In spite of lingering uncertainties brought on by COVID-19, managed travel program stakeholders are planning for a return to travel. As part of that preparation, BCD Travel Global Chief Financial Officer Cees Batenburg explains why those responsible for their companies’ travel program should place more importance than ever on the financial stability of their travel program partners.
We’ve never seen a year like 2020. Why should companies feel confident that BCD Travel is well-placed to get through this downturn and support them in the time ahead?
BCD Travel has always put customer needs first by consistently investing in the technological and human resources to help travelers and travel managers. That hasn’t changed because of the pandemic. We’re receiving a lot of praise from clients for being a trusted partner providing them with the services they need in troubled times.
We’ve always been a soundly run company. And we’re still in a fortunate financial position. We made some smart decisions even predating the pandemic that substantially improved our liquidity position. In short: Our post-pandemic performance will be based on the same factors that have consistently driven our success: our financial stability, our strong partnership with clients, our sales performance (US$1.9 billion in new business in 2020), and a broad portfolio that includes virtual meetings and Advito consultancy group.
Has your role as Global CFO changed because of the pandemic?
Dealing with crises is part of every CFO’s job description, so the pandemic hasn’t fundamentally changed my role. We’re around 87% below pre-pandemic transaction levels. Right after transactions dropped, we focused on reducing cost and preserving liquidity. We moved quickly into expanding liquidity for the mid-term and have been successful. We’re back to thinking about investment and growth for the long-term, while also making sure costs stay under control. And we are giving a lot of attention to interrogating and revalidating assumptions about global, industry and our own financial trends.
Travel managers are using this “downtime” to evaluate their programs and consider new TMC partners. How does a TMC’s financial health fit into this process?
Supply chain management is always crucial, whether we’re in economic downturn or not. In good and bad times, companies buying services or products should evaluate the risk a supplier poses to its entire value chain. Part of supplier risk is financial health. Good financial health indicates that a supplier can withstand potential crisis. A supplier in a less sound position could compromise the continuity of the supply chain.
Times like this prove that making good procurement decisions – choosing a supplier with good financial health – makes a huge difference. In most of BCD Travel’s bids, our financial health is a major part of the prospects’ assessment.
Supplier readiness is another indicator of financial health. Not many people are traveling for business now, but when travel recovers, will the supplier be ready to accommodate that surge? BCD can ramp up quickly to implement or assume the management of an existing travel program. We can efficiently deliver highly configurable, platform-based solutions to clients and travelers. And, we can expertly manage the issues that matter to travel managers and travelers now. We’re pleased at the way we’re providing increased access to real-time information, expanded traveler care offerings and solutions, and assessments that allow travel managers to pivot quickly to serve and protect their company.
Companies also should consider whether a Plan B travel program makes sense for them. What is the fallback option if the original supplier becomes unavailable? The risk management analysis for that should look at how customized their program is and how strategic travel is for their daily business. There’s no right or wrong answer to the decision whether to engage a backup TMC; but if you are being serviced by a supplier with a less solid financial foundation, especially during a crisis, you should at least explore what to do if something happens.
BCD has had non-clients approach us with just that proposition. For those potential new clients, we’ve launched a business-continuity offering that will keep their travelers traveling and their business moving. Of course, our own clients don’t have to worry about that.
What questions do prospective clients ask?
They’re very much interested in the areas of ownership. Clients and prospects question if we can source capital when needed and how our private ownership affects all that. I know I said this earlier, but liquidity is the key. When it comes to ownership, our private ownership structure has consistently allowed us to focus on long-term growth and stability rather than short-term profit. Our founder continues to reinforce that he’s building BCD Travel for the next, next, next generation. The Fentener van Vlissingen family recently made a capital injection into the company and the future of the BCD Group has been arranged for the long term. That means we can continue to deliver experiences and solutions that add value and keep people healthy, happy, productive and confident far into the future.
Publicly traded companies theoretically have broader access to capital. But that doesn’t automatically mean there will be appetite in the market when they want or need to raise it.
Sustainability is another hot topic. Our clients truly appreciate that we can help them build sustainable travel program initiatives as we reinforce our own commitment to ethical, human and environmental sustainability.
Clients and prospects want to hear about the pace of recovery. Can BCD give a clear answer to this question? How do you see 2021 evolving?
We’ve learned from past crises. They can be deep, but recovery has always followed, and business usually returns to previous levels. Based on the experience and the information available today, we expect travel will return to pre-COVID levels within three to five years. There’s already an appetite to get back on the road. Humans want to be with other people and want to see other parts of the world. Sure, virtual works when there’s no alternative but personal interaction is crucial to doing business and engaging with clients, prospects and employees. Obviously, vaccination and the easing of lockdowns will be the most important factors deciding when and to what extent travel will come back in 2021. In a recent survey of over 700 business travelers, 90% told us that they expect to be traveling regularly again by the end of this year.