MAR23 BTNE Spring Edition



PRIMED FOR TAKE-OFF Air distribution hit by turbulence as NDC developments accelerate

IN THE THICK OF IT How TMCs are getting to grips with increasingly fragmented content

AT THE COALFACE The evolution of content distribution is not all music to travel managers’ ears

etc.venues Fenchurch Street

The 3rd annual Business Travel Sustainability Summit Europe will focus on advancements in sustainability and climate action policy adoption along with actions taken by companies to align their business travel programme with corporate objectives and strategies to advance sustainability practices.


Keynote: Sustainability Call to Action

Corporate Trailblazers Paving the Way

Advances in Sustainability KPIs

Supplier Sustainability Innovations

Hot Topics in Sustainable Business Travel

Governmental Moves to Go Greener

This year, the BTN Group has established the Business Travel Sustainability Awards Europe in acknowledgement of the importance of this issue for our industry and in recognition of the role we can perform in protecting the environment. The award ceremony will be the last session of the summit followed by a networking reception.

REGISTER NOW AS OUR COMPLIMENTARY GUEST* USING CODE BTNEAPRIL AT: *Registration is limited to qualified corporate travel managers and procurement/sourcing professionals who are responsible for managing their company’s or organisation’s corporate travel/meetings programme. Registration from travel suppliers including travel management companies, travel agencies, 3rd party meeting planning companies, and consultants who are not sponsors will not be accepted. The BTN Group has the final right to accept or deny registration.








Editorial Director, BTN Group Elizabeth West Editor-In-Chief, BTN Europe Andy Hoskins Contributors Lauren Arena, Michael Baker, Amon Cohen, Rob Gill & Betty Low Art Director, BTN Group James Jarnot Designers, BTN Europe Tony Hunt & Samantha Dilley Want the news delivered to your inbox? Want to know when new podcasts are available? And to receive our monthly round-up? Sign-up to regular BTN Europe e-newsletters: newsletters

26 The distribution issue COVER STORY FROM PAGE


Group Publisher Louis Magliaro Managing Director EMEA Nick Powell

Marketing Director Jonathan Carter-Chapman Advertising Production Amanda Ludman

26-29 Setting the scene To appreciate today’s intricate business travel distribution landscape it’s helpful to understand its circuitous backstory 30-33 Primed for take-off Few areas of business travel are as divisive as NDC but it is now coming to fruition whether it’s welcomed or not 34-35 Mapping it out Illustrating the complex web of pipes and players that deliver airlines’ fares and offerings to their corporate customers 36-38 Central reservations The distribution landscape’s backbone for decades, legacy GDSs are now grappling with convening content in one place 40-42 In the thick of it As travel content becomes increasingly fragmented, TMCs are facing a battle to knit all parties together 44-47 Beyond the margins The distribution of rail content has its challenges but progress is imminent 48-50 At the coalface The evolution of distribution is manifesting in ways that aren’t all music to buyers’ ears

BTN Europe is published by Northstar Travel Group, Spaces, The Epworth, 25 City Road, Shoreditch, London EC1Y 1AA

REGULARS 6-7 In case you missed it The best of BTN Europe online 8-9 Databank Buyers and TMCs share their respective outlooks and views 10-13 Spotlight Series: TMCs Leaders of four business travel organisations deliver their assessments of the market 14-16 Spotlight Series: TMCs The subscription model’s lukewarm reception 18-23 Spotlight Series: TMCs The reasons for – and implications of – TMCs’ often convoluted roster of fees

Copyright ©2023 Northstar Travel Group and/or its subsidiaries and licensors. Corporate offices: 301 Route 17 North,

Suite 1150, Rutherford, NJ 07070, United States. All rights reserved.

The magazine is entirely independent of all commercial interests within the travel industry. Unsolicited manuscripts will not be accepted for publication. The opinions expressed by contributors are not necessarily those of the publishers who cannot accept responsibility for any errors or omissions.

ISSN 2634-3053

25 According to Amon Artificial intelligence is infiltrating the industry


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The next big challenge? Content fragmentation. That’s what buyers and travel management companies alike told us in two recent Business Travel News surveys

NDC’s acceleration is explored throughout our distribution report in this issue (see p26-50), but on pages 34-35 you’ll find a dizzyingly complex diagram mapping out the ways in which airlines’ fares are delivered to their corporate customers. Its many parts include TMCs, the GDSs, aggregators, PSS, ARC and BSP (more three-letter acronyms!), and only four years ago the ‘map’ was published in its first iteration as a vision of the future. Today, with some tweaks, it is the reality. But NDC is just one example of the way in which suppliers’ content is becoming more diverse, bountiful and fragmented. In fact, NDC and non-GDS content aggregation emerged as the top area of investment for TMCs in a recent Business Travel News survey of agencies (see p8-9). Furthermore, content fragmentation was cited as one of TMCs’ biggest challenges this year by three agency group leaders interviewed in this issue (see p10-13) as part of our first Spotlight Series report, on travel management companies. Next up in the Spotlight Series is air travel, and you can bet NDC will be up for debate again.

NDC is just one example of how content is becoming more diverse and fragmented independent consultants to select NDC for inclusion on our 2023 Hotlist published in January, no matter that it’s been a decade in the making. In Europe, the likes of Lufthansa and Finnair are pushing the NDC envelope, while in North America, American Airlines told agencies to connect to its NDC channels or risk losing access to up to 40 per cent of its fares through traditional EDIFACT-based channels this April.


T he business travel industry is full of three-letter acronyms: TMC, SLA, GDS... BTN! In fact, they’re the go-to moniker for TMCs themselves: there’s BCD, CTM, CWT, FCM. But of all the most frequently occurring, and taking the crown for the most divisive topic represented by three letters, is surely NDC – New Distribution Capability. For a long time the mere mention of it in a conference session could make eyes roll. And let’s not be fooled by the ‘new’. The concept was introduced by IATA some ten years ago but, in a distribution landscape that has evolved only haltingly in decades, it is indeed new and a game-changer. Recent developments have been sufficiently significant for our panel of editorial colleagues, buyers and



• As ever, we welcome your feedback. Email me at

PRIMED FOR TAKE-OFF Air distribution hit by turbulence as NDC developments accelerate

IN THE THICK OF IT How TMCs are getting to grips with increasingly fragmented content

AT THE COALFACE The evolution of content distribution is not all music to travel managers’ ears


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NAVAN UNVEILED AS NEW FACE OF TRIPACTIONS Travel management company TripActions has rebranded under the new name of Navan. The tech-first TMC said that the rebranding to Navan was the “next stage of the company evolution” and would unify its travel, corporate card and expense platforms into a single application. The TMC said it would also be enhancing its virtual travel assistant, Ava, using APIs from AI and deployment company OpenAI, including ChatGPT, which helps deliver personalised recommendations and boosts traveller engagement.


Lufthansa has been piloting green fares through a “test run” in its Scandinavian markets since August 2022 and they have now been introduced for flights throughout Europe and North Africa. The green fares will be available across the group’s airlines, including Lufthansa, Austrian Airlines, Brussels Airlines, Swiss and Air Dolomiti, on flights within Europe and to Morocco, Algeria and Tunisia in North Africa. The fares, which can be booked in both economy and business class, are available through the airlines’ direct and NDC-based booking platforms. Corporate clients also receive a carbon mitigation certificate for the reduced emissions achieved by using SAF. Business travel in “emerging” Europe, which includes countries in central and eastern Europe, rose by 53 per cent to reach $30.8 billion last year. Europe remains the third largest region in the world for business travel spending with 20 per cent of the total, although this share is seven per cent lower than in 2019. Six countries – Germany, France, UK, Italy, Spain and the Netherlands – accounted for 65 per cent of corporate travel spend in the region last year. Data also illustrates how the gap in spending between Europe’s largest two markets, Germany and the UK, grew over the past decade. In 2013, Germany’s travel spending was 23 per cent higher than in the UK, but this gap increased to a 31 per cent differential in 2017 and rose further to 33 per cent in 2022.

LUFTHANSA EXPANDS ‘GREEN FARES’ ACROSS EUROPEAN SERVICES Aviation giant Lufthansa Group is introducing its new ‘green fares’ across its short-haul flights after successfully testing the initiative in the Scandinavian market last year. The fares include “full compensation” for carbon emissions within the ticket price. This is achieved through a combination of using sustainable aviation fuel (SAF) to mitigate for 20 per cent of the CO2 produced by the flight, alongside contributions to climate protection projects for the other 80 per cent. Business travel in western Europe is expected to see one of the “sharpest recoveries” in the world and return to pre-Covid spending levels in 2026, according to research by the Global Business Travel Association (GBTA). Europe was the only region to see spending on corporate travel decline in both 2020 and 2021 as the Covid-19 crisis hit the sector hard. But the GBTA’s Business Travel Index (BTI) Outlook said that the continent was now “making up for lost ground” and is expected to be the fastest- growing business travel market in 2023 with spending forecast to rise by 25.3 per cent. In Western Europe, business travel spending in 2022 was up by 23 per cent year-on-year to reach $194 billion, which represented 58 per cent of the region’s pre-Covid annual expenditure.


Gray Dawes Travel is launching operations in North America following the announcement of two key appointments – and has hinted an acquisition in North America is imminent. The UK-based TMC has selected Michel Botbol as chairman of the board (North America), while Carolann Martini will take on the role of chief customer officer. The move follows Gray Dawes’ recent entry into the Australian market with the acquisition of MP Travel. Suzanne Horner, Gray Dawes Group’s CEO, said: “It represents the next step in our global growth plan and closes the circle on our service delivery strategy. With a shared technology platform across the Gray Dawes operation, clients will enjoy a seamless service as we follow the sun from the UK to Australia to America.”

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TRAVELPORT ACQUIRES TRAVEL TECH PLATFORM DEEM Travel technology company Travelport has acquired Deem, provider of the Etta online booking tool, from Enterprise Holdings for an undisclosed sum. The company said it would implement a “swift technical integration” to enable Deem’s access to NDC offers and products. “The game- changing acquisition... will fulfil a growing, post-pandemic need for a tight, fully- integrated corporate tool that will provide access to all multi-source content,” said Greg Webb, CEO of Travelport. The acquisition adds an important component to Travelport’s offering, with competitors Amadeus and Sabre having long provided their own online booking tools.


negative incident when travelling – ranging from minor theft to assault – and almost one in five (19 per cent) feel their organisation should “act with women’s safety in mind”, such as avoiding flights that arrive late at night, for example. Interestingly, both men and women reported taking extra steps to protect their security during a hotel stay, like placing a chair or obstacle against the hotel door to deter a potential intruder (16 per cent of both men and women), and using room service so they don’t have to eat in a restaurant on their own (17 per cent of both men and women). One in five female business travellers (21 per cent) said they prefer to stay in hotels that make provision for solo women travellers and a similar proportion (19 per cent) wear a wedding ring (real or fake) to avoid unwanted attention.

Travelling for work as a woman is less safe than doing so as a man, according to 71 per cent of female respondents in a recent global survey of business travellers. The survey, commissioned by World Travel Protection ahead of International Women’s Day in March, included 2,000 business travellers in the UK, US, Australia and Canada, and found that women are more likely to take measures to protect their safety during a business trip than men. Close to one in three (31 per cent) said they do not travel or go out on their own at night, compared to 18 per cent of men, and almost half (46 per cent) stay in close touch with family and friends so their whereabouts are known, compared to 36 per cent of men. More than one in ten female business travellers (12 per cent) said they have experienced a


Atlantic has announced plans to launch a dedicated corporate travel portal that can be used by travellers, travel managers and travel management companies. Known as Virgin Atlantic for Business, an “intuitive” self-service portal for will be made available this autumn, giving users increased self-serve capabilities including beyond contract value reporting, sustainability reporting and the management of waivers and favours. The launch coincided with the airline’s official joining of the SkyTeam alliance.

HEATHROW PLANS TO TRIPLE SAF USE DURING 2023 London Heathrow airport wants to triple the percentage of sustainable aviation fuel (SAF) used at the UK hub airport this year. The airport introduced a SAF incentive programme last year which is designed to cover up to 50 per cent of the extra cost of the fuel for airlines. Participants in the scheme include British Airways’ owner IAG, Virgin Atlantic, United Airlines, Air France, KLM and JetBlue. Heathrow said the initiative was over- subscribed in 2022 and now wants to triple the amount of SAF supplied this year to around

1.5 per cent of the total fuel used at the airport. This would be an important next step in moving towards its target of using 11 per cent

sustainable aviation fuel by 2030. The airport has also urged the UK government to “inject pace into the

expansion of SAF with supportive policy making”. Currently wider use of the fuel is being held back by high costs and low production volumes. It is calling for a “price support mechanism” to be introduced to help reduce the difference in cost between SAF and traditional jet fuel, as well as for the UK government to implement a mandate requiring airlines to use at least 10 per cent sustainable aviation fuel by 2030.


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POSITIVE THINKING Two recent surveys conducted by Business Travel News – one of travel managers and one of TMCs – paint a vivid picture of the industry’s trajectory DATABANK

What buyers say… Travel managers today generally work for organisations that are recovering to at least three-quarters of 2019 business travel volume and have agreements with their primary travel management companies based on transaction fees. They would also like to see additional TMC investment in their contact center capabilities and moderately happy with TMCs’ responsiveness. At least that’s according to a Business Travel News poll of 176 travel and procurement managers in Europe and the US conducted in February 2023.

Corporate travel recovery continues Buyers’ projected 2023 business travel spending versus 2019

TMC responsiveness needs work On an ascending scale of 1 to 5, ratings of primary TMC responsiveness in prior six months


Exceeding 2019 levels Matching 2019 levels Down less than 10% Down 10%-25% Down 26%-50% Down more than 50%

Not at all responsive




Not very responsive


Average responsiveness


Better than average responsiveness




Very responsive


Buyers seek tech investment Respondents’ desired investment areas for primary TMC*


Contact centre solutions (including chat, SMS messaging, telephone systems)


Transaction fees still dominate Configuration of respondents’ primary TMC

Mobile itinerary management technology for travellers (proprietary or third-party) Client reporting/business intelligence/data management Non-GDS content aggregation (including access to non-GDS air, hotel and ground inventory)



Per-trip fee, fully loaded Management fee structure Subscription fee structure Don’t know Other Transaction fee structure



Customer relationship management systems


Traveller profile systems



Proprietary online booking capabilities for client travellers (desktop and/or mobile)


5% 2%


Mid-office technology and custom programming


Chatbot technology



Back-office/financial accounting systems


None of the above




*Respondents could select more than one answer

8 | SPRING 2023


…and what TMCs say Travel management companies are optimistic about recovery, with more than half of those surveyed saying sales in the six months from August 2022 had already matched 2019 levels. Travel costs are up, but even so, 39 per cent of those surveyed said transaction numbers over the same period were back to pre-Covid levels. Meanwhile, four out of five TMCs say their current capability to respond to RFPs matches demand.

Do the maths: sales versus transaction recovery

TMCs: we’re ready for RFPs Does current capability to respond to RFPs match demand?

BTN asked travel management companies for the current status of sales recovery and transaction recovery. Here’s what they said.

Yes, capability matches demand No, demand exceeds our capability Yes, capability exceeds demand


Sales Recovery

Transaction Recovery


41% 13% 16% 25%


Exceeding 2019 levels


Matching 2019

19% 29% 13%

Down less than 10% from 2019

Down 10% to 25% Down 26% to 50%



Then & now: TMCs’ top five investment areas Then: Previous 12 Months

Green issues rise in RFPs Aspects of RFPs received from corporate accounts in the past six months versus 2019 levels.

Contact centre


Increase Decrease Stay the same

NDC/non-GDS content aggregation


Reporting / business intelligence





Proprietary online booking


Mid-office / custom programming






Now: Next 12 Months


NDC/non-GDS content aggregation





Contact centre



Proprietary online booking





Chatbot technology



3-WAY TIE: Mid-office tech, business intelligence, integrated payments




Source: A BTN February 2023 survey of 32 travel management companies


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ASSESSING THE STATUS QUO Leaders of four business travel organisations – GEBTA, GlobalStar, Advantage and the BTA – deliver their respective assessments of the TMC market

MARCEL FORNS, GENERAL MANAGER, GEBTA Spanish business travel association GEBTA represents the interests of around 20 TMCs headquartered or operating in the country

JAMES STEVENSON, CEO, GLOBALSTAR TRAVEL MANAGEMENT Headquartered in London, GlobalStar is a commercial network of 55 TMCs operating in more than 2,500 locations around the world


The Advantage Travel Partnership is Europe’s second-largest business travel consortium


The BTA comprises around 30 TMC members which, it says, account for more than 90 per cent of managed business travel spend in the UK

10 | SPRING 2023

How would you characterise your members’ sales in the second half of 2022? Marcel Forns, GEBTA: Business travel experienced a strong recovery during the second half of 2022. In terms of the number of trips, the figures from September to December 2022 recorded a significant increase and closed at 82 per cent compared with the figures of 2019 – or 75 per cent for the whole year. In terms of sales, the figures equalled those of 2019 due to the average price increase of products and services, mainly accommodation and air tickets. James Stevenson, GlobalStar: Positive. Business has either returned to 2019 levels or in some cases has extended beyond to create a new, higher level for the latter half of 2022. There are of course some exceptions, notably in Asia due to the late lifting of travel and quarantine restrictions. Also, SME travel came back far quicker than that of the large, multinational corporations. Outside of transient travel we experienced significant uplift in meetings and events volume. Guy Snelgar, Advantage: On average, members have reported that while the number of transactions may still have been 10 to 20 per cent below 2019 levels [in the second half of 2022], revenue levels had returned, or in some cases, exceeded 2019. This has come from a combination of higher fares and rates, but also from TMCs being asked to book more elements of the trip, especially around accommodation and ground transport or transfers. Clive Wratten, BTA: We are seeing a strong recovery of business travel. Most of our members gained around 80 to 90 per cent of 2019 revenue levels by the close of 2022.

What’s your assessment of TMCs’ staffing levels right now?

Marcel Forns, GEBTA: In Spain, the situation around staffing problems experienced some improvement by the end of last year. The current situation is much better than it was six months ago. According to our TMCs, the

Clive Wratten, BTA: The majority of the BTA’s members are at approximately 90 per cent of pre-pandemic staffing levels although recruiting continues. The general feedback we’ve received tells us that service levels are now back within acceptable levels as the industry returns to normality. In which areas do you think TMCs are investing the most at the moment? James Stevenson, GlobalStar: There are four key areas enjoying TMC investment right now. Firstly, technology, and specifically single booking platforms that provide a consistent source of content for both agents and travellers. TMCs have to invest in this to ensure access and full servicing capabilities for both GDS and non-GDS content, including NDC. Secondly, people, from wellbeing and development initiatives through to signing bonuses. Every tactic to attract and retain people is enjoying TMC investment. Thirdly, ESG unsurprisingly remains a focus for investment as clients demand more support for their company initiatives. Lastly, meetings and events and live availability venue finders. In today’s world of remote and hybrid working, canny TMCs are investing to speed up client requests for meeting spaces that enable teams to be brought together.

situation differs depending on the company. In most cases the staffing problems seem to affect predominantly frontline consultants. James Stevenson, GlobalStar: The biggest challenge right now is resourcing. Staffing levels are woefully low. We saw so many brilliant people laid off during the pandemic. Some of our partners kept their staff on during the pandemic, sometimes outsourcing them to provide resource to Covid-related call centres, pivoting their businesses to survive. As a result they have highly trained, experienced and knowledgeable teams in play. It comes as no surprise to see the competition for staff right now. There are signing bonuses being offered as normal and candidates are receiving multiple offers and taking their time to make a decision. Guy Snelgar, Advantage: Our members tell us that this certainly remains an ongoing challenge, but not at the critical level it was in the second half of 2022. We are seeing some old colleagues deciding to return to the industry, having left during the pandemic, and some TMCs are starting to benefit from trainee and apprenticeship schemes that have brought in new, young talent. However, competition for good, experienced staff remains high, as does the cost of recruiting them.


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Guy Snelgar, Advantage: Many TMCs continued investing through the pandemic, particularly in technology, and we are now seeing the fruits of that investment being launched for customers. Tools delivering sustainability information and calculation to the corporate traveller have been the most prominent. There has also been a lot of work behind the scenes by TMCs refining the operational processes – a combination of technology, recruitment and organi- sational change to support new booking patterns and service expectations that have emerged post-pandemic. Clive Wratten, BTA: On the whole, all TMCs continue to invest in technology, but I actually believe the biggest investment is in their staff. Recruiting, retaining and re- training employees is critical, especially as the industry is making a promising return to pre-pandemic levels. It is clear that people are at the heart of the business travel industry. What do you think is the TMC community’s biggest challenge now? Marcel Forns, GEBTA Sustainability and content. Both issues are without doubt major concerns for the TMC community. As we have seen a certain decrease in staffing problems in the last months, we believe that access to content will now become the main challenge for the vast majority of TMCs.

There was much talk of subscription fees during the pandemic but, for all the hype, has there been much change in the way corporates remunerate their TMC partners? Marcel Forns, GEBTA In general terms the Spanish market is based on a transactional model. However, we do see some shift to complementary and more balanced business models that seem to be more adequate in remunerating the added value offered by TMCs, namely when it comes to consultancy, for example. James Stevenson, GlobalStar: There’s no evidence of that change. I’ve seen the subscription model on a domestic level, pushed for by the TMC, but nothing more than that. The subscription model can be an expensive option for clients when their travellers’ volumes vary so much.

James Stevenson, GlobalStar: Staffing has to come high on this list because as we have seen, it is detrimental to meeting service level agreements. Probably followed by – and these are in no particular order – content fragmentation, supplier capacity and inflation. Clive Wratten, BTA: I believe that content fragmentation is a key issue that TMCs face in the future. There has never been a more important time for the industry supply chain to collaborate and respect each other. TMCs are the integral conduit, and they need to be recognised and appreciated. Collaboration across the industry is vital to tackling big and small challenges. We need to take a proactive stance on sustainability and reducing our carbon footprint. As a contributor to greenhouse gas emissions, sectors across the industry must work together to develop innovative long-term solutions that are financially viable.

12 | SPRING 2023

When buyers are looking to achieve the minimum cost for each different transaction type it will inevitably lead to a complex fee structure

Guy Snelgar, Advantage: With so much uncertainty around travel volumes over the last couple of years, it is not surprising that there hasn’t been a big move to some of the new fee models like subscription fees – it was hard for a corporate travel manager to make any commercial comparison while people weren’t travelling. However, they have not gone away and we have seen more TMCs announcing alternative models recently. There is still a disconnect between the value that a TMC delivers from the total management of a company’s travel pro- gramme and a fee structure which is based heavily around the booking of each individual transaction. As business travel establishes its ‘new normal’, I do expect to see a move towards some more inclusive models that recognise the whole service a TMC provides. Do you think there is a discernible shift in the way TMCs make money? James Stevenson, GlobalStar: I think many TMCs would like there to be a shift in how they make money! The management fee model is usually the preferred option, but in reality, clients are asking for a transaction fee model. It’s interesting as the mix between supplier revenue and client fee revenues will vary depending on the TMC – and those who weight towards earning from supplier revenue are always providing less choice for their clients. But the landscape has changed. Suppliers simply don’t have the same amount of cash in their model today that they had pre- pandemic. Costs and margins are irrevocably altered. TMCs can no longer rely as heavily on a blend of listing fees, marketing revenue and performance- driven incentives. Guy Snelgar, Advantage: There’s not so much a sea-change here as a gradual evolution that has been happening for some time. Certainly some suppliers, post- pandemic, are reviewing how they incentivise and remunerate agents, but as always that varies across the industry.

While many supplier partners are offering new commercial incentives, others are reducing or limiting access to these. The impact of these changes varies from TMC to TMC, depending on their model, which is leading many to review the profitability of some products and whether existing client fee levels are sustainable in some cases. Clive Wratten, BTA: This very much depends on the model that the travel management company uses as the industry continuously adapts to market conditions. TMCs are adept at adjusting their business models to reflect the commercial landscape which explains the shifting emphasis on where the profit is derived from. Are TMCs’ increasingly long and complex fee menus and surcharges damaging customer relations, or is it a case of ‘needs must’ for TMCs’ welfare? Guy Snelgar, Advantage: There is a necessity for TMCs to cover the changing – and often increasing – costs associated with processing different booking types and content sources. In a model where corporate buyers are looking to achieve the absolute minimum cost for each different transaction type, that is inevitably going to lead to a complex fee structure to match. For example, if a booking fee has been sliced so thinly on a product that might not deliver any commission back to the TMC, then the removal of a GDS incentive, or additional costs incurred from having to manually process changes to the booking, can make that fee unsustainable without a surcharge or increase. James Stevenson, GlobalStar: It is definitely not a ‘needs must’. It’s a choice. We choose to not to entertain it, preferring to place emphasis on great customer relations. Our model is pretty simple. Our fee menus are neither long nor complex, and we don’t have surcharges, unless it is a third party surcharge, such as NDC, which we pass through at cost, obviously. Our makeup adds

to the simplicity of our model. Complexity is created because the industry doesn’t have a standard way to book. That means that larger TMCs and especially the mega TMCs can and will charge extra for anything and everything that is outside standard service. They have to try to cover all bases as far as client needs – today and in the future – are concerned. A ‘pay as you go’ menu that is long and complex is their solution. This article was first published on in February 2023 as part of the Spotlight Series: Travel management companies report


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Heralded as one answer to TMCs’ plummeting revenue during times of disruption, the subscription fee

model has to date had a lukewarm reception among buyers, writes Andy Hoskins

14 | SPRING 2023

S HUTTING the stable door after the horse has bolted – that was one industry executive’s succinct assessment of TMCs’ call for a move to subscription models during the height of the pandemic. With revenue from transaction fees plummeting almost overnight while TMCs continued to field enquiries and perform non-revenue-generating services, the rationale was perfectly logical. A subscription fee set-up – which come in many guises – would better protect TMCs and ‘share the risk’ with customers. But would anyone beyond the most benevolent of corporates see value in the set- up? For all the hype surrounding the model, corporates appear unconvinced. In a survey of more than 150 buyers conducted by BTN Europe last year, only six per cent said they had a subscription arrange-

travellers or cost centres and that prevents the shift. So it’s financial accounting that prevents change.” A second barrier to adoption, Park believes, is the possibility of further events that could disrupt travel in the future. “If you have a high subscription fee and then there’s a month or months of no travel… that’s expensive for the buyer who is paying just to keep the lights on.” Park does however like the idea that a subscription fee could be reduced if a corporate’s online adoption increases or its average call times fall. “They might say ‘ok, we can reduce your fee because you’re not causing too much noise in the machine’,” he says. Caroline Strachan, managing partner at business travel consultancy Festive Road, offered a simple analogy during a breakout session at GBTA Europe last November. “If you’ve ever paid for a gym subscription, been there lots in month one and month two and then not so much in month three for whatever reason, it’s an expensive subscription. That’s the issue I think buyers have with the model.” She added: “The commercial model conversation came up during Covid purely because of the massive revenue drop that TMCs faced. I think it’s almost a non-issue as we exit the pandemic.” Nevertheless, she suggested that alternatives to transactions fees or management fees need “comfort factors” built into the contract such as a get out clause after a year if the arrangement is not working for either party. Some companies have a central budget so they can choose their model more freely

customer and our suppliers as well. If we’re not able to be healthy and service the customer at the end of the day, if we don’t have any revenue to do that, if we don’t have any revenue to develop tools and products for the future, it’s going to be bad for everyone in the long run,” said Snyder. Snyder said his preference was a cost- plus model “where you have your basic cost covered and then you have a markup on top of that”, while “subscription pricing would also have a good place”. American Express Global Business Travel CEO Paul Abbott offered a similar assessment in the midst of the pandemic: “High demand and low revenue is not a great balance. I do think the transaction fee model needs to be looked at.” Amex GBT has not formally launched a subscription offering but says it offers

“nearly every pricing solution imaginable” with “almost every customer ending up with a hybrid of transactional and non-transactional pricing elements for the various aspects of

ment with their TMC. In a similar survey conducted by BTN this spring, the figure was just two per cent. In both surveys,

around two-thirds of buyers said they operate on a transaction model. “There’s been very little movement [away from the

our A spokesperson for the TMC said that services”.

subscription fees can work well for established programmes, with relatively predictable demand, or for delivering a defined set of products and services, paired with a central budget. COST ALLOCATION It is the last point, a central budget, that is a sticking point for many corporates, says Ben Park, senior director procurement & travel, Parexel: “Some companies have a central budget so they can choose [their model] more freely, but in most companies, the costs need to be distributed to the

transaction model]. If there’s anything that I regret, it’s that we haven’t gotten more aggressive with changing the pricing model through the pandemic,” said BCD Travel chief executive John Snyder at The Beat Live in December last year. “It was very clear for the first couple of years of the pandemic that the transaction pricing model was broken; it doesn’t work. TMCs were not getting fairly compensated for the work that they were doing. “[A pricing model change] benefits the TMC for sure, but it also benefits the


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about [re-writing] their travel policy or bringing in sustainability initiatives, for example. There’s no transactions there but you’re still working with them and providing value.” The company will adjust the fee as appropriate each year. “We’ve had it both ways, with some companies coming in with lower spend and some with higher spend than they expected. Many companies at the moment struggle to have insight on the size of their programme,” says de Boo. And that is the crux of the matter. A subscription fee has to work for both parties and setting it at the right level is fundamental to that. Moving to the model when there remains uncertainty about future travel volumes is difficult. “Subscription fees work best when a buyer can give assurance as to what their volumes are going to be. Then they can agree the appropriate set up,” says consultant Chris Pouney, who provided this article’s opening line. “Good travel managers know with reasonable assurance where their volumes are going to be because they’re connected to their sales team, their finance team… they know what’s coming up and that is when the model works well.” Travel management companies – and some buyers too – almost unanimously believe the transaction fee model needs shaking up. While they work for some, subscription fees do not appear to be the solution around which the industry will coalesce – at least not until travel volumes stabilise and become more predictable – but then again, perhaps there is no such panacea. This article was first published on in February 2023 as part of the Spotlight Series: Travel management companies report Travellers get the support they need and won’t land a $25 fee if they need to make a change

have a flat annual rate that reflects the value we provide for managing the entire programme which is much more than just allowing travellers to book.” De Boo says the offering, which is utilised by around 60 per cent of its customers, provides simplicity in terms of budgeting and understanding the cost of the travel programme. “Travellers also know they get the support they need and won’t land a $25 fee if they want to make a change,” he says. Ostensibly, it is not too far removed from a management fee, but is not based on a percentage of overall spend. Rather, the annual fee, which can be adjusted up or down, is based on a combination of the number of travellers, overall spend, online adoption and a customer’s particular service needs. “All of that determines the sweetspot,” explains de Boo. “There are subscription models based on license fees or user numbers but if you have some people who book only four times a year and others booking 100 times a year that’s not going to work so well.” The likes of reporting, analytics, reshopping, duty of care procedures and unused ticket management are all wrapped up in the fee. “No shoe fits everyone but I think it works really well for the market we’re in – the mid-market and smaller customers,” says de Boo, who adds the TMC includes the option in RFP responses where it deems it appropriate, “but often we’ve already engaged with the client well before the RFP and the model might be the reason we were invited to participate.” The TMC has been offering the set-up for more than four years and says it better protected it during the pandemic. While the company reduced fees for some customers, it was able to keep many larger clients’ teams “more or less intact”. De Boo explains: “We kept providing all our services. Just because there wasn’t any travel didn’t mean they [customers] didn’t want to talk [about] travel – how to navigate it all, providing information to travellers, looking after those still travelling. And as the pandemic progressed some thought

CWT was perhaps the highest profile TMC to formally introduce a subscription offering, doing so last summer. Customers receive a single, recurring monthly invoice for all products and services they procure from the firm, with the fee based on criteria including forecasted transaction volumes. A group of customers that took part in a pilot of the model over the preceding 12 months said the monthly fee reduced the time their finance teams spent reconciling TMC invoices and helped eliminate hidden fees. Asked for an update on the offering in February this year, CWT says it sees a “continuous uptake” and has onboarded its first client outside the US on the model. It noted the arrangement resonates well with tech clients as it resembles software or cloud-based pricing models. Travel Planet also offers a subscription- based pricing model but says the traditional transaction model remains its most popular offering. “We have less than five per cent of clients on it and I don’t see it growing by much,” says the TMC’s UK chief executive James Diaz. It offers monthly, quarterly or annual billing and expects those on the subscription model to have upwards of 70 per cent online adoption. “We price it based on the expected number of trips per month – not how many travellers they have or their total spend. That is then their bucket. If a customer’s number of trips varies widely from that bucket we’ll take a look at recalculating it. If it’s within, say, ten to 15 per cent we probably wouldn’t do anything about it but anything more and we’d probably sit down with them and look at which way the fee needs to move.” A DIFFERENT TAKE Some travel management companies have found success with different versions of subscription pricing. “Business travel has traditionally been completely transaction fee-based but as a TMC the booking is only a part of what we do and it’s not the part where we attach the most value,” says Geert de Boo, vp global business travel, JTB Business Travel. “With Experience Zero, we

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CHARGED UP TMCs’ often convoluted roster of fees is

partly symptomatic of the multiple pressures they are facing, but should buyers be more sympathetic of their plight and even abandon the pursuit of transparency? Andy Hoskins reports

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T RAVEL management companies are feeling the pressure. A Covid- induced slump in customer revenue was followed by an ongoing battle for talent, while content fragmentation and shrinking supplier revenues are taking their toll. The challenging circumstances have reignited conversations around TMCs’ remuneration models – subscription fees are not necessarily the answer (see p14-16) – and the proliferation of fees and charges. Meanwhile, some buyers continue to call for total transparency in a world in which TMCs earn their living from conflicting revenue streams. “TMCs are in a difficult position right now and that is leading to a lot of new ideas and fees,” says Martin Warner, principal at MW Travel Consultancy and former executive vice president, market strategy and segmentation at CWT. Proving problematic for many TMCs, he says, are declining GDS incentives and an “acceleration in supplier revenue decline”, together with a talent shortage and, as a consequence of that, higher labour costs. Lastly, he says, online booking adoption rates have not typically returned to pre- Covid levels – meaning more human intervention is required – and that bookings are still taking longer and require more assistance. Indeed, last summer the Business Travel Association said the proportion of bookings that required assistance or changes had gone from around one in ten to one in four. “Some TMCs are trying to increase their fees or introduce new fees and some are talking with their customers and working out how they might consume their services differently now,” says Warner. And with content becoming increasingly fragmented, there are costs associated with bringing it all back together. “TMCs are embracing more and more non-GDS technology… and I think there’s an

argument that supports the TMC’s justification of more cost with new or increased fees,” he says. “But then how long as a customer would I be prepared to tolerate a TMC’s inefficiency to get hold of that content for me?” Meanwhile, as supplier revenues fall, the balance of TMCs’ revenue is moving towards the customer side. Speaking in December, BCD Travel’s chief executive John Snyder estimated that the TMC’s revenue was “hovering around that 50/50 mix of supplier versus customer revenue”. He went on to spell out the shift: “If I had to predict, and given where some of the changes are evolving in the industry, I think the customer revenue piece is going to grow, and the supplier [revenue] is going to stabilise or neutralise where it’s at. So I think the percentages are going to move over time. We’ve got to get more revenue from the customer at the end of the day. So I think we will see that start to tip a little bit over time.” FEELING THE HEAT Those TMCs that increased fees or introduced entirely new ones during the pandemic felt the heat from customers – even if they could see the rationale as TMCs carried out extensive work for no reward. Some argue that corporates are themselves partly to blame, having driven down transaction fees long before the pandemic took TMCs’ revenue away. “I think there’s an unwillingness on the part of some companies to accept that there is a price to pay for having the services that they want,” says Margaret Birse, travel practice lead at Wolfe Procurement, and former global travel director at Serco. “Some [corporates] try to push fees down to the point where it creates the wrong behaviour on the part of the TMC. We completely understand the desire to get the

best possible fees, however, the fee cost is small compared to the overall travel cost and we remain focused on ensuring that the cost and service are balanced for programme optimisation.” Guy Snelgar, business travel director at the Advantage Travel Partnership, agrees. “In a model where corporate buyers are looking to achieve the absolute minimum cost for each different transaction type, that is inevitably going to lead to a complex fee structure to match.” He continues: “For example, if a booking fee has been sliced so thinly on a product that might not deliver any commission back to the TMC, then the removal of a GDS incentive, or additional costs incurred from having to manually process changes to the booking, can make that fee unsustainable without a surcharge or increase.” How long as a customer would I be prepared to tolerate a TMC’s inefficiency to get hold of content?


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CONTACT CHARGES Regardless of the pandemic, TMC fees have become increasingly convoluted. “I’ve been through so many TMC RFPs and I’ve seen all the bells and whistles – all the fees and charges,” an independent consultant told BTN Europe. There can be up to 50 line items for transaction fees per country, they said, and then “probably another 20 or more fees for implementation, data hand- offs, single sign-on, re-shopping services, unused ticket tracking… fee, fee, fee! It’s really challenging for buyers to manage and audit all that and I think it’s challenging for TMCs too.” One surcharge that frustrated many buyers during the pandemic was contact fees. When transactions dried up at the onset of the pandemic, some TMCs introduced fees for calls that did not result in a booking. Probably the highest profile of these was a $25 contact fee introduced by American Express Global Business Travel. It applied to phone calls, emails and chat exchanges where there was no booking, although the fee was often negotiated down “to a couple of pounds per call” according to one source. One corporate who had enough clout to have it waived completely told BTN Europe: “We absolutely fought that and in the end they didn’t apply it. We felt it was completely against what a TMC should be. It shouldn’t be an expectation that every call results in a booking.” The buyer adds: “TMCs say the fees are not about profit but about being able to provide the level of service we expect so I am sympathetic to a certain point. We value their partnership and appreciate there are reasons for costs to go up.” A spokesperson for Amex GBT said the contact fee was introduced during the pandemic “at a time when we were handling a disproportionately high volume of calls from travellers seeking information

rather than booking travel. It is one of the many approaches we have taken with customers to best align the pricing between the cost structure of our services and the activities that drive those costs.” Margaret Birse believes most TMCs’ contact fees are around the $10 mark and can be applied multiple times in relation to a single booking. “If someone calls to check the itinerary, request the ticket etc, that could be $40 on top of the initial online booking fee,” she says. “They [TMCs] don’t seem to be discouraging people from making those contacts yet some are struggling with the resources required to maintain a high level of customer service.” But contact fees aren’t all bad, believes another independent consultant, Chris Pouney, who says they can help root out particular behaviour among travellers. “Rather than putting my transaction fee up, the TMC can bring in that [contact] fee and get more revenue for a while, while you stop those people calling when they really shouldn’t be. I’m fine with that. I doubt many buyers have said that but, in theory, it’s right as long as it’s done in a transparent and collaborative manner.” Although many contact fees were introduced or increased during the pandemic, they are not an entirely new concept. During his time at CWT, Warner oversaw the launch of an “excess contact fee”. He explains: “If the average contact per transaction was higher than what we’d based the contract on then we reserved the right to charge for those excess contacts. Some customers were very understanding of that.” CWT says it does not charge a “universal contact fee” for calls that do not result in a booking but says there are circumstances where a charge could occur, while FCM told BTN Europe it only charges a contact fee on its emergency out of hours service. One TMC striving to simplify its model with an “all inclusive” approach is Travel

Planet. Its fees include everything from account management, implementation and reporting, to approvals systems, traveller tracking and even out of hours service. “Our fees are all-in…. I’ve seen the price templates from other TMCs and you need an A3 printer for those,” says James Diaz, the TMC’s UK chief executive. Another mid-market European TMC told BTN Europe that they do not “in general” charge a fee for calls that don’t result in a booking, but the organisation is open- minded on high-cost booking charges – another cost some buyers object to. “Non- GDS content currently makes up a relatively small percentage of our bookings, but we would consider introducing additional fees when the demand increases,” they said, without wishing to be identified.

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