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Corporate travel undergoing metamorphosis

While travel and tourism is one of the largest service sectors in India, the strengthening and growing economy of the country drives corporate travel the most.

Corporate travel, an investment by corporate to further their business growth, has emerged as one of the fastest growing segment of the travel and tourism industry globally. While travel and tourism is one of the largest service sectors in India, the strengthening and growing economy of the country drives corporate travel the most. The recent implementation of GST, initiatives such as Make in India, Digital India, Start up India etc have also given a push to the economic growth. As a result, India has emerged as a big market for corporate travel and players in the segment are geared up to tap this opportunity.

According to a report by consultancy firm KPMG, India is now a US$ 30 billion business travel market and is expected to more than triple to US$ 93 billion by 2030. “In 2015, India saw a 15 per cent increase in business travel spending, which will grow with a CAGR of 12 per cent through 2020 to six per cent by 2030. This increase in all possibility will be greater than the increases in business travel growth in the next three largest countries combined, including South Korea, Italy and Brazil. Thirteen years from now (by 2030), India will likely be amongst the top five in business travel spending,” the report stated.

“Business travel spending in Asia Pacific was pegged at US$ 458 billion in 2015, and is expected to grow at 7.8 per cent CAGR over the next five years. 6.5 per cent of this total spend came from India, while China, Japan and South Korea accounted for nearly 90 per cent of the remaining spends. India is projected to be the most robust business travel market in APAC over the next five years, projected to grow at 12 per cent CAGR over that period,” the report adds.

Bulk of Indian business travellers (86 per cent) are in the 18-30 and 31-49 age brackets, and although male business travellers are in the majority, there is a reasonably significant portion of female business travellers (23 per cent). The female Indian business traveller is amongst the most significant growth segments of the Indian travel market, and represents an opportunity for travel providers that barely existed a few years ago. Moreover, this stupendous growth and evolving mix of sectors and markets brings a greater complexity to travel.

 

Changing trends

With passing time, corporate’s focus on safe and smooth travel for their executives, increasing demand from corporate travellers and consistent change in travel technology amongst others has further pushed this segment to become more evolved. “The corporate travel segment has shifted from generic to more individualistic approach in dealing with the traveller. The corporate have recognised the importance of their human resource talent pool and are trying to extend maximum support to them. The rise of terror activities and natural calamities globally has also given rise to issues surrounding duty of care for business travel. The need to find technology solutions to track employees on business trips has become a top priority for organisations around the world. We are seeing that the acceptance of travel technology solution for business travel has significantly increased. Players are focusing on making the business travel platform robust, simple, transparent and operationally efficient,” says Jyothi Varma, Regional Manager – SE Asia, Association of Corporate Travel Executive (ACTE).

According to her, all components of this segment be it suppliers or buyers are geared up. Airlines, hotels, OTAs, Travel Management Companies (TMCs), visa and forex service providers, car rentals, calling cards have started fine tuning their products, offering new products and services to suit to the business travellers. “Airlines have started offering services targeting business travellers for a small fee. Hotels are revisiting their corporate programme regularly. Others are also coming up with enhanced service facilities to make the process simple and travel safe and pleasant,” she adds.

 

TMCs : A vital cog

Many companies, especially large multinationals opt for global consolidation of their travel procurement. They generally choose to put their entire purchasing of travel arrangements in the hands of one Travel Management Company (TMC). Hence the role of TMCs becomes more important in the entire system. Also, the ever growing demand from corporate pushes TMCs to come up with new solutions to cater to the demand of the client. TMCs fulfil their demand by consistently investing in technology.

Replying to a question over role of TMCs in driving travel spend for a corporate, Raja Natesan, Chief Executive Officer, UNIGLOBE Travel (South Asia), says that the answer lies in how TMCs want to position itself. “If the TMC is only playing a fulfilment role, then there is very little value addition they can provide. A good TMC would see its role as that of saving costs for the corporate without cutting on quality, analysing travel and buying patterns, looking at better rates on preferred suppliers etc and charging a fair rate from the corporate for the services provided,” says Natesan.

Making it more lucid, Ajay Bali, Managing Director, BCD Travel, India, says TMCs are facing challenging times due to growing competition from online travel aggregators (OTAs). “The emergence of OTAs targeting smaller businesses by assisting them with “Managed Business Travel” services has opened a new segment in the managed business travel market. With OTAs increasingly targeting the market traditionally dominated by TMCs as an alternative service provider, it is imperative for TMCs to enhance the range of offerings by using alternative booking channels and differentiating themselves through more value added services considering their ability to offer higher degree of personalised services compared to OTAs,” Bali says and adds that TMCs are looking at avenues to consolidate by tying up with sharing economy service providers; operations of these service providers are increasingly rolled into the booking and expense tools of the former in order to provide seamless, consistent and economical business travel experience. Ashish Kishore, India-Country Head, Dnata says TMCs definitely work as a partner to the corporate, helping them shape their travel policy, and analysing their travel data to bring out time and money savings.

So, how TMCs gear up themselves on market expectations? According to Bali, TMC appointment process is evolving from a low cost selection towards value for money considerations. “TMCs are using M&As as a strategy to enhance their capabilities and target niche segments in the highly diverse business travel market. Earlier, TMCs were the only point of contact between travel service providers and their corporate clientele. Emerging online booking tools (OBT) have enabled these service providers to directly target corporate users. TMCs, however, still remain the dominant source for travel bookings due to need for travel plan coordination and service customisation,” he opines.

Corporate Travel often involves impromptu meetings and last-minute requirements, which are hard to organise, coordinate and book. As a result, companies, especially small and medium enterprises, are rapidly adopting corporate booking tools and TMCs have to come up with new tools. According to Natesan, while technology today is seen as a key differentiator, it is not possible for any TMC to keep investing in cutting edge technology which changes every three months. “There has to be a balance between investment and the Return on Investment which is a challenge. What we focus on is consistent and top quality service delivery. This means standards, processes, quality control, transparency and focus on customer satisfaction,” Natesan says.

Bali says that technology helps in adoption of big data and real time analytics, automation in the form of Internet of Things (IoT) robotic technology, virtual reality and augmented reality and these further help service providers cut down costs, improve productivity and help expand their businesses. As more powerful technology make it easier for TMCs to better serve their clients, Natesan says technology saves a lot of time and effort on the repetitive processes. “That leaves the consultants with time to work on the areas that make a difference to the customer. Technology also makes it easier to sort and analyse data. This helps identify trends, patterns and the TMC can give the customer tailor made consulting,” Natesan adds.

 

Role of Travel Managers

The quest for a hassle free travel from corporate travellers keeps Travel Managers under tremendous pressure to fulfil the requirements of demanding travellers. Travel Managers balances employee needs with corporate goals, financial and otherwise by ensuring cost tracking and control, facilitates adherence to corporate travel policies and realises savings through negotiated discounts.

Talking about the way forward for corporate's to handle travel requirements with the exposure and transparency, Ankush Bindra, Head - EGI International Mobility, Ericsson India Global Services, says products like flights and hotels are already shifted to the OBTs giving travellers more option under the gamut of the corporate travel policy. "Travel Manager has to align his travel operations under the policy framework in terms of the price considerations, time, class, room category, inclusions etc. They also ensure that options given to employees for their selection are unbiased and transparent. Other products are lagging behind in the automations but Travel Managers keep on working to ensure that they reach to the best levels in terms of transparency. To achieve this, it is essential to flash the negotiated rates, manuals, SOPs available on the intranet for the employees to refer as and when required. A good reference module for the visa related information covering the checklist of documents, insurance premium and coverages, preferred ground transportation partner details and competitive calling card details need to be published and circulated," he says adding that today people are more than ready to adopt new technologies like Self-Booking tools, chat-bot, mobile based apps etc. Apart from these, Travel Managers also needs to be prepared to face the challenges for external factors. "We have seen buyouts happening in hotels, airlines and TMCs which affect the way we negotiate in the market with our suppliers. It also gives them additional penetration to their target markets. These factors play crucial role in planning your strategy while floating your RFP in the market and selecting your partners," Bindra adds. Commenting on the role of Travel Managers, Varma says that travel managers need to find a balance between encouraging positive employee experiences and ensuring compliance with travel policy.

 

Suppliers’ perspective

Hotels, airlines, car rentals, calling cards and other service providers have consistently been upgrading their offering to make it more suitable to corporate. While hotels are coming out with new corporate travel programmes according to the changing needs of the market, airlines are also coming out with exclusive offerings for the segment. “The rise of mobile apps within the travel industry is largely influenced by the increasing presence of millennials in the corporate sector. In line with the changing customer needs, Singapore Airlines offers the ‘Companion App’ which is a first-of-its-kind mobile application that provides customers greater control over their in-flight entertainment experience,” says David Lim, General Manager – India, Singapore Airlines. Another factor that drives corporate travellers to top airlines is their frequent flyer programmes. “Singapore Airlines has continuously invested in technology and systems that can enhance customer experience. A substantial investment towards bettering our web/app services helps our customers avail of the best available fares, manage their bookings and register for ancillary services, all readily accessible at their fingertips. At the back end, most airline reservations and sales systems are rooted in dynamic pricing, where yield generation is priority. Corporate deals are often customised to match the requirement outlined,” he says adding that corporate travellers continue to explore travel options that offer the best product at a convenient price point.

Similarly, car rental companies are also gearing up to offer the best possible services to their corporate clients. “We offer the responsibility of duty of care to our customers. Consistent quality and attention to detail is our main USP wherein each stage of the car dispatch process is closely monitored and assured for quality. We offer complete real-time dashboard and customised MIS to enable corporates to monitor and control their ground transportation spends. With higher application of technology based processes we are able to customise requirements of corporates and incorporate them into our processes and make the business scalable,” says Rajesh Loomba, Managing Director, Eco Rent a Car.

 

Way Forward

Although corporate travel is evolving slowly in India, however, the pace of change is visibly fast as TMCs have turned to technology to solve common problems. The shifting traveller behaviour and the primacy of mobile as a booking channel are compelling travel management companies to refine and retool their technology. Corporates are getting insights from consumer technology giants how to improve their digital booking experiences to have a better control the business traveller’s journey from beginning to end.

Enumerating the challenges in corporate travel segment in India, Varma says that due to disconnect between Global Policy compliance and local challenges, travel managers need to get exceptional approval. Moreover, the competitive online fares compared to traditional fares by TMCs also pose the challenge. “There is a need to have robust tool that can churn out predictive data using the past trends data, additional information available and dynamics of the market. Frequent changes in the visa regime, changing mode of payment, changing booking behaviours, constant change in travel technology are some of the issues that industry needs to tackle to push the growth of the segment,” she adds.

According to Natesan, while the corporate faces challenges, it is not always possible to find a solution that is ideally suited. “A good solution may involve cost, rebuilding a technology platform or even changing buyer behaviour. There is a need to have a relationship of trust with the corporate so the TMC gets time to discuss, understand and come up with the most cost effective solution,” he says.

Varma concludes that if all players in the eco-system focus more on fulfilling the requirements of travellers, we can create happier corporate citizens.

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