2020: THE YEAR THAT TOOK TMCs TO THE BRINK

“2019 was a fairly typical year in terms of seasonal movement so the December drop-off in new transactions was exactly what we’d expect,” says Travelogix's Chris Lewis.

After a promising start to 2020, new transactions dropped 51.22 per cent in March (compared to March 2019) and collapsed by 89.48 per cent in April.

“There was a little bump in September last year as restrictions briefly lifted, but it was a small increase that hinted at a recovery that never emerged,” says Lewis.

After that fleeting glimpse of hope in the autumn, new transactions once again crashed by 89.01 per cent in November compared to the same month in 2019.

“It is clear that as an industry we need to move away from solely transaction fee models,” says Clive Wratten, chief executive of the Business Travel Association. “The BTA has worked with the industry and corporate buyers to recommend three different models to make our sector fit for the resumption of international travel at scale.”

Overall, there was a 65.18 per cent decline in new transactions, from 7.8 million in 2019 to 2.71 million in 2020 – a figure that would have been far worse but for a strong January and February.

“The 2020 reduction of 5.09 million transactions year on year is a stark reality of the impact Covid has had from a business travel perspective," says Julia Lo Bue-Said, chief executive of the Advantage Travel Partnership.

“Each lockdown generated obvious halts on already reduced expenditure and can be clearly felt within the results displayed.”

The rise and fall of invoices raised throughout 2019 was once again fairly typical, according to Travelogix.

But the drop in new transactions in 2020 was mirrored in the number of invoices raised, with March down 50.51 per cent (compared to March 2019) and April, May and June falling 88.4 per cent, 91.67 per cent and 85.50 per cent respectively.

“From late August 2020 onwards we saw booking numbers recover slightly but new invoices did not increase at the same rate” says Lewis. “This suggests travellers were keen to travel and held bookings in anticipation of being able to travel but ultimately lacked confidence and did not move forward with their plans.”

The average revenue per transaction fell 64.21 per cent from £296.50 in 2019 to £106.12 in 2020, reflecting the fact that what little business travel remained was largely domestic rail travel or short-haul flights.

October 2020 was a negative month where the value of refunds processed by TMCs was greater than the bookings they took.

“The role of the TMC should be commended throughout this whole process as often refunds are not chargeable via a transaction fee,” says Hazel Dawson, Focus Travel Partnership’s commercial manager. “Therefore TMCs were facilitating valuable services to their customers without any income whilst also managing all the other challenges that Covid-19 brought with regards to resourcing and their own cash flow.”

In March 2020, the numbers of refunds processed was up 61.49 per cent compared to the same month in 2019 and the increase peaked at 113.43 per cent in October following the lifting of some restrictions earlier in the autumn and a brief recovery in bookings that were subsequently cancelled.

The total number of refunds processed in 2020 only increased 9.67 per cent year on year, but the figures do not include airline vouchers that were processed and held on accounts and comprise a large number of cancelled bookings.

“Travellers clearly wanted to get back on the road but their desire was curtailed by a second wave of regional restrictions and travel bans resulting in a record volume of refunds,” explains Lewis. “We saw a spike in bookings in September that didn’t come to fruition so all of those and more were flowing back out of the agencies in October.”

Revenue and ticket sales for air travel around the world fell relatively consistently from region to region, with North America suffering the greatest – revenue on air fares dropped 84.42 per cent from 2019 to 2020 and the number of ticket sales fell 79.81 per cent.

Of TMCs’ top ten destinations booked in 2020, ticket sales to Hong Kong fell 90.51 per cent year on year. Japan was down 82.87 per cent, Singapore by 81.62 per cent, France by 80.79 per cent and the United States by 80.46 per cent.