Last year was a record one for business travel in the UK. Forecasts released in October by the World Travel and Tourism Council said spending would reach $84.1 billion (?65.8 billion) during 2024.

This has certainly been borne out by the figures from this year¡¯s leading TMCs survey which showed healthy and growing sales figures from our research. ¡°There still remains a yield factor to that, but I think business has come back,¡± says Clive Wratten, CEO of the Business Travel Association. ¡°The investment in technology and the human cost has gone up so is the margin still as strong as it was in 2023?¡±

The Advantage Travel Partnership¡¯s Global Business Travel Review 8.0 said that the number of new transactions for 2024 significantly outperformed 2023 by 15.5 per cent. It also highlighted a fall in average transaction value because of a ¡°continuing trend of business travellers turning right rather than left¡± ¨C business class bookings fell from 15.61 per cent in H1 2024 to 14.69 per cent in H2 2024.

*Estimated

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The state of the economy and ongoing recovery after Covid has boosted growth in the sector. The UK¡¯s economy did better than expected during the year, delivering GDP growth of 1 per cent, ahead of the International Monetary Fund¡¯s forecast of 0.7 per cent.

How do prospects look for 2025? The IMF has upgraded its forecast for UK growth to 1.2 per cent, saying that ¡°an economic recovery is underway¡±.

Once again this year, we polled all our UK TMCs for their views on the challenges and opportunities they face (see this report's Introduction article for the full results). The growing pace of recovery is expected to continue into 2025 with most TMCs predicting that sales will grow by up to 25 per cent over 2024. Pressures on airfares and hotel rates have lessened as inflation has come down but geopolitical pressures are weighing on TMC minds.

Our survey found that, once again, TMCs are expecting their growth in 2025 to come from winning customers. One in ten TMCs said they believed they would benefit from increased business travel from their corporate clients.

Merger and acquisition activity is still on the cards for many acquisitive companies. There is a new name in the report this year ¨C Talma. The TMC brings together the businesses of Blue Cube and Norad Travel. We may also see a combined American Express Global Business Travel and CWT in 2025 if the competition authorities wave the deal through.

Julia Lo Bue-Said OBE, CEO of the Advantage Travel Partnership, believes the proposed Amex GBT-CWT merger is creating opportunities, not threats, for independent TMCs. ¡°While the mega-players get even bigger, they're losing the personal touch that SMEs value most,¡± she says. ¡°Independent TMCs see this consolidation as their competitive edge, as they can deliver the personalised service that gets lost when dealing with corporate giants.¡±

THE CHALLENGES AHEAD

Geopolitical issues are top of the agenda this year, with around half of our TMCs saying it was one of the biggest challenges to their success.

The BTA¡¯s Clive Wratten says, ¡°The other issues our members are facing are a bit more granular. There is financing and payment. There is still a lot of credit and BSP for example. Accessibility has come right up the agenda.¡±

The lack of talent still haunts the sector too. Staff with skills in travel tech and AI in particular are proving very difficult to find. Wratten says the rise of AI has led to increasing debate in the TMC sector. ¡°There's a big debate going on around TMCs on whether the focus should be on technology or humans. There are really two separate camps: people that say it should be technology and others that say we're about human touch.¡±

He continues: ¡°All of our members are speaking about AI, some in a less positive manner and others in a more positive way. Whichever you believe, it is coming. However, I'm not sure the client actually knows what AI is going to deliver them, other than it's going to be good. For now, it's establishing what the art of possible is and that is what many TMCs are going through now.¡±

Advantage¡¯s Lo Bue Said adds, ¡°Most [independent TMCs] are deploying chatbots, freeing consultants for complex issues. Many are also using AI to automate repetitive tasks like queue checking, letting skilled staff focus on high-value work requiring human expertise.¡±

She believes there is a technological arms race which requires ongoing investment. ¡°For content access, clients demand TMCs maintain access to all booking systems, including NDC implementations, to stay competitive and prevent off-programme bookings.

¡°TMCs are navigating a complex landscape where consolidation, technology advancement and shifting client priorities intersect. Their success increasingly depends on leveraging their core strengths of personalised service, agility and specialised expertise ¨C while continuing to invest in the technological capabilities that modern corporate travel programmes demand,¡± she says.

BRANCHING OUT

Our survey also looked at demand for particular products and services and how that has changed. Despite the hot air coming from the Oval Office, the majority of TMCs say they are being asked for sustainability consultancy more than last year. Some of this will be driven by increasing reporting requirements from government as well as the desire by companies to be able to report on their impact in their own sectors. TMCs are also being asked to provide consultancy on duty of care and technology.

In general, UK TMCs are feeling positive about facing up to the challenges and grasping the opportunities of the future. Advantage¡¯s Lo Bue-Said believes that independent travel management companies are ¡°facing both challenges and opportunities in an increasingly complex environment¡±.

¡°Recent developments across consolidation, technology adoption and shifting client priorities are reshaping how these businesses operate and position themselves both today and in the future market,¡± she says.

She highlights two vital areas from UK corporates ¨C effective cost control and comprehensive access to content. ¡°Cost control is challenging since many factors remain outside TMCs' control, however they respond by optimising booking patterns, leveraging preferred supplier relationships, and providing data-driven programme insights.¡±

The elephant in the room is geopolitical instability. Wratten is buoyant about business travel despite the changing geopolitical winds. Contrary to some initial reports of business to the US slowing down, he says June figures for the North Atlantic routes are now on a level with last year.

¡°It's not just financiers that travel. Regardless of what's going on in the world, ships' crews still need to get around. Engineers still need to go and build stuff,¡± says Wratten.

Nevetheless, Lo Bue-Said adds a word of warning: ¡°Whilst the sector is well versed in navigating geopolitical uncertainty, the current instability is significantly affecting corporate appetite for business travel, particularly to regions perceived as higher risk.¡±