issue is how long it should take for an organisation to see the expected incremental savings, if at all.
“The facts that the trend towards globalisation is not new, and that 44% of our survey respondents control spends of over £20 million suggest that it may no longer be realistic to see financial return as the primary benefit of globalisation.”
“TMCs have to demonstrate their value to the travel procurement process more effectively” said Colin Goldney, managing director of ITM research partner Argate Consulting. “There are just as many buyers who think TMC service levels have stood still as there are those who believe that they have improved in the last three years.
“Technology is unquestionably better, but the only other aspect in which there is a consensus for improvement is the quality of management information.”
Despite doubts over the prospect of seeing significant additional savings, 82% pinpointed cost savings initiatives, and 64% highlighted self booking tool adoption support as the two areas in which TMCs can add most value.
Report by Phil Davies
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