The corporate division of Flight Centre Travel Group is outperforming the company’s leisure travel bookings, pointing to a comeback for a sector that has suffered significant cutbacks during the pandemic.
25.08.2023 - 14:08 / skift.com / Matthew Parsons / Flight Centre
Corporate Travel Management is investing in building back up its teams to prepare for the global travel recovery.
The Brisbane-based agency reported an almost $6 million one-off expense for “excess staff capacity” in the first half of its 2023 financial year, which covers the six months to Dec. 31, 2022, to get ready for more business.
A common complaint among companies is their travel agencies don’t have enough staff to support their employees when taking business trips, to help them deal with any disruptions. CTM doesn’t want to be accused of that this year.
“… We have rebuilt our workforce capacity ahead of the recovery,” said managing director Jamie Pherous during an earnings call Tuesday. “We needed to do that to support additional service demand through what we expect would be a rapid recovery.”
CTM added 204 full-time employees during the six months. It now has 3,000 employees and expects “negligible employment growth” for its second half, noting “we have that $5.8 million of unused staff capacity costs expensed in the first half,” Peherous said.
The company laid off 40 percent of its staff during the pandemic, according to reports.
Pherous also said there were no signs of macro-economic factors impacting the recovery, and North America had “reignited” since January — with booking volumes for that month at the highest levels since Covid.
The technology sector layoffs were also relatively insignificant. “I mean you guys hear a lot about the tech industry, but I think the reality is that tech industry, it’s a high profile. It’s a very low percentage of corporate travel. And I think to be fair that a lot of those tech companies carried a lot of fat,” Pherous said on the call.
CTM North America, formed following its acquisition of Travel and Transport in 2020, reported underlying earnings before interest, taxes, depreciation, and amortization (or EBITDA) of $11.5 million for the first half, which was a 177 percent increase on the same period in 2022.
However, Australian wealth manager Ord Minnett said CTM, like most agencies, will continue to face headwinds including corporate sustainability goals, downward pressure on airline margins and fierce competition in the small and medium-sized enterprise space. It also highlighted the current push to “decouple travel management company revenue models into transaction and advice.”
In Europe, CTM wants to continue to grow its “new, ongoing logistic-related revenue streams as a result of expertise developed through the Covid period,” alluded to in a company presentation.
This could be related to work it carried out for the British government, relating to the country’s controversial hotel quarantine program.
When quizzed on what that was, Pherous said:
The corporate division of Flight Centre Travel Group is outperforming the company’s leisure travel bookings, pointing to a comeback for a sector that has suffered significant cutbacks during the pandemic.
Australia’s Flight Centre Travel Group has a few issues with airlines at the moment.
Qantas has sold its remaining 12.4 percent shareholding in Australian travel agency Helloworld Travel Limited for $22 million.
Adventure travel specialist G Adventures has made a “significant financial investment” in Reforest, a digital platform that connects travelers with local communities that are restoring their ecosystems using reforestation.
American Express Global Business Travel continues to benefit from the ongoing rebound of business trips. In particular the reopening of countries in Asia Pacific, barring China of course, bodes well for the world’s biggest travel agency.
Agency consortium GlobalStar Travel Management is expanding in Europe, after boosting its presence across North America and Asia.
Airlines around the world are ripping up schedules and bringing in new flights to cope with a COVID-triggered trend in corporate travel for executives like Jerome Harris – the scrapping of one-day business trips in favour of longer stays.
Travel prices across Europe have started to decline, following months of continuous hikes in air fares and hotel rates. However, they’re expected to remain highly volatile for several years as the market undergoes a correction.
Travel platform Agoda has been pushing ahead with a series of new fintech partnerships, with its eye on Asia’s corporate travel recovery.
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