Moving away from a legacy market to a globally ethical one

By Cheranka Mendis

Aiming to revolutionise the local business travel market from a legacy market to a world reputed one that maintains high quality standards and ethics, BCD Travel, the third largest corporate travel management company in the world, is working in close partnership with Worldlink Travels to introduce and modify market behaviour in preparation for increasing travel and trade growth in Sri Lanka.

BCD Travel, Asia Pacific President Gregory O’Neil was in Sri Lanka recently to discuss the new possibilities of development and joined the Daily FT to share his thoughts and plans for the future. BCD carries out their services in the country through its local partner, Worldlink Travels.

Q: What brings you to Sri Lanka?

A: We want to focus more on the business travel market here in Sri Lanka. For us, the key is to identify opportunities. We are discussing ways in which we can revolutionise the marketplace here.

Q: How would you describe Sri Lanka’s existing market?

A: Currently it is very much a legacy market which can also be described as a high touch market with local standards. Yet, we service some of the biggest corporations in the world that have multinational expectations and requirements.

Q: You provide global corporate travel management. What exactly do you mean by that?

A: The focus of BCD Travel is to provide the efficiencies of presenting travel service, data, security, and management consultancy. When I say data, I mean providing procurement power, helping people understand both post-travel and pre-travel scenarios with pre-trip reports which enable people information at a moment’s notice.

Our integrated and global technology infrastructure provides intelligent analysis of travel data. The multi Global Distribution System (GDS) environment, mid-office quality controls and back office integration streamlines everything from online booking tour scenarios to taking HR data feeds from the customers, creating profiles for them to use while travelling, that are in an encrypted secure system.

The world of travel has changed quite a bit. It is less of a leisure environment and more of a corporate environment.

Q: In that context, how important is travel management for Sri Lanka?

A: That is yet to be seen. We are certainly looking to see if we can be one of the leaders in doing the area soon; that is why I said we are looking at revolutionising it. There is an opportunity to be a business leader here as there is a demand for it at a global scale. Business is very small here today but this is an opportunity for us to grow.

However, we are looking at a 30% growth this year over the previous on the business travel in Sri Lanka. We are also a company that is focused on anti-corruption and anti-bribery and that means companies here which hold many side relationships must change in the way they conduct business. We must find customers that are willing to change their business and fall in line globally.

Q: How do you plan on attracting such customers?

A: We will start by trying to make a name, a bit differently, here. There are customers who want our service to inform them of market opportunities, areas of challenges, etc. There are lot of opportunities here. In most of our markets, we return 100% of our revenue, giving a revenue share back to the customer. We expose the revenue.

Here, it is still the commission market. Even though the commissions are going to go away eventually, it will be interesting to see how the market changes. I rather be at the forefront providing the opportunity today, so that when it does happen, we will be in a much more advantageous position to present ourselves as an effective TMC.

Q: What are the strengths and weaknesses in the Sri Lankan market and how do you suppose we can bridge the current gaps?

A: Currently Sri Lanka does not embrace a lot of technologies; rather it is a high service oriented one.  There has been a shortfall in introducing transaction and management fees which means a lot of work has been done but probably unfair revenue is received at local market level. That is something you will have to pull yourself over in the future.

There are other areas such as visa and passport where lots have been done but have more space to develop. These are bits and pieces that will happen over time. There will be many global customers that will start reaching for a mandate which would require moving online, moving to a global procurement, etc. which will help bridge the gap. There will also be a number of requirements such as anti-bribery and anti-corruption acts which you will have to sign up for and agree to.

Q: What are your thoughts on the potential of the tourism industry?

A: The potential is pretty great. This is well evident by the five to six new hotels coming in. My concern however is if you have talent management for this. In my business, based in Singapore, the biggest thing I see is an unemployment rate of less than 2%. That unemployment rate requires that I look outside the market to bring people in. That changes things.

The very first thing I noticed here is that Sri Lanka is known for a very high touch, a high level of service. If you have to start looking outside the market, your costs are going to build up. It is going to be more competitive. We have to look at ways of being young, innovative and tap talent for short or long term stints, depending on what you require.

However I think hospitality will do many great things for the market. However, it will also create challenges for existing businesses in the market, in terms of employee retention, etc. I think the growth of hospitality and leisure is phenomenal and it will increase business opportunities for the country.

Q: BCD Travel has done a 2013/2014 forecast. Could you briefly tell us what the forecast is for Asia Pacific?

A: Our biggest concern is that all carriers are all pulling back in yield and they are doing various alignments etc. We are also waiting to see how the Qantas-Emirates partnership announced in October will play off and how that will change markets like Singapore. We have also seen low cost carriers coming in to the market such as Peach from Japan.

The biggest challenge will be the continuous rise of fuel cost, cost of overheads, rent, and employee salaries. Looking at the three highest markets for us – China, Hong Kong and Singapore, I believe that customers are still expecting costs that was there three or four years ago in a time that the costs are rising 10-20-30%, depending on markets. The prediction for China is that it will continue to fare well, even with GDP going back every now and then.

But with low cost carriers in the market and so many constraints – such as the announcement of opening the GDS restrictions recently which was initially announced 25 years ago – there are many factors to look out for. The market will evolve at a slow rate.

I think your markets will embrace the likes of online booking tools which are quicker and faster. There has been an approximate 15% adaptation for online tools in Australia, and China which has an adaptation rate of 10% is likely to go up to 20%.

 Q: What are the factors that can really influence a traveller?

A: Travellers behaviour is influenced by the corporates’ behaviour. Corporate behaviour has what is called the travel policy which dictates where the travellers should travel and how they should travel. The idiosyncrasy of that is that the preferences of the traveller sometimes conflicts with the preferences of the corporation.

We (BCD) policy that through certain standards. A point of sales system will control how we provide the content to the traveller, and as it is an online booking tool, they may not even see the content as non-applicable outside the policy.  We also have quality control systems that automatically ensure that the protocols are in place and as a travel management company, we are required to identify deviations. When deviated from corporate policy, the travel manager or travel arranger is notified of the deviation. These are all the things we want to bring to this market which we think will be a difficult task.

Q: Why will it be so difficult?

A: Transparency. As part of the global rollup and global procurement, I think companies are trying to pull everything under one umbrella making transparency hard. Markets like these will have long standing relationships that will be hard to overcome.

They will have relationships that may be tied to other scenarios such as frequent travel programs, hotel programs, perks etc. or tied to relationships. I think corporations are trying more and more to get away from that and use a logical, ethical approach. Over time, markets will have to embrace that. I think because there are a lot of smaller companies here, it may be slower.

Q: When you say ethical, what exactly do you mean?

A: In some markets we have seen in past legacy days, relationships formed on different types of reasons which we might perceive as being unethical. For example, giving two airline tickets to a secretary per year is considered unethical in many corporate contracts. BCD follows and adheres to all of those requirements. Giving someone an upgrade or providing something free of charge may actually violate a customer’s contract. In many markets in Asia, that legacy still exists and people expect that.

Q: How do you suppose we can change that?

A: It is one customer at a time. It really has been a process. We are looking for customers who want a win-win scenario and are looking at ways to grow two organisations together. When your company grows, the better I grow. The longer I sustain that relationship, the better off we are. Our focus is on the retention of customers, not just bringing in new customers.

Q: What exactly are you looking at in the Sri Lankan market?

A: What I have found is that there is a very young and aggressive organisation here. We focus on the tour and leisure side of the business. We want to try change the perception of the market on what we are doing and we want to be the leader in the corporate business side. We will do that through point of sales changes while maintaining the higher level of service that we have always seen in Sri Lanka. We want to take that and do it in a more efficient, cohesive, and global approach.

That will take us to the next level and that is what the team wants to do here. We will do it a customer at a time. I think the market will embrace change, will be forced to, and we will be at the forefront of that change.