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For all the talk of “support bubbles” in the UK, where certain households are permitted to mix during lockdown, there’s been little consideration for the travel industry’s own support bubbles — those independent travel agencies that prop up airlines and airports.
There’s a fragmented business travel landscape across Europe with hundreds of smaller travel management companies happily cohabiting with the mega agencies. In the UK alone, there’s at least 200 companies.
That number could shrink, however, leaving a gap the bigger U.S. technology travel players, such as TripActions, or even the likes of Google or Amazon, will be more than happy to fill, according to one agency boss.
“The travel industry is going to come out in a very different shape and size,” said Mark Colley, managing director of Kent-based Sunways Business Travel. “But it’s important we still have a British-based company industry, because the U.S.-based tech firms will very quickly fill the space. If there’s a scenario down the road where there are no longer any travel management companies, they will fill that space and they’ll fill it badly.”
He argues that as technology companies, they don’t care what they sell as long as they’re selling. “It’s all done by algorithms, not travel specialists like us. That’s a possibility and there’s no return from that,” he added. “That doesn’t benefit anybody at all. All that wraparound support, protection and service goes instantly overnight.”
He’s also convinced this has already occurred in the leisure sector, in light of the many phone calls he’s fielded from distressed vacationers who’d booked their holidays with an online agency and were left stranded, or out of pocket, as the crisis hit.
Is this unfounded pessimism, or is there real cause for concern?
State of the Industry
The travel industry does seem to be approaching boiling point. In an opinion piece for the Daily Telegraph last week, British Airways boss Alex Cruz said the aviation sector was fighting for its very survival, noting that “every aircraft at Heathrow supports 300 jobs in the supply chain.” Airports also warn of trouble ahead.
So too are agencies contemplating their own futures. Another small corporate travel agency, with a dozen staff, is considering unpaid leave, reduced hours and even redundancies.
“We’re looking at this at the moment,” said Mark Smith, head of business development at Simplexity Travel, located in London’s Mayfair, “but if we can trade through the rest of this year, we’ll be in a good place in 2021.”
Smith said whatever decisions are made, he’d want to give staff a choice and that one advantage with unpaid leave is benefits remain in place, like pensions, and it means they avoid the immediate stress of having to look for another job in a downturn.
For Sunways, which has about 20 employees, it made a “significant investment” in keeping staff off the furlough scheme, Colley said, because he wanted to support his customers. Two thirds of its business is corporate travel, with the remainder leisure. As a result, there was a cost both financially and personally to staff who worked tirelessly, evenings and weekends, he added.
However, financially, Sunways is in a fortunate, almost enviable position, according to Colley, who’s ran the numbers and predicts it can survive the next two years based on a “low revenue stream”. It’s got a healthy balance sheet, but many others don’t. “A lot of people I talk to are hoping for a much sooner return to business,” he said.
Crisis, Part 2
A former banker, Colley also sees parallels with how the government bailed out the banks after the 2008 recession. “My worry is they’ll take a similar approach to how they dealt with the banking crisis. They propped up the banks, but not the support system around the banks,” he said. “Today, it’s all very well protecting the airlines, but what about the people that put those customers on the aircraft. Do these governments know aircraft aren’t filled by airlines alone?”
This sentiment echoes in some part EasyJet’s CEO warning that while airlines are receiving state aid, there’s not enough joined-up thinking being done to ensure planes are actually able to fly.
In the UK, some progress is being made to create more high-level awareness, with the Business Travel Association launching an All Party Parliamentary Group on Business Travel last week. The group is made up of members of parliament from across the political spectrum.
“There’s been little understanding of the importance of how (business travel) projects the UK economy to the wider world. Never has that been more important to the lead-up to Brexit. That understanding is growing, but without support I fear for our industry,” Colley added.
As the pandemic continues, all agencies are adapting. Simplexity, for example, is thinking creatively. Its consultants, for example, are no longer consultants.
The team has now returned to the office (a move Smith took not because business was picking up, but because it helps their mental wellbeing) and everybody has become business development managers. “They’re contacting our old clients, and other people, just to reintroduce and re-engage, because people might have left businesses. It’s a good way for us to tidy up our database,” Smith said.
Rethinking marketing is also key.
Simplexity helped with various repatriation efforts, via a program ran by agency network Focus Travel Partnership. “We took passengers’ details, and when we feel it’s right to start marketing again, we’ll add them to the newsletters and let them decide if they want to qualify themselves to receive them. From a marketing point of view, we’ve got new clients. Whether they’ll re-book or not, I don’t know,” Smith said.
Simplexity also has a mix of sectors to spread the risk. “We decided a long time ago to take any market, as long as they’re paying us. We have different people in the office who manage different types of markets,” he added. It’s a move that is already proving useful, as it has just renewed a deal with a football club.
Sunways, too, covers different sectors including finance, architecture, pharmaceutical, media and technology — a broad spectrum that is already seeing some clients travel domestically. It will also push the personal touch message. With its 100 percent success getting in getting refunds back to its customers, Colley claimed, it’s a strong message he can take out in the future. He also doesn’t expect to lose any customers.
On the other side of the crisis, Simplexity’s Smith predicts opportunities will also arise with those organizations planning to curtail their travel programs, and which may eventually become disenchanted with their agencies.
“If a company used to spend $4 million a year on travel, then they go down to $1.5 million, are the likes of American Express Global Business Travel and BCD Travel going to be interested in that kind of business in the new world?” he asked. “Chances are, they say yes now, but further down the line, as travel starts progressing again, they’ll end up being forgotten about. And they’re the companies we’re going to be looking at. We’ll give them that service, and more often than not we’re cheaper, with regards to the booking fee.”
Resourcefulness is rife, and the pulse of the sector is beating, if not a little weaker. Agencies are clearly holding on as they re-engage with clients, but now there’s the matter of that long wait for employees to return to their offices, and for the confidence to travel, which has been stigmatized by coronavirus, to rebound.