Travel agencies

Business travel agencies are restructuring to take advantage of the recovery

Image matters in today’s climate, as travel agencies seek to reassure their customers that they can manage their bookings as economies begin to recover.

And corporate travel managers will look to demand assurances from them that they can cope with increased activity as travel restrictions are lifted, especially as governments end their travel programs. financial support and labor shortages threaten broader industry recovery.

The “time of truth” is approaching, according to a global travel buyer working in the retail industry. “It is particularly difficult to read how private companies are doing. It is up to them to ensure transparency, ”he said, preferring to retain his name.

Several large agencies now appear to be stepping up their messages and, in some cases, restructuring and refinancing.

Credit problems?

CWT is in restructuring talks, and looking for credit companies including Caspian Capital and Oaktree Capital Management for new funding.

Bloomberg said CWT entered talks “after ignoring the June 15 interest payments on its bonds …

Two days before the report, the rating agency Fitch Ratings downgraded the company, due to missed debt payments. “The company is in discussions with the majority of its lenders and bondholders to negotiate an agreement for a more comprehensive transaction,” he said.

A spokesperson for CWT told Skift that a recovery in the global travel industry is underway and that it is ready to serve customers throughout the rebound and beyond. “As the next step in our recovery, we are in active discussions with our owners and bondholders to further strengthen our financial position and accelerate our ability to invest in our business. These discussions have been positive and we are making great progress, ”they said.

“One element of this plan includes an agreement with our bondholders that allows us to delay our June interest payments. This agreement gives us more time and flexibility to achieve the best possible financial plan for CWT and all of our stakeholders, regardless of any rating updates made by rating agencies.

Find a pulse

Financial health is important to travel managers. If the travel agency collapses, their business will not be able to recover as quickly as their competitors because their employees will for the most part be grounded.

The retail company’s travel buyer said exercising financial stability due diligence should be an ongoing exercise, and travel agencies should provide a forward-looking cash consumption plan on 12 months. month. It was an exercise he had pushed into his own business – but had failed so far.

“I need to be assured that the service will be maintained, including an agreed plan B and C,” said another global travel manager, working in the entertainment industry. “When re-executing a request for proposal from a global agency over the past year, one topic that was the subject of much discussion was contingency plans for business failure or failure. underperformance of the service. “

Global agency group ATPI hears the message loud and clear and this month made the unusual decision to preview its financial results. It has been forced to cut its global workforce by 20% due to the pandemic.

On June 14, it reported underlying profit of $ 15.24 million for its fiscal 2020. For the 12 months ended December 2019, it made a profit of $ 30.48 million. But he added that he had in fact traded profitably every month since June 2020.

“It is becoming increasingly relevant, particularly to the travel buying community, that the financial stability of travel management groups is likely to be in question,” said Ian Sinderson, CEO of ATPI. “We felt it was important to let the market know that this kind of perception is not necessarily universal and that some travel agencies, in particular ATPI, are resisting the pandemic quite well.”

Sinderson was previously the agency’s chief financial officer, which explains his concern to get the message across now before releasing the full results at the end of August. “This is the first time, and something I would like to continue during the recovery phase,” he said. “It is important to put in the public domain the situation and the way we are going. “

Different shapes and sizes

One agency believes the time has come to restructure and take on a new form to capitalize on the rebound. Business travel management said it expected to emerge from the pandemic as a more global business, having bought out the US Travel & Transport agency last year. It has now reinvented itself into three global business units: Global Customer Solutions, Global Agency Partnership Program and Global Supplier Partnerships Program.

“We believe this value proposition positions CTM as a leading competitor for global and multinational travel management services in the future,” said Laura Ruffles, COO of CTM Global.

“We have listened to feedback from our customers, partner networks, and sales and technology teams to identify the needs, opportunities and challenges that global travel programs face when it comes to business travel. And we are convinced that we have successfully put in place a structure that fills a gap in the market.

CTM was not the only one to win the competition. In fact, it’s such a common tactic during a recession, according to Mohamad Halawi, global travel director for fragrance company Firmenich. “Usually in a recession you save your way out of a recession, lay off staff, stop your capital investments and lock everything up,” he told Skift earlier this month. “Or you invest to get by, by investing more in research and development and buying someone else. “

Meanwhile, American Express Global Business Travel remains to some extent on the sidelines pending approval of its takeover of Egencia.

New priorities

Yet, as travel managers keep an eye on their agencies, they also appreciate that there will be more dependency in some areas. Health and safety, for example, will be a priority and agencies have responded.

CWT has strengthened its Travel essentials search platform last week, adding 15 more languages, easier access to travel documents, an immunization status filter and a sharing feature allowing employees to send documents to colleagues, friends and family.

“CWT Travel Essentials has already supported a 28% increase in daily searches since the start of the year,” said Erica Antony, CWT director of products. “Greater availability and a range of services will make it easier for our travelers around the world to resume their journey with confidence. “

Amex GBT on Tuesday unveiled new features, including post-travel traveler surveys to allow managers to collect information directly from travelers to analyze flight and hotel experiences.

It has also launched a live travel dashboard, as part of its Premier Insights platform, which uses anonymized data to display all of its customers’ destinations. This means that travel managers can see which destinations are open for business travel and then update their travel policies and pre-travel approval processes accordingly.

“To best tailor their programs, travel managers are looking for new ways to get real insight into the traveler’s experience and provide up-to-date Covid information to travelers at every stage of the journey,” said Mark McSpadden , vice-president. of the product strategy.

In the future, large companies will have to rely on their agencies for detailed carbon reporting in the future. “Sustainability and reporting offsets will be important, and you need a travel management company to help you run this program,” said another travel director, based in Germany. “I don’t see a big risk in general for travel agencies if they adapt to the new capabilities required.

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