Just a year short of the 20th anniversary celebrations for both the company and the founders, Global Travel Management’s story has been one of organic growth, retaining customers and building relationships. But sometimes a tremendous force of nature can also help, as Scott Pawley discovered a couple of years back when an erupting volcano in Iceland spewed out vast clouds of volcanic dust into the atmosphere.
In last month’s issue, I asked the owner of Beacon Security when it was that people decided to invest in security. “After they have had a break-in,” was his reply. It seems that the same thinking can often apply to travel management. With travel comparison sites, booking flights isn’t that difficult, but companies have a responsibility for their staff who are travelling.
This is where a travel-management company (TMC) is so important. “Perhaps the most important thing is the peace of mind knowing that someone is looking after your travel if there are any problems,” says Scott. “With the recent incident at Brussels Airport, the first thing we did was to find out where all of our travellers were. Was anybody in Brussels? Then we can tell all of our clients, you’ve got x number of people there and we can manage their forward travel. If you do it yourself, you are at the mercy of the airlines. We can tell you, either by email or phone, or by one of our apps, that your flight has been changed.
“The most challenging event was the aftermath of the volcanic eruption in Iceland. That was the first time flights around the world were grounded for so long. It was an absolute nightmare. No-one had ever seen anything like it before. “On the Saturday afternoon when I realised how bad things were getting, I thought I’d ring our out-of-hours service, and the lines were engaged, so I knew they were in trouble. I got in the car and legged it to the office. I thought I’d turn the phones on and start working - but the office was already open and all the team were already there. I hadn’t phoned them to tell them to come to the office, but they just knew it was going to be bad. Being the last in meant I got plenty of stick! They all stayed there literally until the following Wednesday, when it started again.
“We were inundated with calls. Everyone was watching the TV and were being told 24/7 there were no flights. Everyone said: ‘I really need to get back,’ but there were simply no flights. ‘Can you charter me an aircraft?’ we’d be asked, but chartered or not, planes can’t fly through volcanic ash. Strangely, it was a real buzz. By the time we finished, everyone was exhausted.
“We got so many calls from previous customers who had decided to book their own flights on the internet, and we could advise them, but ultimately we just had to refer them back to the airlines, and, of course, they couldn’t get through. We got a lot of business because of our reaction to the crisis. I don’t want another volcanic ash incident, but it was a good business lead.”
Of course, a TMC is not just there in case of Acts of God or terrorism outrages. Happily, in usual circumstances they are there to make business travel smooth and cost-effective, as Scott explains. “Business travel is not just about the flights. A businessperson might need a hotel, they may need advice on whether they require a visa or insurance. Then there’s the accounting side; if you are doing one flight a month, that’s easy to account for, but not so straightforward if the company is doing 100 trips a month. We bring all the invoicing and purchasing into one place, and we report on figures.
“We are not tied to any one airline. We have a license to sell with almost any airline in the world. If we haven’t got a license to sell with them, it’s through our choice. We simply guide our travellers to where they want to go in the most cost-efficient way, because our fee is going to be the same, whether they buy a £1,000 ticket or a £5 ticket.”
So, who is GTM's market?
“When we first started 19 years ago, it was just myself and my wife. Our niche was small start-ups, as we could relate to them, and the key was always to be around the SME market. Obviously, a good SME company grows, so we have grown with them. Now we have more of a mix with SMEs and blue-chip companies.
“The SME market is still our bread and butter because they appreciate what we do and they appreciate there’s a fee for our service. It’s not overly high, but they understand that if they did it themselves, it would be more expensive.
“It’s all about knowing the corporate needs, because we rely on repeat business. We learn their business and their travel requirements. If they are exhibiting at trade shows, we get to know the nature of their business, so we can help ensure the transit of their stand goes smoothly. It’s difficult to advise on customs, as laws in different countries change, but we can ensure we source for them the right place to get the up-to-date information, such as our partner freight forwarding company or the right department within the government.
“We have also diversified into new markets. We own a private-jet company, which has attracted a new demographic, including sports stars and celebrities. One of our clients is a Premiership club.”
Scott has come a long way, and perhaps he should thank his school's careers advisor...
“I only went to school because I had to go; I didn’t really enjoy it; and I didn’t do well in exams. My parents were rightly concerned that I had no plans to do anything, and I just had one CSE in maths. The careers advisor asked me loads of questions, input the answers into a computer, and the print-out said I should be an estate agent, work in a hi-fi shop or be a travel agent - so the next day I applied for a job as a travel agent at Reading University in the students union.
“It was doing UK and domestic travel, mostly British Rail tickets and National Express, which was fine, but I saw what was going on in the main office with the flights - and that was the sexy part.
“When I was 21 I moved to a company in Chertsey, where I met Natalie. We got married we and both wanted to stay in this business, but we decided it probably wasn’t best to work together, so she went into the hotel trade I stayed in the air side.
“My father had a business partner in Turkey, and one day he told my dad: ‘You and I are going to run a business in the UK, it’s going to be a travel agency and your son is going to run it.”
“I was 24 at the time, and it was six months before the wedding. I’d never even met my dad’s business partner. Dad offered me the opportunity, and I said no. I’d only just started on the management ladder, and I just didn’t feel ready. But after our wedding, Natalie asked me in a cinema, ‘Do you ever regret that decision?’ To be honest, I hadn’t really thought about it, but I phoned my Dad and next thing we were in Turkey, chatting to the guy.
“We came back, we handed our notice in and we set up our own business-travel company in Horsell, a little shop with two phones, two PCs and just me and Nathalie. It was a simpler time, because there were no huge demands on us to make any profit because it was a brand-new business. We wrote our business plans and we worked 23 ½ hours a day for two or three years... and it grew and grew.
“Nineteen years later we have just short of £30 million turnover and there are 35 of us doing it. We still very much see ourselves as a family business.
One of the greatest challenges for any company is managing the growth, and working out when the time is right for expansion. GTM have always handled this well, as Scott explains:
“Once we started getting a bit too busy for two of us, we employed a few more people. We got someone in to sell for us, but we were winning a lot of sales from our referrals, so that’s when we thought this is going somewhere. We’ve always been keen to make sure we had one extra member of staff before the business was there.
“The best barometer, to me, is the guys working in reservations. Our rule of thumb was that everyone in reservations should be able to turnover a £1 million of business in a year. If we had five people and £6 million of business, I would think we were one short, though I would speak to the team first.
“There have been a few recessions and dips, but we have grown all the way, through a lot of hard work and a bit of luck as well. In the first dip, we looked to outsource outside of the UK and go to emerging markets. We started doing business in Bogota and South Africa. Even though the UK economy was down, we were riding the wave of newer economies.
“When we first started, we couldn’t have done this, because passengers had to have actual tickets. When e-tickets came in, the whole world opened up to us.”
Aside from e-ticketing, what are the biggest changes you've seen?
“The airlines used to pay a commission. If I sold you a ticket to New York, the airline would give me 9% of the value of the ticket. The very day we opened our doors, a letter came through the door from British Airways which said they were cutting commissions from 9% down to 7%. It was a worrying start! Then 7% became 5%, and 5% became zero. Within our first 4-5 years we’d lost the whole mechanism of where our income came from.
“We had to think on our feet, and that’s when we, and the whole industry, introduced our own fees, whether it was a monthly management fee, a transaction fee, or per invoice. It was a massive change, but in hindsight it was good that it happened when we were starting out, as we had to adapt from day one. For the companies who had been going 40 or 50 years, it was a big struggle. Some of my older peers are still complaining, 16 years later.
“There have been changes in how we pay the airlines. We have to pay airlines through a company called Billing and Settlements Plan (BSP), which is effectively a clearing house. We used to pay our bill once a month, but this has changed to bi-monthly, which may not sound like an issue, but effectively means we have less time between booking flights and paying. As customers often pay on account, there has been a considerable impact on cashflow.
“If you add to this the requirements from IATA on how much cash must be held in reserve, it means that running a TMC requires significant sums of money. You probably wouldn’t want to start a business in this sector now as the licenses are getting harder, and more expensive, to obtain. Our business works on bonds; if you are an unknown business in this industry, you have to put down a bond, and that could start from half a million pounds. We’ve built up quite a large cash reserve over those years. It’s hard, but I try to keep the cash in the bank.
“It is no wonder that many companies are merging or consolidating. We are always looking around. We’re not actually looking for someone right now, but if the right opportunity came along, and we could manage and integrate it, we’d be open-minded.
“We recently took on a company that had been going for 43 years, with a good client base, heavily into the medical market. For us it was a good fix, because it was a family-run business and it was the right size. We are 8-9 months in now, and it’s been a big challenge and very exciting. We gave ourselves a year to do it, but we are three months ahead of time. All the things we thought would be hard have been really easy; all the bits that we said, ‘Oh, that’ll be easy’, have been the hardest bits.”
What innovations have kept you ahead?
“Four years ago, we developed comparison software called Farefinder so we could make sure we didn’t miss a fare for our client. We get reduced prices on many flights, but we also check against online portals such as Expedia. In our market, clients check our fare and then go on to Expedia to see if they can beat it. We need to make sure that we can beat their prices, because if we don’t, people won’t come back to us. We created a network of agencies around the world to ensure we remain competitive.
“We are part of an organisation called the Advantage Focus Group – the largest independent travel consortium in the UK. If our sector is strong, it keeps the bigger boys at bay. We gave Farefinder to all 68 members of the group.
“You never can tell what the next booking will be. One phone call is going to be a first-class around-the-world, and the next phone call is going to be an Easyjet to Aberdeen. The interesting thing is that more people moan about the price of the Easyjet to Aberdeen at £100, than a round-the-world ticket at £7,000!
“Our key routes are Jo’burg and Durban in South Africa. There’s always going to be New York business. In Europe, we have a lot of stuff into Warsaw, we have a lot of stuff into Paris, as well as Brussels. Each year we run a report on what our top five routes are, and four of those will probably change each time.
“In a leisure market you can push a destination. Our clients phone up and say they want to go to Munich, and I say how about New York, and they say, no I want to go to Munich, it’s where the business is. They tell us where they want to go, and that is the big difference between leisure and business. In a leisure market, they can be open-minded: ‘here’s my budget, where can I get to?’”
Are there any decisions you've made that have changed the business?
“We decided to open up an office in Durban three years ago. We put it there because we had a lot of business coming out of South Africa. We had a few guys in the office who were South African and the possibility arose that one of the guys might go home, so we said, if you do want to go home, why don’t we pack your PC under your arm and we’ll set you up remotely with a phone system. It will be like you are sitting in Woking, because your phones will come through here. It worked out very well for us.
“The next step may well be Australia, for the advantages of the time differences. We have a very good out-of-hours service, but it costs me a fortune. I’d like to bring it back in house, but trying to get people to work all night isn’t ideal. With an Australia office, during the day we’d be their out-of-hours service and during their day they’d be ours. We’ve got some clients out there already, and through our network of other travel agencies we’ll look at possibilities there. We won’t have a problem finding people who want to go from here to start it up. That’s the five-year plan.
“Our most important decision has always been to value our staff, and we are proud to have Investors in People accreditation.
“It is great to get recognition. In a secret vote of all the airlines, they voted us as their favourite travel agency. That was fantastic. We are hoping they will vote for us again this year. Closer to home, we were shortlisted for a Toast of Surrey Award. I learnt so much from it, and the staff had a great time being involved. We have entered again this year and have been shortlisted for three awards. Local awards are important to us, and we are working closely with colleges in Woking and Guildford.”
Which leads us onto one very impressive achievement: a husband and wife working together successfully for such a long time!
“When we first worked together, we did exactly the same job. Now, we are almost polar opposites. She’s more on accounts payable, that sort of side. I’m on the other side, still doing reservations, so if something goes wrong, I’ll offer something for free, but I have to get it past her. We’ve got a rule: I’m in charge at work, but that’s the only place. When we get home, I don’t stand a chance. We don’t go home and spend the whole time talking shop, but when we need to, we can.”