Skift Take

With so much consolidation taking place, the group reckons its FCM Travel arm is now the only global alternative to the legacy travel management companies. They may disagree.

The corporate division of Flight Centre Travel Group now has a seat at the table when it comes to pitching for business from the biggest clients around.

That’s according to Chris Galanty, its corporate CEO, who said that consolidation had played a large part. In the past year the division, which includes the FCM and Corporate Traveller brands, scooped $1.74 billion worth of “new wins” (based on what those companies would have spent on travel in 2019), Galany said as the group reported its full-year 2022 results.

During the 12 months to June 30, 2022, the corporate business delivered a $9.42 million profit, which included a $26.9 million fourth quarter result. New customers include Shell (a former CWT client) and PwC.

Since the pandemic began, Galanty said the division had won a total of just over $4 billion in new business.

“After the consolidation at the top end of the industry, there’s fewer choices for large enterprise customers which has really helped FCM. In fact, we’ve been invited to more request for proposals than we ever have been in our history,” Galanty said during an earnings call on Thursday.

“Some of the legacy travel management companies have struggled to adapt to the new needs of customers, and struggled to invest for a post-Covid world. That’s really helped us. And some of the tech-only startups that we saw emerging in some parts of the world prior to Covid have really struggled to deliver what customers needed, when technology and people are both required.”

There does appear to be some movement, with Corporate Travel Management recently saying it was pinching business off its rivals. It says it’s now the fourth largest business travel agency, behind Amex GBT, CWT and BCD Travel.

Amex GBT said the contract value of its own new wins over the past 12 months stood at $4.2 billion, and includes JP Morgan.

Firing, Then Hiring

Execs during the earnings call also touted the brand’s strength in attracting talent. Flight Centre took brutal steps to slash its cost base at the outset of the pandemic, trimming down its workforce from 21,000 to 7,000 employees.

It’s since returned to 11,000 employees, and receiving 4,500 applicants a month alone in Australia, where it’s recruiting 300 people per month. Globally it’s hiring 500 per month, with recruiting set to last for several months.

There’s no secret to the recruitment, which come from a mix of sources, which includes a Flight Centre alumni group. It also claimed to be attracting more young people because travel was perceived as a growth industry again. And if its shops get overstaffed, Melanie Waters-Ryan, supply CEO, said during the earnings call that all the company needs to do is spend a little money on marketing.

Flight Centre currently has 459 shops globally, and aims to add 38 more by the end of the 2023 first half.

Other news to emerge from its 2022 annual report, published Thursday, includes the revelation it paid $27.4 million in April to bring its shareholding in travel tech company TP Connects up to 70 percent. It first took a 22.5 percent stake in the Dubai-based company in 2020.

“Airlines globally are investing heavily in New Distribution Capability and are now starting to look for returns on this investment by shifting volume onto the new channels,” the company said. “Flight Centre is well placed to capitalize to this shift, given its ownership of a specialist aggregator.”

It also spent $2 million on buying Shep, a browser extension that helps corporate customers enforce travel policies, at the end of last year. The amount was payable in five quarterly installments, with the first three instalments already made.

Another smaller investment this year involved its Discova division buying Asia-based cycle tour specialist Grasshopper for $450,000.

Flight Centre Travel Group reported a loss of $127 million for 2022.

CORRECTION. A previous version of this article incorrectly stated the PwC win FCM referred to in its earnings was a previous customer of American Express Global Business Travel.

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Tags: amex gbt, australia, bcd, business travel, corporate travel, covid-19, cwt, earnings, flight centre, jp morgan chase, ndc, online travel newsletter, pwc, travel management companies, travel technology

Photo credit: Flight Centre's corporate business delivered a $9.42 million profit during its 2022 fiscal year. Omar Prestwich / Unsplash