The agency is pretty confident business travel will take off this year, and clearly doesn't want to miss out by not having enough staff to help travelers handle the inevitable disruptions.
Corporate Travel Management is investing in building back up its teams to prepare for the global travel recovery.
The Brisbane-based agency reported an almost $6 million one-off expense for “excess staff capacity” in the first half of its 2023 financial year, which covers the six months to Dec. 31, 2022, to get ready for more business.
A common complaint among companies is their travel agencies don’t have enough staff to support their employees when taking business trips, to help them deal with any disruptions. CTM doesn’t want to be accused of that this year.
“… We have rebuilt our workforce capacity ahead of the recovery,” said managing director Jamie Pherous during an earnings call Tuesday. “We needed to do that to support additional service demand through what we expect would be a rapid recovery.”
CTM added 204 full-time employees during the six months. It now has 3,000 employees and expects “negligible employment growth” for its second half, noting “we have that $5.8 million of unused staff capacity costs expensed in the first half,” Peherous said.
The company laid off 40 percent of its staff during the pandemic, according to reports.
Pherous also said there were no signs of macro-economic factors impacting the recovery, and North America had “reignited” since January — with booking volumes for that month at the highest levels since Covid.
The technology sector layoffs were also relatively insignificant. “I mean you guys hear a lot about the tech industry, but I think the reality is that tech industry, it’s a high profile. It’s a very low percentage of corporate travel. And I think to be fair that a lot of those tech companies carried a lot of fat,” Pherous said on the call.
CTM North America, formed following its acquisition of Travel and Transport in 2020, reported underlying earnings before interest, taxes, depreciation, and amortization (or EBITDA) of $11.5 million for the first half, which was a 177 percent increase on the same period in 2022.
However, Australian wealth manager Ord Minnett said CTM, like most agencies, will continue to face headwinds including corporate sustainability goals, downward pressure on airline margins and fierce competition in the small and medium-sized enterprise space. It also highlighted the current push to “decouple travel management company revenue models into transaction and advice.”
In Europe, CTM wants to continue to grow its “new, ongoing logistic-related revenue streams as a result of expertise developed through the Covid period,” alluded to in a company presentation.
This could be related to work it carried out for the British government, relating to the country’s controversial hotel quarantine program.
When quizzed on what that was, Pherous said: “It’s more related to things outside of travel logistics and the revenue streams are pretty good and better than travel.”
He added it was a “big unaddressable market that no one’s really attacked.” In Europe CTM saw a record profit in January, and expects the region to be “the largest contributor to the group” in its upcoming second half, with this new revenue contributing.
The agency has never been shy about its aim to win more public sector contracts.
“We’ve proved some expertise for some pretty unique challenges at scale that we managed well, and that’s playing out for us,” he said. “We flagged it earlier, but now it’s really starting to play out as normal business is getting back to business that have that same demand and need. I’ll leave it at that.”
As with many travel companies releasing their results in recent weeks, including Airbnb and Marriott, CTM published its own record numbers on Wednesday, including total transaction volume ($2.9 billion) and revenue ($201 million.) As a result, the company posted EBITDA of $35.4 million.
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Photo credit: The Brisbane-based agency is rebuilding its workforce. Jesse Collins / Unsplash