In 2014, European companies will book 41 billion euro of travel through the online tools of large agencies, says a new forecast.
That represents a 29% spike in online gross bookings over four years, according to a white paper by PhoCusWright, produced in conjunction with Travelport.
Two-thirds of that managed travel business will go through the largest, pan-European travel management companies (TMCs)—Carlson Wagonlit Travel, American Express, Hogg Robinson Group (HRG), BCD, and Expedia's Egencia.
Local TMCs are also predicted to see a solid growth rate of 18% between 2010 and 2014.
But are TMCs necessary for managed travel?
The PhoCusWright-Travelport white paper defines "managed travel" as bookings completed by companies that enforce specific policies regarding their employees’ business travel, such as a required use of preferred suppliers or an explicit expense policy.
By that definition, in 2014, a majority of managed travel bookings will be completed by online.
But not all of those online bookings will be through TMCs.
In 2014, TMCs, including corporate booking tools, hotel booking aggregators, and online travel management companies, will book 13.1 billion euro in online managed travel bookings.
But 7.7 billion euro in online managed travel bookings will be done through supplier websites, such as those run by railway company agencies and low-cost carriers like Easyjet. Generally speaking, this means booking data from supplier sites is pulled back to company's in-house systems for reporting and reconciliation. Typically, the bookings are queued for the company's own travel manager to approve it.
To TMC or not to TMC
Yesterday, Carlson Wagonlit Travel (CWT) released a report finding that 62% of travel managers do not want to let employees book through any channel.
Yet Scott Gillespie, who has worked as a strategic sourcing consultant specializing in travel for more than 15 years, has questioned the premises of defining "managed travel" as only travel booked through a TMC.
CWT released today a study of issues related to "rogue" spend and open booking. It is well worth reading for anyone wanting confirmation of the value of traditional travel management.
Unfortunately, the study misleads readers into equating Managed Travel 2.0 with unmanaged travel. Either CWT doesn't understand the difference, or it doesn't want its audience to.
Managed travel, as defined by CWT, requires a booking to be serviced by a TMC. That's a predictable view coming from a TMC, and a key to this study's misleading conclusions.
My view is that Managed Travel 2.0 does not require a booking to be serviced by a TMC. It can be, or not - it is up to the traveler to decide if there is value in paying the transaction fee.
One of the keys to MT 2.0 is that travelers do need to book in ways that let the company capture the booking data quickly. That is what makes MT 2.0 different from unmanaged travel. It's what gives travel managers the ability to manage travelers in a MT 2.0 environment - with or without a TMC.
I like a lot of the research that went into this study. Kudos to CWT for trying to tackle this issue in a fact-based way. It's the predictably self-serving definitions and conclusions that leave me less impressed.
Why is online managed travel growing in Europe?
Digital travel management is enjoying a growth spurt against a context of economic uncertainty in Europe. A recent report from leading TMC Hogg Robinson Group noted the broader shakiness:
Despite ongoing challenges, particularly in the Eurozone economies, there are signs that the business travel market is on the road to recovery.
Global air travel booking activity in the first quarter of 2013 was up 3.2% compared to the same period in 2012.
So why is online managed travel booming at much greater percentage gains?
Small companies appear to be switching to agencies because they can help keep business travel expenditures under budget by restricting the type of travel that employees can purchase.
Savings is another factor: TMCs may have access to discounted airline, hotel and car rental rates, unlike small businesses that cannot individually negotiate such discounts because their volume is comparatively small. Three recent studies found that airfares booked through TMCs cost between 9 and 24% less than fares found on the open market.
Studies also show that nearly half of bookings done through TMCs have to be edited or changed at some point prior to departure. So companies may like having TMCs for their ability to quickly cope with changes to itineraries.
In short, online channels for managed travel seem to be blossoming in popularity because automation has been found to be cheaper, more time efficient, and provides easier accounting.
See PhoCusWright's European Managed Travel white paper, here (opens as a PDF) and the Carlson Wagonlit Travel report is here. For more on managed travel with involving TMCs, see this Tnooz viewpoint: "Introducing Managed Travel 2.0, a revolution in corporate travel that will affect everyone.