ARE YOU REALLY MANAGING TRAVEL?

In the past few years, travel suppliers have stepped up their efforts to capture the small and midsize segment of the business travel market – which some estimate at around $950 million of the total $1.4 trillion in annual global business travel spend.

Among managers of small and midsize travel programmes surveyed by Business Travel News, 61 per cent said their companies were spending more in 2024 than they did in 2023, with more than a third saying their travel spend was more than 10 per cent higher than last year. Whether small and midsize companies will continue to invest in business travel at that rate – or potentially more –only time will tell.

Meanwhile, one in five respondents (19 per cent) said their business travel spending in 2024 will be similar to that in 2023, while 20 per cent said they expect spend to fall in 2024, with 6 per cent anticipating their outlay on business travel will be down more than 10 per cent compared to last year.

The economic environment for SMEs looked relatively bright at the end of the second quarter, so the corresponding outlook for business travel could be good. That said, persistent inflation, geopolitical issues and recent market fluctuations may have tempered the picture.

BTN's 2024 Small & Midsize Business Travel survey asked...

120 respondents

Business travel environment

The effects of inflation are bleeding into business travel investment. American Express Global Business Travel CEO Paul Abbott noted during the company's second-quarter earnings call that, as with the first quarter, small- and midsize business customers "have tightened spending controls in face of sustained higher interest costs and higher inflation."

On a transaction basis, SME growth for the second quarter was at 1 per cent year over year compared with the company's global multinational segment growing at 7 per cent for the same period.

But the first thing to realise with the SME market is that it's not a one-size-fits-all segment, many sources said. Much depends on the size and type of the organisation, its vertical and many other factors.

Abbott said Amex GBT was confident that as macroeconomic conditions improve, so too will SME growth as a business travel segment. He cited a July customer survey which showed 82 per cent of Amex GBT's top 120 SME customers expect travel spend to grow or remain flat in the second half of this year. This almost exactly matches BTN's survey, showing that number at 80 per cent. For Amex GBT, he also said that "new wins" for SME accounts continued to be strong.

The TMC's EVP of global SME, Jason Geall, supported Abbott's remarks, noting that SME business was "more than the backbone" of the industry. "The vast majority of all travel spend is coming from SMEs."

Geall, whose position was created less than two years ago – after the global travel management company acquired Egencia, which had "excelled in the SME market" – added that Amex GBT is signing approximately $2 billion worth of total SME travel volume a year, "so two-thirds of all new travel volume signed on an annual basis is now coming from the SME segment, and just under a third of that, 30 per cent, is coming to us from never having had a TMC before," he said.

121 respondents

119 respondents

KesselRun VP of program management, Krissy Herman, said that she's seeing more SMEs that were lightly managed before or had some policy in place wanting to "build it up a little bit more."

"We're seeing a lot of prospects come to us asking about TMC consolidation services or just management of the programme in general because either travel just reported to whomever, and now they want somebody with a bit more experience and expertise on it, but don't think they're large enough for a travel manager," Herman said. Or they had to let go of their travel manager during the pandemic, and "now are looking for more of an outsourced model in that space."

The services these SMEs are looking for are as varied as the companies themselves.

Traveller safety and duty of care is one obvious need, because during the pandemic, companies that didn't have a managed travel programme had to manage disruption directly, Geall said. He added that a near-equal in terms of priorities is cost management, because "one of the trends has been that [SMEs] have been having to manage the challenge of rising costs of travel and accommodation."

Put another way, after companies cut travel during the pandemic and that budget line item plummeted, as travel comes back, "putting those back jn [the budget] becomes a little bit more painful," said Direct Travel CEO, Christal Bemont. "Once something's off of a line item, it's really hard for it to come back and to then manage it. So,that cost containment and cost management has just heightened relative to making sure that [travel managers] are watching every dollar and where travellers are going."

Online fraud and cybersecurity concerns have become another factor for SMEs. In the mid-market, "we're seeing as intense security concerns and requirements as there are in any complex large business right now," said Gant Travel Management president, Patrick Linnihan, adding that previously, some mid-market companies didn't think they were big enough for anyone to come after. "All the mid-markets are ramping up their security with everything as sophisticated as what you see at the biggies."

Over the past two years, Gant, which specialises in SME clients, implemented SOC 2 based on increasing client requests. SOC 2 is a cybersecurity compliance framework for third-party service providers to help ensure the security and privacy of customer data, as well as compliance with regulations and risk mitigation.

111 respondents

111 respondents

109 respondents

Another trend is the desire for an improved traveller experience, which has "risen up in the ranks as being a much more important factor," said Mike Cameron, CEO, Christopherson Business Travel.

Part of improved traveller experience is another demand that rang through loud and clear from multiple sources: many SMEs want both a good digital experience – preferably with modern retailing options, which is enabled by New Distribution Capability – as well as a good high-touch human experience when it's needed.

Companies "want their travellers to have a modern consumer-like experience just like they do in the rest of their lives," said Cameron, and travel managers also "want them to have a high-touch, concierge-like experience in terms of service." They don't want an "either or" choice between high-touch and digital, "they want omni-service, meaning they want both integrated."

112 respondents

Travellers "want to be able to quickly get access or to even be notified of things and be able to do things in a very self-service way," said Bemont. "However, they want that until they need to pick up the phone and know that there's someone there." With the recent CrowdStrike disruption, "you want to talk to someone, and you don't want to get in a queue behind someone in some sort of email or some sort of chat."

Bemont added that she's hearing a wave of frustration now from travel managers looking for a new TMC saying that the technology is letting them down. "It's largely the booking tool on the surface," she said. "But it goes beyond that. It's the substance that's underneath it."

Managers of small and midsize travel programmes who are multi-tasking with other job responsibilities may not care what the issues are under the hood of the technology – and travellers themselves certainly will not. It will be up to suppliers to compete in the middle market with those capabilities, and they are getting the memo about the SME market's technology demands and service needs.

"The shopping experience alone doesn't solve it," said Bemont. "It starts with the self-serve technology... but then they want to be taken care of in a timely fashion, and they want [issues] resolved, not in a singular way. Both of those are very, very important under the circumstances when you need it."