SMEs: Bespoke model

Tailoring a business travel service to a small or medium-size enterprise can be very rewarding

When you are small but beautiful – as a company that is – it usually makes sense to concentrate on what you do well. If you are a bakery with five staff, you would happily outsource the bits that might not be considered core to your business – cleaning the shop, doing the accounts, and so on.

When it comes to business travel, small and medium-size enterprises (SMEs) have not always felt the same need. Booking travel, even if it is for business rather than leisure, is usually perceived as a task that doesn’t really require external expertise.

However, Kate Roe, American Express GBT’s head of marketing for EMEA and APAC, says outsourcing business travel is no different from outsourcing other functions, such as payroll or accounting. “How much do you want to take on yourself before it becomes more cost-effective and more professional to have that managed and let you return to your core business?” she asks.

But Steve Banks, director of business development at Capita Travel and Events, says there has to be a trigger for SMEs to start using an agent.

“They may start off having unsophisticated requirements and doing it themselves. It might be that it takes up too much of somebody’s time, billing becomes too complicated or they are using multiple sources so there is no trip continuity. Duty-of-care comes into it, too. Sometimes there is an incident and companies don’t know where their people are.”

Roe says: “Staff are more conscious of the risk of business travel and, if they happen to be in a country where something is going off, they want their employer to have something in place to take care of them.”

“It might also be spend,” says Banks. “They know they are spending a lot but have no management information to authenticate it.”

Sarah Smith, who heads up Clarity Travel Management’s Hub, a dedicated service for SMEs, says: “One of the main things SMEs are looking for is data consolidation. They want full visibility and want to know how they improve buying behaviour.”

Even with one of the triggers above, one of the biggest challenges for TMCs in getting an SME to move from an unmanaged environment to a more managed one is that they will now have to pay to book their business travel in the form of transaction fees.

Do SMEs get it?
Regarding paying transaction fees, Norad Travel Management’s commercial director Bob Govan says: “Some get it, some do not; there’s still a regular need to explain our business model, and in so doing we clearly tie the true value of our fee to the M for management service aspects and benefits, rather than the T for travel [booking] in our industry nomenclature.”

Andy Hegley, general manager of Corporate Traveller, the dedicated SME division of FCM, says: “The actual fee is a very small percentage of the total – less than 5 per cent of the travel spend – we provide reporting year-on-year and can show the value is there.”

The company targets SMEs spending between £50k and £2 million on travel and has around 4,000 of these on its books, including 2,500 that travel on a regular basis. “Within that spend category, we have dedicated account managers with blended technology called Your.CT. Some companies only require some profile management, but as they grow they need to track spend on their reports, which requires an online booking tool. Then we introduce FCM.”

Clarity’s Sarah Smith adds: “If someone asks me why they should pay a fee, I show them all the airlines we have negotiated rates with. You might book a £100 fare on BA but we would negotiate it to £80 and pass it on to you with a £10 fee – you pay £90 where you would have paid £100.”

Steve Banks of Capita Travel and Events, around half of whose clients spend less than £1 million on travel, says that often the transaction fee barrier is jumped by showing small companies how they can get commissions back on hotel and rail transactions.

Capita’s free of charge CTE Navigator offers a predominantly online service with offline support and telephone account management as well as management information and duty-of-care. Companies that require more sophisticated offline service are passed over to teams dedicated to SMEs.

What do SMEs want?
A survey by TMC Egencia of its SME clients in December 2017 showed that “increased cost savings” was one of the three most important areas for the year ahead. Of those, 60 per cent believed it was the most important. The other top two areas were both closely linked to efficiency, with “increased productivity for the traveller” at 50 per cent, and “improved transparency on travel expenses” at 40 per cent.

Savings are uppermost in SME minds then? Perhaps not. “They say they want cost savings because they feel they should,” says Clarity’s Sarah Smith. “But if we can reduce the number of people booking last minute or show them a cheaper option first and ask them to give a reason if they take a more expensive flight, it might slowly start to change buyer behaviour.”

Roe says SMEs are looking for “savings on air and hotels, good choice in the market, a booking engine, an approval workflow and basic reporting”.

She says: “That is the ABC of managed business travel so we have put all of that together and worked out a price based on a transaction model, with two different options depending on whether the company wants a heavy offline or an online model.”

Amex GBT launched its Business Travel Made Simple proposition at the 2018 Business Travel Show to allow “someone with simple requirements to benefit from buying power, best practices and the savings we can offer large customers”, says Roe. “We don’t want to crush a small company with an implementation that takes ten months. They are looking for something off-the-shelf.”

Roe says the company can offer SMEs discounts of up to 35 per cent at some hotels, for example, but can also negotiate free breakfast, wifi or last-room availability.

Capita, however, sees savings as an important offering. “SMEs also have access to a programme called Collection which comprises independent hotels with negotiated rates that tend to lend themselves well to the SME market,” says Steve Banks. “We have also negotiated fares with 40 airlines; if the company doesn’t have any volume to negotiate with, they can piggyback off us.”

It is not just about savings. Capita’s Traveller First service offers travellers discounts and other benefits irrespective of the SME’s spend. On Great Western Trains, for example, the company can offer free tea or coffee, or free car parking.

“Assistance in the creation and effective dissemination of an effective travel policy is often of interest to SMEs as are ancillary services, such as VAT reclaim and staff welfare benefits, including access to our leisure travel service expertise,” says Norad’s Bob Govan.

“Quite often, an SME won’t have a policy so we take responsibility designing that with them,” points out Corporate Traveller’s Andy Hegley.

What many SMEs are looking for from TMCs is 24-hour support, meaning that the PA/travel booker no longer has to be constantly available and at the beck and call of the company’s travellers.

“Our 24-hour service comes into play in the level of support we give to the traveller,” says Capita’s Banks. “It is there to ensure the traveller doesn’t feel isolated.”

Clarity’s Sarah Smith says 24/7 service is one of the big three requirements of SMEs, along with data and cost savings. Hegley agrees: “If someone is stuck overseas at two in the morning, we can change things for them very quickly on the phone. Giving smaller businesses peace of mind is very valuable to them,” he says.

Roe adds: “If there is anything we can learn from the small business market it is, keep it simple. Business travel can get complicated, so we need to simplify it to be successful in that segment of the market.”

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