Corporate travel. A glass quarter-full is still plenty
Where do we go from here?
In which Johnny Thorsen argues the case for a glass quarter full….
In case you haven’t already done the math – it is now 8 months since China announced the first major shutdown of 20% of the domestic flights and a few international flights back in late January 2020 – and the time has come to accept that we have entered a new phase in the never-ending odyssey known as “the travel industry”.
Travel as we knew it prior to 2020 will not return for an unknown period of time, and rather than keep debating when it might happen I believe the time has come to say “travel has already restarted” and reposition your business according to the new rules rather than hoping you can survive until the old rules potentially return one day.
TravelTopia Futurist, Johnny Thorsen is a uniquely strategic thinker with close knowledge of the corporate travel industry.
Catch Johnny talking all things technology and innovation at the October Edition of CAPA Live on 14-Oct-2020.
To register, visit capalive.capaevents.com.
Travel is still a global business - but a 50% productivity increase is needed
Starting at the 30,000 feet level, travel is still is a massive industry – if we assume a 75% drop from 2019 there will still be more than 1 billion travelers to service in 2021 – which is an incredible amount of customers in most industries and verticals – so stop “moaning about the drop” and start focusing on securing your fair share of the available market – like any startup has to do when they enter an existing market with a new service offering – focus on the most important things and ignore the items you cannot change or influence!!!
Which leads to the next observation – if you are a TMC or travel supplier then stop saying that it is impossible to change or upgrade your existing technology infrastructure because of Covid-19, when in fact it never will be easier or cheaper to do so – and by the way if you don’t upgrade now you will almost certainly go out of business when your competitors have upgraded as your cost base will be too high and your ability to deliver services in the new world will be inferior compared to those who did upgrade.
With or without Covid-19 the travel industry had actually reached a point where the legacy technology infrastructure was falling apart, but in most cases the problems were hidden or ignored by the fact that the global volume was growing at 4-5% consistently which made it possible to work inefficiently and still survive because of the endless flow of business.
Those days are definitely gone now – if you think you can survive another year with old outdated human-intensive workflow procedures then you are in the wrong industry – in order to survive in the Covid-19 world your productivity probably has to increase by at least 50% before the end of 2020 - and this can only be achieved by eliminating every process which require a human agent unless you can charge for the privilege of providing an agent as an fee-based alternative to a simple and elegant “Do it yourself” service option.
The traveller must do the work
Whether we are talking about the process of searching, booking, changing, cancel (and refund) or upgrading a service, it must be possible for the traveler to do it themselves – and the same goes for the areas of invoicing, credit notes, statements, settlement and balance inquiries which must be self-service capable services. Corporate travel specific features such as profile management, policy configuration (price, service and sustainability), supplier optimization (ie work in Excel) and reporting must obviously also be self-service enabled and highly automated and finally the area of payment has to be simplified and optimized in such a way that we can say goodbye to the expense report completely.
If you are familiar with the technology infrastructure of the corporate travel world then you are probably thinking “this is not possible” and you are partly right – because it is not possible with the existing solutions which have been running for 10-15 years or even longer in some cases – but it is completely possible with the next generation of services and solutions arriving in the marketplace at a perfect time – just when the travel industry actually has the required time available to say goodbye to the legacy world and move into an open and inter-connected technology architecture.
They buyers have the power to create change
As always change is primarily driven by customers so if you are a travel buyer then you should start asking your TMC how old each of their technology solutions actually is – and perhaps create a new SLA requirement which states the average age of their tech stack must be under a certain level – say 5 years – to ensure they provide you with the latest tools and services at the lowest possible cost while still being allowed to make a meaningful profit margin like any other trusted supplier.
Or perhaps you prefer a different model where you create your own tech stack for managing your travel program and simply use the TMC as a “booking service” similar to how you procure a number of other services and products today in your core business
Regardless of which of the 2 models you prefer, they will both lead you down a path with higher efficiency, lower cost of service and most importantly a better travel program as a result.
Are you a manufacturer or a designer ?
The first option works best for travel programs where you don’t have a budget allocation for sourcing and funding your own travel technology and therefore have to pay the TMC for use of their tech stack – I refer to this model as the “travel factory” as it applies the same dynamics as a manufacturing business where all the costs are factored into the product being produced with no option for the customer to influence the process in reality.
The second option works best for travel programs with a dedicated budget for travel related technology where you operate your own data warehouse and can activate any relevant 3rd party service without asking the TMC for support or permission – I refer to this model as the “travel studio” as it follow the principles of a product design environment where every little details is analyzed and optimized to create a perfect result without focusing on maximum reuse of old existing methods.
So obviously, if you are a travel buyer you need to ask yourself “which model is best for me” the factory or the studio option – both will work but you will have more control over traveler happiness and efficiency in the studio model while you will have more control over the cost elements in the factory model – so ask yourself which model your company prefers and then decide how you get the best possible outcome in the preferred option.
Where will the travel buyer reside in the future ?
In most companies the travel buyer has lived a “comfortable and hidden” life in the shadows of the global procurement and finance organisation, and the travel procurement manager can generally be divided into 3 groups.
The first group - “The category manager”
I call them “The category manager” - consist of the procurement specialist who are given a 3-year ownership of the travel (and sometimes meetings) category before they move on to bigger and more important procurement categories.
These individuals will rarely make any major changes as they literally want to get out of the travel category as quickly as possible without causing any major headache or problems, so they are a perfect buyer persona for the TMC and travel suppliers in general.
The second group - “The category owner”
“The category owner” – is typical a person with prior background from the travel supplier / TMC industry before they jumped over the fence and became a buyer.
A majority of these individuals have a natural close alignment with the TMC community and will generally maintain the status quo while trying to keep up with the mainstream developments in the travel management arena, but they are likely to issue RFP’s on a regular basis and typically use the threat of changing supplier as leverage to get a slightly better deal.
Then there is a third group - “The category disruptor”
Over the past 1-2 years we have seen the emergence of a new and very interesting third group of travel buyers – “The category disruptor” – and they represent the next generation of travel management experts.
It is too early to tell when this group will become the dominant leader in the future, but there are some clear signs showing that they will replace the “category owner” person in a number of global companies as an indirect fallout from Covid-19.
The Disruptor is not afraid to challenge the status quo, and they have shown great skills in terms of aligning with the internal digital teams as well as HR in order to secure strategic sponsors for their projects, and most recently they have started using sustainability and virtual meeting demand as the next areas of leverage to increase the overall budget for innovation in travel.
Getting started is easy...
I am not going to promote any individual companies or services here, but if you are interested in a particular area of service then feel free to reach out with a PM and I will be happy to send you a brief document with a list of some of the new and exciting startups and solutions out there.
Most of them are less than 2-3 years old and have struggled to break into the market because your trusted partners – the GDS and TMC – typically have done everything possible to prevent them from doing so – but they are now your best chance for upgrading your travel program quickly at a low cost point and be able to take maximum advantage of all the new opportunities emerging in the travel industry.
Because the best days are still ahead of us and we will continue to travel but hopefully in a smarter, greener and more efficient way.
TravelTopia is getting closer every day – and I actually believe we will look back at the year 2020 and Covid-19 and realize that this was the trigger event which created a better travel industry – hopefully you will be part of it and play an important role in designing how it looks
I am ready to travel again – are you?
Johnny Thorsen is the “VP for Strategy and Innovation” for American Express Digital Labs after they acquired Mezi, in January 2018.
Prior to joining Mezi in 2017 Johnny was the co-founder and CEO of conTgo, a UK-based startup acquired by Concur in March 2013. Johnny serves as a strategic advisor and board member for multiple startups within the wider travel industry, and is a frequent presenter at travel industry events (physical and virtual). Business Travel News named Johnny Thorsen one of the 25 most influential people in the business travel industry in 2018 and 2010.