"Elimination of agent's commission is a positive move for us"
Published: 10 Jun 2008
Travel Distribution Summit Asia 2008 Special
"Back in the early 2000s the TMC business was classified as a dying business. Looking back now in 2008 – the absolute opposite is true."
This statement came from Berthold Trenkel, EVP Traveler & Transaction Services and President, Asia Pacific Carlson Wagonlit Travel, in an interview with EyeforTravel.com's Ritesh Gupta.
Trenkel, who recently spoke to EyeforTravel.com about corporate travel distribution model, said the value of effective travel management is even higher today than five years ago.
"Large TMCs with an integrated network and strong value proposition continue to thrive. The continued fragmentation around content, emergence of LCCs, duty of care, corporate social responsibility, carbon foot print, etc. have made the business for the corporates even more complicated – and hence strengthened the value proposition of the TMCs. The TMC industry has matured into a professional services industry and is here to stay," he said.
Trenkel also spoke about his stint with CWT and much more. Excerpts:
Ritesh Gupta: How do you assess your stint with Carlson Wagonlit Travel since joining the company in 2005?
Berthold Trenkel: CWT had an enormous 'growth run' in the Asia Pacific region and globally over the last three years. Since 2005 our business world wide more than doubled – which globally was driven by a combination of organic growth and acquisitions; and within Asia Pacific largely through organic business expansion. We've build CWT into the #1 in the region and have now the clear lead in nearly all major markets like Australia, China, India and Japan
Ritesh Gupta: What major changes have you witnessed in the way travel suppliers want to sell to the business traveller? Is there anything specifically which stands out in Asia?
Berthold Trenkel: Over the last three years more changes have happened on the customer side – travel managers appreciate the value of travel management and we saw a big push for program consolidation, i.e., companies opting for one TMC across the region or even globally.
At the same time not too many changes happened on the supplier side, with the exception of the surge in low cost carriers – and the supply/demand imbalance in hotels and in some markets in air. But even the LCCs after their initial focus on the leisure sector have started to pay attention to the corporate sector. So availability of inventory via the GDS or direct connects etc. has become important to facilitate the corporate travel needs.
Ritesh Gupta: Besides the well documented changes in low cost travel and adoption of web-technologies, what according top you are the think the most interesting changes in the relationship between supplier and business travellers from the service side?
Berthold Trenkel: While some markets have good maturity level like Singapore and Australia – we finally saw movement in other places too. While reductions in agent commission levels are a painful change process for the leisure sector – it helps to strengthen the corporate sector that anyway is build around a 'pay for service' model.
Ritesh Gupta: Innovations such as online check-in and the ability to print your boarding pass at home are very recent but they change quite radically the travel experience. So is the race is not just to appeal to the pocket of the travel manager but also to the experience of the traveller?
Berthold Trenkel: These are good innovations and long overdue; but let's not forget the TMC business always has two audiences – the travel manager who oversees the programme – and the traveler and the travel arranger in particular in Asia, where a lot of the trips are booked by the assistant. Paying in particular attention to the traveler and the travel arranger and providing them excellent service prior, during and after a trip is absolutely critical for the success of a TMC.
CWT has made major strides in re-aligning it's global organisation to pay even more attention to the actual traveler and the travel experience; and I'm personally tasked to lead this for CWT on a global basis, reporting in this new role directly to the CEO.
Ritesh Gupta: How important is customer loyalty in the corporate travel marketplace? How can you distribution strategy enable you to maintain and grow brand value with your corporate travel clients?
Berthold Trenkel: Our business is build on the fundamentals of delivering value and service to our clients – be it the travel manager or the actual travelers and travel arrangers. We are not a brand or marketing driven business like the airlines who invest into their loyalty programmes – we need to proof ourselves ever day, every single interaction with our clients – like in the case of CWT with over 40 million transactions and many hundred million touch points every year.
Ritesh Gupta: As suppliers reduce or eliminate travel agent commissions, agents have to evolve their businss models to survive and have had to seek alternative revenue sources including the sale of additional products and services. An additional requirement is for agents / TMCs to operate more efficiently and maintain cost efficient processes. How do you assess the situation in Asia currently?
Berthold Trenkel: We welcome the maturing of this industry. So the elimination of agent commissions is a positive move for us. The difficult part is the transition – and in particular the 'medium' stage where commission levels have been reduced – but not yet reached zero. The quicker the change the better for the TMC industry.
Ritesh Gupta: Do agree with if I were to say: distribution strategy is about being in front of as many potential travellers as possible – whether you're a low cost carrier or a hotel?
Berthold Trenkel: I would personally disagree – it is about being in front of your target audience. Hence each player needs to figure out who his audience is and how to get in front of them in the most cost efficient way. Same applies for CWT – we are at the core a B2B business with a B2C component – hence our attention is on travel managers and travelers plus their travel arrangers. Our clients.
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