ANALYSIS: October 29 2009

In a year when client spend fell and corporates searched for savings, Doug Anderson, global president and ceo of Carlson Wagonlit Travel, tells ABTN how TMCs are evolving to meet these new challenges.

In the next few weeks, Carlson Wagonlit Travel (CWT) is expected to announce a partnership with an infrastructure provider to give its clients access to virtual meetings. Six months ago, the global travel management company globalised its meetings and event management. It is also putting an increasing emphasis on the use of mobile technology to assist travellers while they are on the move.

These are among the ways that TMCs, a species regularly condemned to death, are evolving to meet challenges thrown up by the savage recession, Doug Anderson, CWT's global president and ceo, said.

It is a recession that has hit business travel particularly hard with Mr Anderson reporting that transactions with clients are down this year, compared to last, by 10-12% while traffic has dipped by between 20-30%.

Speaking to ABTN this week at the Association of Corporate Traveller Executives' Global Education Conference in Prague, he said the other side of the coin was that client retention was "very good" at 98% and over the last five years "north of 96%".  There was also $1.2bn of new business for his agency. So it had been a "mixed year".

CWT has taken similar measure in the last 12 months as other businesses with 4,000 staff made redundant while contracts with suppliers had been re-negotiated. The aim, he said, was that when growth returned, CWT would have a "better and deeper base grow from - I am pretty confident about that."  

Looking around the world, Mr Anderson said he felt trading levels had bottomed out in the US in May-June with some increase in the following months. The picture in Western Europe, with the UK still technically in recession, was not so good.

"It is at the bottom but I think the real unknown will be the shape of the recovery. It might be a protracted ‘U' but it might also be a "W'", he said.

The major challenge that the recession had thrown up for TMCs was to meet client demands to save money. "All in all, clients are looking to savings and we are helping them drive that. We have found that clients are looking to centralise and globalise their travel policy and we are helping them do that.

"There is also evidence that clients mandate policies more than they did a year ago.

"I think the big noticeable change in the year has been around costs. In most developed countries, there are much stronger trends towards online booking with some seeing an increase of 10-50-60%. We have seen a 2-3% growth in this in the EMEA and North America regions," he said.

"Companies are also not as oriented as in the past on the travellers' wants but more on the costs. I think that this is a temporary focus because if a traveller is uncomfortable, they are not going to travel. But there is not quite so much emphasis on comfort as in the last six years."

The industry was also seeing a rise in RFP activity both to suppliers and to TMCs.  "Clients looking to take advantage of the capacity in the air and hotel businesses but they are also testing the market to see what is available.

"I think it is about spending the available travel budget more effectively. It is not about taking 30% off their budget but about spending less but getting more," he said. The chosen way for corporates to achieve this, Mr Anderson said, was through re-thinking travel policy, more advance booking, downgrading in hotels and on aircraft and pushing more compliance. 

In what is still strongly a buyer's market with corporate driving hard to get the best deal on hotel rates and airfares, TMCS can be caught in the middle of this battle. But Mr Anderson said his "primary obligation" was to his clients.

"These clients will have well managed programmes and have agreements with most suppliers. It is not a question of ripping off the suppliers but of us bringing together a willing buyer and a willing seller. There is an opportunity here for suppliers to fill their capacity and for clients to take advantage of current rates."

Like other TMCs, Carlson has brought out new products or enhanced existing one to meet these changing demands form clients. For example its CWT Room Select tool which provides access to 160,000 properties worldwide, both GDS and non-GDS, is now being rolled out in continental Europe.

But a major structural change has been the globalisation of its meetings and event management. Cathy Voss, CWT's executive vp global programmes solutions, said the same drive to save costs and improve leverage was behind companies requiring their M&E team to work more closely with their transient travel buyers.

"We are seeing a lot more of that in RFPs, the consolidation of M&E. Companies are bringing M&E and transient travel under a single process. Some companies sp end as much on M&E as on transient travel," she said.

While bookings for hotels and venues for M&E were still local, Mr Anderson said clients were looking to manage global programmes. He has three or four large global clients now looking to bring M&E into their global travel management programme.

With technology, especially software aimed at helping travellers on the move  becoming increasingly important for TMCs, Carlson now has  just under 1,000 people working on IT development and support as well has having  a "long list" of IT partners.

But it is in the area of virtual meetings that Mr Anderson is looking for development. The growth of alternatives to travel like telepresence and video-conferencing, which has seen a great advance in its technical abilities, has been significant during the recession.

 The argument as to whether corporates will return to travel in the same numbers when the upswing comes still rages. But, again like other TMCs, Carlson is covering both possibilities. Hence the deal with a virtual meetings provider.

"Will virtual meetings stay? Yes, I think so. We are seeing clients adopt virtual meetings and others are working to make the investment. Some clients have invested millions on virtual meetings while others have just put their toe in the water. We have figured out how to be the third party. It's anew revenue opportunity.

"I think there might be a small decline in the number of virtual meetings and I think that business travel will continue to be important. But companies which have been forward with virtual meetings will stick to it."

 Mr Anderson said the TMC's job here was to help clients decide which "trips" should be virtual meetings and which real meetings. Clearly small internal meetings were an obvious choice for the former but after that, he said it was very much up to the client. "We would not make that decision. It would be up to the client. But we would help our client design a programme around his decision and then help him enforce it," he said.

This is, he said, just another example of a TMC adapting to changing circumstances. "Think back to online booking. Online booking was going to be the end of TMCS. But it did not happen. I think that TMCs do a good job in reacting to trends in travel and help clients find the most efficient way for them.

"I believe we will continue to evolve," he said.

www.carlsonwagonlit.com