Feature

The calm before the storm - 50 LEADING TMCs

The travel management sector is still in business, says Mark Frary, but it will pay to remain cautious...

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Last year's ranking of the leading 50 travel management companies (TMCs) started off with talk about "financial horror stories emanating from across the Atlantic".

Now, in 2009, it does not matter on which side of the Atlantic you are sitting.

Or what side of the Pacific, for that matter.

The declaration of bankruptcy by Lehman Brothers in September 2008 is seen by many as a tipping point. The realisation that a huge investment bank with over 150 years of heritage was not going to be bailed out came as an enormous shock to many. The world's stock markets have been in freefall almost constantly since.

September was also the month when British Airways premium traffic figures suddenly dropped dramatically. The airline had been reporting single percentage figures falls from the previous year until that month, when it suddenly went to 20 per cent drops year on year.

As a result, the business figures in this year's survey do not yet reflect the full horror.

Many TMCs had a fine first three quarters of the year. Certainly, transaction figures from the Guild of Travel Management Companies (GTMC ) bear this out. Air bookings among its members for the third quarter of 2008 were up by 14 per cent over 2007. Overall, transactions were up by eight per cent on the previous year.

A quick look at the 'Year in Numbers' table (on page 49) show that many TMCs reported increased revenues from business travel in 2008 compared with the previous years. There are some obvious exceptions to this. Hillgate Travel - which counted Lehman Brothers among its financial sector clients - has dropped a number of places in the ranking, for example.

2009 will certainly prove more challenging, with many TMCs reporting very quiet business during the months of January, February and March.

With companies in many sectors imposing travel bans, forcing travellers to use cheaper alternatives or to forswear Business Class in favour of Premium Economy, many privately owned TMCs are now wondering whether to remain in a sector in which margins have become increasingly thin. Consolidation has, therefore, returned to the sector with a vengeance. Indeed, even we are not immune. This is the first year that the leading 50 has been published by Buying Business Travel, following the acquisition of Business Travel World.

As we hope to have shown with this move, consolidation can only make the sector a healthier place to do business.
Mark Frary, Editor

For the full report, click here.

Top 10 over the past three years

* American Express not included in 2006 and 2007 listings
**ATP - The Advanced Travel Partner

The typical TMC
Average business travel revenue 2008 £136.9m
Average number of transactions 192,254
Average transaction value £461.56

Breakdown of transactions:
Air 65.3%
Hotel 13.9%
Road 1.8%
Rail 12.8%
MICE 2.2%
Other 4%

Analysing the figures from the leading 50 travel management companies (TMCs) this year shows that the economic downturn has not had a enormous impact ... yet. 2009 may well be a different story.

The average travel management company has charged more for doing business this year but the number of transactions has fallen. The breakdown of transactions between the different categories of travel remains largely unchanged from last year's survey, although rail has now edged up to represent 12.8 per cent of all business. This may well be because of the better access to rail content via specialist online booking tools and through the global distribution systems (GDSs).

Getting together
As a result of the financial challenges, consolidation was again a watchword in 2008. The big acquisition of the year was Portman Travel's buy-out of Fleet Street Travel (which was in 12th place in 2007).

The eagle-eyed will notice a big change this year. American Express has not been included in the ranking in recent years, largely because the company was unwilling to reveal its country-by-country breakdown. We have decided to reintroduce the TMC into the rankings, using our own research to establish the company's turnover in the UK. Likewise, we have had to calculate HRG's figure as it was unable to supply data due to Stock Exchange regulations.

Winning the business
We are also adding a new ranking to the supplement this year, which looks at how good TMCs and hotel booking agencies are at winning new business. We asked each TMC and agency in our survey to tell us how much new business they had won in 2008. The table below lists two top tens: the first on the absolute amount of new business won during the calendar year, the second list showing the TMC fast track - the agencies which have won the most new business compared with the revenue they would have earned if they had not won anything during the year.

Green and technology
There has been much talk about environmental and more general corporate social responsibility (CSR) concerns taking a back seat to corporate survival this year. However, TMCs are keener than ever to promote both their own internal environmental policies and the services they offer to clients. In many cases, these client services have moved beyond simple carbon calculators to more sophisticated technology and even green consulting services.

In the area of general technology, the survey shows that TMCs are investing more in web portals, traveller tracking tools and pre-trip reporting technology. However, in the current economic climate, this may well tail off.

Note: figures included are those supplied by participants