The future of the TMC

This is a preview of the full report The Future of the TMC.

By Norm Rose

The business travel market has seen a significant rebound from the COVID-19 pandemic, with business travel spending for many corporations recovering to pre-pandemic levels at a total volume of $1.48 trillion expected for 2024, according to the Global Business Travel Association. In today’s competitive market for business travel services, the traditional travel management company (TMC) model (referring to travel agencies that focus on the managed corporate travel segment) is being challenged.

Changes in airline distribution have prompted a reevaluation of the tech stack needed by TMCs, as new market entrants push the industry towards different models while more traditional TMCs refocus their efforts on automating online and offline processes. The introduction of AI is having a ripple effect, bringing new levels of efficiency to the travel booking and support processes. Labor shortages continue to impact offline call center performance, while new agent tools seek to alter the traditional online versus offline distinctions.

This is a preview of the full report The Future of the TMC.

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Traditional vs. New Entrant TMCs

There is a lot of rhetoric surrounding “next generation” versus “legacy” TMCs. For this report, we use the term “traditional” instead of “legacy.” A traditional TMC simply means a TMC that has been servicing clients for multiple decades, while new entrants have emerged within the last 10 years. The term legacy implies old and is a misnomer, since the large mega-TMCs have invested millions in updating their technology architecture to meet the new evolving distribution environment. The three large mega-TMCs are American Express GBT, BCD Travel and CWT.

Please note as of this writing American Express GBT is attempting to acquire CWT. There is resistance from the U.K. Competition and Markets Authority, which is concerned with promoting competitive markets and address unfair behavior. If successful, the combination of American Express GBT and CWT would further limit choices for multinational corporations requiring global coverage. There are also regional TMCs that are challenging the megas by launching more global services. These include FCM (a division of Flight Centre) and CTM. Other regional players with strength in specific markets include Omega, Christopherson, Andavo Travel, Lufthansa City Centre and ATPI.

Rather than “next generation” TMCs, we use “new entrants” to classify those TMCs coming on the scene within the last 10 years. These include Navan, Travelperk and Spotnana. The fact that many of these TMCs have built their tech stack around the IATA New Distribution Capability (NDC) reflects an embracing of an Application Programming Interface (API) architecture. Click here for Phocuswright’s historical reports on NDC. This infrastructure change is often referred to as the API economy, wherein an organization's digital services and assets are exposed through APIs in a controlled way.

Embracing a new tech stack represents a shift in the way technology is deployed, bringing a new level of independence from the traditional GDS infrastructure. The new entrants’ tech stack design enables the handling of non-GDS information (e.g., NDC API, hotel APIs) across their platform facilitating the sharing of information between online and offline operations. This change has not gone unnoticed by the large mega-TMCs, as each has invested heavily in redesigning their tech stacks and promoting their owned online booking tools (OBTs).

In the full report, the sections below compare the new entrant tech stacks to the traditional TMC tech stack, highlighting key differences:

Use of AI

Traditional methodology

The large mega-TMCs and many regional TMCs are implementing AI tools to improve the efficiency of their travel agents. One example is AI-driven email servicing, which uses AI to organize and service incoming emails. In August 2024, American Express GBT, the largest TMC in the world stated that it expects 6-8% efficiency savings on inbound call routing and 2-4% on the use of client knowledge bases and policy assistants, all utilizing AI. Some of the traditional TMCs have implemented AI assistants to assist with reservation processing.

New entrant methodology

New entrants are also deploying AI-first solutions for common customer queries, freeing up time for customer success staff. Many have deployed AI virtual assistants designed to optimize travel and expense management for businesses, supporting travelers with real-time data analysis, assisting travel admins, finance managers and CFOs in streamlining their T&E programs. In addition, new entrants are particularly aggressive in exploring AI-powered personalization enabled by their new more open platform.

The pace of change for AI is accelerating. 2025 promises to see growth in the use of Generative AI (GenAI) as a booking interface for corporate travel and as an assistant to travelers during their trips. We are on the cusp of new era of autonomous agents that will perform tasks on behalf of humans. The GenAI momentum triggered by OpenAI is impacting both the traditional and emerging agents. The key will be whether the tech stacks of the TMCs are able to deploy new GenAI technology. It should also be noted that the GDSs (Amadeus, Sabre and Travelport) are all spending millions on AI automation with the help of their large tech partners (e.g., Microsoft, Google, Amazon).

Steve Singh, founder of Concur, acting CEO of Spotnana, and chairman of Madrona Ventures’ investment in Otto, a company that is building an autnonomous agent for business travelers, represents how aggressively the new entrants are pursuing GenAI.

The full report also analyzes:

Traveler Reservation Storage
NDC Content
Travel Agent Desktop
Use of Blockchain Technology

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The Move to Open Systems

If you listen to Steve Singh, former Concur founder, head of Madrona Ventures and acting CEO for Spotnana, he often uses the term “open systems” as a key differentiator for his travel company platforms. It is important to differentiate open systems from open source. Open systems allow third parties to make products that plug into or interoperate with them. Open source refers to the software's source code which is generally created by a community.

For example, the PC is an open system. The Linux operating system is an example of open source. The blockchain development community often uses an open-source approach to code development. Open systems may employ open-source software or proprietary software. Are traditional TMC’s tech stacks open systems? It depends on the TMC. Classifying a TMC as having an open system means that the TMC has published their open APIs to connect to their core available to any third-party system. This is true for both traditional and new entrant TMCs.

Access the full report for sections on:

Impact of Staffing Challenges
Will the NDC Advantage Be Sustainable?

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