The growing trend of small and medium-sized business owners outsourcing travel management is driving significant growth for two Vancouver-based travel giants: Flight Centre Canada (FCC) and Uniglobe Travel International LP.
Executives are increasingly finding it more cost effective to hire an agency than to have staff book flights on discount websites and then expense the travel.
Corporate travel-management firms create reports that detail all staff trips and suggest travel efficiencies. They also save staff time by making bookings and are available round the clock to make any changes needed.
Uniglobe’s franchisees in 64 countries annually handle approximately $4 billion in travel business. The parent franchisor has focused on business travel over leisure travel since owner Gary Charlwood founded the venture in 1979, Charlwood told Business in Vancouver March 7.
Business travel consequently accounts for about 70% of Uniglobe sales, which are growing at about 10% per year.
FCC is Uniglobe’s mirror-image. Approximately 70% of its $800 million in annual revenue comes from leisure travel.
Brisbane, Australia-based Flight Centre Ltd. (ASX:FLT) opened its North American headquarters in Vancouver in 1995 and started basing U.S. operations out of New Jersey in 2009.
FCC president Greg Dixon told BIV March 6 that he expects his 1,100-employee Canadian division to increase revenue to $1 billion in the year ended June 30, 2013.
Hiking corporate travel sales is a key part of that business plan.
Flight Centre representatives book about $80 million in corporate travel in B.C.; Uniglobe franchisees book approximately $120 million.
Dixon aims to surpass Uniglobe within a few years.
“Corporate travel is growing at about 40% per year,” Dixon said. “FCC’s Corporate Traveller division, for small and medium-sized enterprises, is probably the star performer for Flight Centre globally.”
Dixon has tried to find a niche in the corporate travel business by catering to enterprises with annual travel budgets as small as $30,000.
Carlson Wagonlit and American Express dominate the corporate travel niche of catering to the world’s largest businesses.
Lyell Farquharson, American Express Canada’s vice-president and general manager of business travel, declined to reveal how small a travel budget a company could have to be accepted as a client, but American Express has recently tried to diversify its client base.
Farquharson said that in 2009 the company launched aXcentis to service small and mid-sized companies.
But Charlwood still views American Express as focused primarily on “the IBMs and BPs of the world.”
“We’ve deliberately chosen the mid-size corporate travel sector [which] has grown over the years because the global nature of business has expanded.”
Flight Centre has two other corporate brands.
FCM Travel Solutions is in Ontario and targets slightly larger customers than the Corporate Traveller brand. Stage and Screen Travel serves clients, such as the Canadian Olympic Committee, that are in the sports and entertainment business. •
