How has business travel changed in terms of organisation within companies?
Mathieu Gufflet: As far as the management of the travel budget is concerned, this non-production expenditure comes under the control of the purchasing department in large companies; those that devote an annual budget of at least €5 million to business travel. For other companies, this item is more generally the responsibility of general services, or even general management for SMEs. New functions have emerged: on the one hand, the buyer responsible for negotiating services with travel agencies and rates with air, rail and hotel suppliers; on the other, the travel manager who acts as the interface and coordinates between the travel agency and the company, while monitoring the agreements negotiated. Externally, large groups generally had implants: a team of professionals that the travel agency delegated to the company's premises. SMEs, on the other hand, dealt directly with a local travel agency. With the development of new technologies, online booking tools have emerged. According to our latest studies, today 16 % of transactions are made via these applications, compared with only 6 to 8 % in 2005. For their part, travel agency networks are organising themselves into business hubs and are not hesitating to relocate their call centres.
Omar Cherif Machichi: Fifteen years ago, two full-time people were needed to manage business travel in a company with around a hundred employees. Five years ago, you only needed one full-time and one part-time person to do the job. Today, a single post is enough; but more importantly, this single agent can offer a more comprehensive service than before. In the meantime, human relations, based essentially on telephone exchanges, have given way to electronic messages via tools such as self-booking tools. There remains one sector in particular: VIP business travel, where the right to make mistakes is not tolerated. For these top-of-the-range services, there is often no question of relying on electronic means, given the stakes involved.
Georges Panayotis: Over the years, corporate travel policies have become more rigorous. They leave less room for employees to make their own personal choices when it comes to travel. This rigour can be explained by the strategy of companies, which after the oil crisis and during the economic crisis, asked their purchasing departments to cut overheads. With a certain degree of flexibility when booking, companies looking to guarantee the best fare do not always look favourably on yield management. Introduced in the airline industry in the 1980s, this method of setting fares according to occupancy levels was developed in the hotel industry around ten years later. Each year, companies negotiate the cost of services such as air transport and accommodation through their travel agency or by invitation to tender. They obtain a price applicable for one year. But this negotiated price does not necessarily offer an advantage over a rate resulting from yield management.
What about the agency business model?
Mathieu Gufflet: In the 90s, travel agents were seen by their customers as profit centres. At the end of the year, they received a cheque for part of their commission. More recently, the agency has become a cost centre, with customers paying it directly. In the meantime, the commissions paid by the airlines have fallen significantly. And they are due to disappear in the next two years, which will give rise to a new method of remuneration per transaction. Currently, this cost per transaction concerns almost 80 % of companies, compared with barely 20 % in 2000.
Omar Cherif Machichi: Since the abolition of commissions paid by suppliers, agencies have tended to issue a monthly invoice based on a percentage of business volume including VAT. For SMEs, this remuneration generally varies between 6 and 7 %. For large groups, it is between 5 and 2 %, depending on the volume handled.
Georges Panayotis: Driven by companies, travel agencies dealing with business travel have gradually moved from the status of service providers, earning commission on services sold (mainly air tickets), to that of partner in managing companies' travel budgets under the best possible conditions. Commission-based remuneration has been replaced by remuneration based on services rendered, time spent, and even indexation to savings made for the company.
Has the role of the agencies changed as a result of this change in the way they are remunerated?
Mathieu Gufflet: These major changes are leading to a transformation in the travel agent profession. From simple generalists who sometimes confined themselves to issuing plane or train tickets, these professionals are becoming specialists who provide high added value to their customers, who have become more demanding. Their role is expanding to include advising customers on how to streamline their budgets and processes. To this can be added the role of service integrator, when the agency is responsible for obtaining visas for business travellers, organising an incentive trip or seminar for a group, and so on. Finally, given these cost-cutting trends, it's a safe bet that one of tomorrow's challenges will be for service providers to control the quality of business travel...
Omar Cherif Machichi: As long as the commission system worked, the agency was a transit point. Now it provides real added value by selecting products, based on the criteria of value for money and passenger safety. This requires both negotiation and consolidated sales actions, and imposes greater specialisation, because selling train and plane tickets is not enough to make a business profitable. Proof that the traditional agency is on the way out.
Georges Panayotis: With the practice of net prices, without commission, agencies become 'buyers' of services on behalf of the company. There is greater transparency, and the agency participates in the drive to control corporate costs. They have to justify their added value by providing better advice and finding the best solutions for company staff to travel. It now has a negotiating role with transport and accommodation suppliers.
In terms of products, what changes have you seen over the last fifteen years or so?
Omar Cherif Machichi: We're seeing an explosion in the number of air links, as the number of arrival points around the world has multiplied. As airlines go and find customers where they are, it's easier to move around, and niche markets are multiplying.
Georges Panayotis: The hotel sector has always been a forerunner when it comes to the home. The way rooms are equipped has evolved, in particular with the use of digital means of communication: Internet access, wi-fi, interactive flat-screen television, etc.
Your vision of the sector...
Matthieu Gufflet: Companies, like travel agencies, have to prepare for major changes: the end of commissions, the relevance of online booking tools and electronic expense reports, the maturity of low-cost travel, the development of direct sales channels, the automation of banking flows, etc. This inevitable restructuring of the market is a response to the desire of multinational companies to 'industrialise' and save money.
