Demand, Availability Challenge Europe’s SMEs

Agile and less burdened by processes and procrastination, small and midsize businesses spearheaded the return of European business travel, according to the consensus of travel management companies and suppliers as the industry emerged from the pandemic.

Now, as the industry lurches from one crisis to another, are SMEs’ attitudes to travel changing when faced with a climate of disruption, TMC staffing shortages and rising costs? The jury is out.

“High demand, reduced availability and price hikes in all walks of life are driving a renewed cost focus for SMEs,” Reed & Mackay director of global client experience Max Hensser said of the travel management company’s small and midsize customers.

Some are cutting travel back over the summer months to avoid disruption, he added, but said “far more” are turning to the TMC for help “navigating the current disruption and securing the greatest value from their spend.”

Focus Travel Partnership chief executive Abby Penston, whose TMCs serve largely small and mid-market clients, believes short-term concerns will give way to continued recovery. 

“Some SMEs are being put off travel in the current circumstances. They’re frustrated by it, absolutely, and some of the prices out there right now … it’s just not sustainable,” she said. 

Nevertheless, Focus members are still forecasting “the normal autumn upsurge” in business travel, said Penston, while Tim Fitzgerald of Travel Counsellors, who has some 30 SME organizations on his books, said the autumn is “already looking insanely busy.”

“For the last four months I’ve been trading at an almost identical level to 2019 as a franchise unit, but a third of that is new business, so there’s still a big hole for some companies. Some are traveling at 120 percent [of pre-Covid volumes] and others are at 20 percent. It’s impossible to generalize,” he said.

“I don’t think SMEs are necessarily going to travel less in the long term, but I do think there’s less discretional travel among small businesses now. The focus is on value, sustainability and duty of care,” said Fitzgerald. “Trips will always be signed off if the potential return on investment is significant enough. You’re endangering your own business if you’re not seeing key clients or meeting potential new business.”

But rising travel costs are making some companies think twice about traveling, he said. “I think the difference is that if you had to jump on a plane to Hamburg tomorrow it would cost you £700 right now—if you can get a seat—so you’d expect it to be business-critical, whereas pre-pandemic it would have cost £200 and you wouldn’t have given it a second thought.” 

One SME travel manager has “scaled back on what we do” after an initial surge in business travel but added that was due to increasing scrutiny of trips and made them no different to many companies, regardless of their size, the travel manager told BTN. 

“I’ve been pushing internally not to look at trip savings but instead to focus on what we’re getting out of a trip—the ROI,” the travel manager said. “If a trip is necessary but not urgent, then I can see a lot of people putting off trips to the autumn given some of the disruption we’re seeing.”

_{The Buyer’s View}

Staff shortages have been evident throughout the travel industry and across Europe, with much made of slow response times and declining service at some travel management companies. Some commentators have gone as far as to suggest larger TMCs will be concentrating their efforts on their larger customers right now, leaving SMEs more prone to slipping standards than others.

The U.K.-based SME travel manager said critical travel had continued during the pandemic “when service was fantastic” but now “travel is coming back in a big way and service is considerably worse.”

The company’s travel manager, who wished to remain anonymous, has had a change of account manager foisted upon them and seen response times stretch out, but did not attribute that to their diminutive nature amid a sea of large corporates at a U.K. top-10 TMC.

“I don’t necessarily think we’re having a tougher time of it than larger companies,” the travel manager said. “But from talking to other travel managers, some do feel that TMCs might be deprioritizing smaller customers so they can focus on bigger companies.”

The buyer’s previous account manager is among innumerable TMC staff to have jumped ship this year as agencies outbid each other in the race to recruit experienced hands. 

“We appreciate the rapid return of business travel has caught a lot of people out. Every TMC is having to adjust to the additional work involved in every booking right now. What’s been interesting is the different communication levels among TMCs,” they explained.

“Ours has been quite transparent about staffing issues but only after we started jumping up and down about it. Now they’re letting us know what they’re doing and how many staff they’ve recruited each week, but it takes time for [new staff] to learn about us and our particular needs.”

The company, which initiates most bookings by email, said response times at the TMC have stretched out considerably. “We’re used to sending an email at, say, 8 a.m. and hearing back by 1 p.m. Right now, it’s often more like 1 p.m. the next day. Our normal [service-level agreement] is a two-hour response, but we’re not going to penalize them. They’re taking action and being transparent,” the travel manager said.

“All TMCs are in the same position and our travelers are generally sympathetic of what’s going on. [Travel disruption] is all over the press at the moment.” Has serviced slipped to a level at which it is considering its future with the TMC? “We’ll probably extend [our contract] again. For us, it’s important to maintain continuity and confidence for our travelers as we get going again.”

_{Recruitment Woes}

With the swift recovery of business travel, Focus’ Penston conceded many TMCs have struggled to recruit to the necessary level. “Many now have the staff they need but onboarding them doesn’t happen overnight. They have such a big skill set—you can’t just flick a switch. We certainly heard a lot of noise a few months ago, but it’s stabilizing now.”

The surge in travel also has caught airports and airlines out, with the knock-on effect of well-documented disruption creating extra work for TMCs and exacerbating staffing issues.

Tim Fitzgerald of Travel Counsellors said: “If you took 10 minutes to manage a booking [before], it’s now more like 20 to 30 minutes because of all the schedule changes, cancellations and other factors involved.

“I used to get a couple of flight changes on a daily basis and occasional cancellations. Now the cancellations are daily. Some of them are quick to fix, but if there’s no other obvious options or everything’s full, it’s a problem. A lot of TMCs are really struggling because they can’t get the headcount back in and trained up quickly enough.”

American Express Global Business Travel U.K. vice president and general manager Rachel Tonge said the company’s “robust recruitment program is progressing well” and it has also launched a U.K. apprenticeship scheme offering on-the-job experience and qualifications. Its first 20 apprentice consultants will join the company in August.

The staffing problem is certainly not unique to large TMCs, with Simplexity Travel Management among the many agencies actively recruiting. “The challenge we have is purely down to staffing,” said Simplexity head of business development Mark Smith. “We need experienced people, and we just can’t find them and get them onboarded quickly enough.”

He added: “We didn’t lay anybody off during Covid and we still need to hire now. The [travel] requests are coming back thick and fast, but people are now taking annual leave, and there’s a lot of Covid about,” causing absences.

Smith argued that “it’s all very well a corporate jumping ship from one TMC to another but everyone’s facing the same staffing issues. We don’t want to take on business that we can’t service because it makes us look bad. We have to manage growth carefully.”