Corp Travel Agencies Need to Start Unbundling Services

Corporate travel agencies are facing new pressures to separate their bundled services from company travel managers looking to cut costs and add flexibility.

Questions were raised over what kind of value travel agencies offer today, delegates heard at the Global Business Travel Association’s European conference in Brussels on Wednesday.

During a panel debate called “What Should Tomorrow’s Travel Management Company Model Look Like?” one delegate suggested: “Maybe I should buy the online booking tool from BCD Travel, and the consultants from FCM.”

Corporate travel agencies are increasingly dividing up their services, in some cases a move designed to offer  solutions to smaller companies or start-ups that may not want a full service contract. So-called microservices allow travel agencies to do that.

But in this case it seems larger clients could now be taking advantage of that.

It was currently a major trend as corporations build travel programs “like a Lego house,” according to moderator Caroline Strachan, managing partner at consultancy Festive Road.

“It’s the biggest trend we’re seeing. Of all the calls we get, about how we need to get a new travel agency, that now ends up in unbundling the travel agency, and what the agency used to do,” she said.

“Maybe set it up as a system of microservices, maybe the travel agency is the foundation stone, or maybe it’s not. Maybe technology is the foundation stone. It’s a bit like a Lego house, build it back up again,” she added.

Divide and Conquer

Expedia is also developing more microservices, including fraud prevention, to help other travel retailers.

“We’ve expanded and improved our partnerships with many of our biggest supply partners through these kind of technological relationships, and we’re feeling quite good about it,” said CEO Peter Kern during an earnings call at the end of last week.

Newly launched travel agencies including TripStax and Spotnana are also focusing on this area. “Think of us as Amazon Web Services for travel,” said co-founder and CEO Sarosh Waghmar recently.

However, Strachan said some company travel managers may find opting to use just a single travel agency is the simplest option.

“You may go through that exercise, and it actually reaffirms the agency was right along, so put everything in one place, so there’s a low total cost of ownership, and you don’t have a lot of resources to manage,” she said during the panel.

“Or there are others, who may say with the API (application programming interface) world as it is, I’m more empowered as a travel buyer, I’m going to build my own program. That’s an emerging trend,” she added.

Panellist Ben Park, senior director procurement and travel at pharmaceutical company Parexel, added: “What I’m seeing at the moment, it doesn’t matter which travel management company you’re choosing, you’re getting, online, almost the same experience. This devalues the experience option with the travel management company, the chance for the agency to differentiate themselves.”