Monday, March 18, 2019

GBTA Michael McCormick Chauffeur Driven had the unique opportunity to sit down with Global Business Travel Association (GBTA) Executive Director & COO Michael McCormick and GBTA Allied Leadership Council President Scott Solombrino to get their thoughts on the state of business travel, issues impacting it, and the sharing economy—especially TNCs.

Chauffeur Driven: For our readers unfamiliar with GBTA, please explain what the organization is and does.
Michael McCormick: As the Global Business Travel Association, I’d say that the core group that we represent are the travel buyers in the business travel industry. That’s always been our role since the beginning back to when we were the National Passenger Traffic Association to the National Business Travel Association, and when we became “Global” going on five years ago. The organization is about putting buyers and sellers together within the marketplace for business travel and that covers everything from air, hotel, rental car, ground transportation—all aspects of the industry. A big part of where chauffeured cars fit into it is the strategies that companies have about getting their people from point A to point B the most efficiently and effectively. Then, of course, we provide education and research about business travel and very actively advocate for the industry here in Washington, D.C. When we talk about advocacy and our positions, we are always thinking with the buyers in mind and for the corporations that are spending the money and paying the bills for business travel. The focus of a lot of our research is about the critical link that business travel drives business growth. When companies want to grow, they spend money on travel and put people on the road. It drives the economy, it drives jobs. It’s vital to every aspect of business. So it’s not just about business travel being an expense—it’s not a luxury by any stretch of the imagination.

CD: Please tell us a little bit about your background and how you got involved in GBTA.
MM: My whole career has been in travel, since my first job out of college where I was hired to do financial analysis for what was then Rosenbluth Travel. I worked for Hal Rosenbluth for 11 years and was part of a solid team that built Rosenbluth; it was a great way to come in to the industry, which really was the beginning of corporate travel management in the late ’80s. Later, I ran the hospitality and leisure group for Cendant, which at the time included Orbitz and Travelport and a long list of brands. When my current role became available, it was purely coincidental. I threw my hat in the ring at the last minute but ended up coming here, and it’s been a very enjoyable part of my career going on six years now.

Scott Solombrino: Michael is really underselling himself with what he has done here. Having been on the GBTA board for 13 years, I can tell you that he has doubled membership, completely changed the financial structure of the organization to where it’s absolutely a commercial success, our Convention is larger than it ever was probably by a multiple of three, and the overall metrics [of his leadership] are really astounding. He has had enormous success. He was also responsible for the globalization process at GBTA where we literally opened up on every continent in the world with education, networking, or events. Together with the board, he really took GBTA to a new plateau, where we find ourselves now as the largest global business travel association in the world.

MM: Like Scott said, we’re really proud of it. We’ve put together a tremendous team and re-engineered every part of the business of GBTA. Our membership has doubled over the past five years and so have our revenues. We now have over 7,000 members globally and half of them are from outside the U.S. When we started down this path going back almost six years, it really was with that in mind. If you look at the timeframe, 2009 was when the market crashed and the business environment was terrible. Business travel was at an all-time low. We made investments in that globalization at a time when it probably wasn’t the popular thing to do. We knew when business came back that it was going to be a very different economy. The travel patterns we see today are totally different than what they were just a few years ago. The destinations of business travelers and the responsibilities that companies have for their business travelers have changed dramatically. The biggest issue we’ve seen emerge since 2009 is duty of care because you’re sending people out to all corners of the world and asking more of their productivity and time away from home. It’s certainly been one of the most important areas of focus for business travel managers over the past four or five years.

SS: There are over 100 chauffeured car providers in GBTA so we make up a large constituency in the GBTA community. And we are now out there preaching to people about paying attention to the duty of care when it comes to TNCs and them trying to go into corporate programming and legitimize themselves. A member of our state [Massachusetts] legislature recently asked: If during the blizzard you went to the supermarket and were charged 10 times what you normally paid for chicken, the grocer would be in handcuffs on their way to prison for price-gouging. Why then is it OK for these TNCs to charge extra during the same blizzard when it becomes a matter of public safety and we’re allowing this to happen unregulated? It’s probably the savviest example I have heard.

CD 0315 Michael McCormick GBTA

CD: What kind of concerns do you have about the lack or use of substandard insurance by Uber and Lyft in terms of what our industry (and other regulated industries) is required to have?
MM: I can’t talk specifically about any one provider, but I can talk about TNCs in general. I can tell you that we’re very concerned; our buyer members are extremely concerned about the duty of care responsibilities that they have to their travelers. The argument that you’ll often get back is: Are the buyers in this industry trying to stand in the way of innovation? The direct answer is absolutely not. We’re not about blocking innovation. It’s really our job as an association to look at this in a transparent fashion and see all sides of the issue. We’re not here to talk about what people are doing on their own time and what benefits the business traveler personally. But when people are on the clock and the company dime, these become very critical issues.

CD: Do you feel that various corporate travel managers and procurement departments are in tune with the shortcomings of TNCs?
MM: It’s an education that has begun over the past year but I think there is still a way to go before they have that full level of awareness. The hard fact is that the way many companies learn of shortcomings is when something goes wrong, their companies have liabilities that they didn’t expect, and then they learn fast. Within GBTA, these issues have elevated very rapidly over the past 12-18 months and I think people are getting more in tune and taking action with a number of policy adjustments. Some have gone as far as not reimbursing for certain providers.

CD: Do you see this as an issue that GBTA will educate on, or will it be up to the chauffeured transportation providers to educate procurement departments and corporate travel managers?
SS: GBTA and NLA have worked for years together on legislative issues and political action initiatives, so there is already a symbiotic relationship providing education and getting the specific information to the respective organization memberships. So because of that, NLA is going to be coordinating part if its public relations campaign with GBTA. We think there is an education process back into the membership. Because we’re not competing for the same people, we’re actually working on the advocacy side for the same people. Ground transportation is more of a risk factor for an average business traveler than flying in an airplane. I know everyone worries about what happens if the plane goes down, but that’s not where statistically you’re going to have a problem. It’s hundreds of times more likely during the ground transportation component, whether it’s chauffeured transportation or the person is driving a rental car themselves.

CD: What was the initial perception of TNCs’ business travel model before they revealed the chinks in their armor?
MM: Just because something has some application in the consumer space does not necessarily mean it translates into the business space. We’ve seen many companies try to build those relationships, growing to understand business travel and making investments for our needs, and then go on to be successful, but many of them don’t. In order to serve this market, you have to remember one very fundamental fact: It’s not the traveler paying the bill, it’s the corporation. There are reasons why travel policies exist. Corporations have huge liabilities with respect to their business travelers.

CD: Do you think TNCs will make that investment and operate on a level playing field within business travel?
SS: If we can have successes at the state level and get the regulations on the books, then it’s up to the operators to level the playing field in terms of technology. At my company, we have a platform similar to Uber ready to go and available. The question is, will the rest of the industry follow, because if they don’t then we’re never going to have enough capacity to compete with TNCs. The general public has already voted—Uber is worth $40 billion. The public is saying that they like the product’s ease of use and if you have that, we’ll do business with you, too. Level playing field or not on a regulatory level is not enough to win the war.

CD: Besides the technology, how can we compete with the on-demand component?
SS: We have 36,000 cars available around the globe every day and that’s not enough. I’m talking to my biggest competitors on a regular basis about things that I think we need to do together. The industry has to come together—it can’t be through the NLA because it’s a non-profit and can’t have a commercial end to it, so operators are going to have to get it together. We have to be able to put aside our own egos and brands and see that there’s a better way to do this together. If you can’t meet demand, you lose the users and they don’t come back. No one is going to wait for you to meet the demand—they will go somewhere else in this on-demand society and get it now. Everyone knows what the challenges are, but it’s a matter of can it be executed—and I think it can.

CD: We’re a very fragmented space. If the industry truly collaborates on an on-demand initiative, which company will own the client? Won’t this become an issue when a competitor’s car picks up your client because it was closer?
SS: I don’t think the industry has a choice if you want to compete in on-demand service. Some of our competitors might say that they don’t want anything to do with it because it’s too complex and will try to ride it out in the non-demand space—but I think that’s a shrinking space because of the shift in the paradigm. So my theory is you’ll have to take down some of the defenses that would prevent you from having to collaborate with someone you normally wouldn’t so that you can jointly make more money and meet a demand, and ultimately build a better business model that might lead to a better valuation of all of our companies. I think if we can get the regulations in place on the state level, the rest of it is the easy part.

CD: And it seems so cut and dry that it should happen, yet regulators haven’t drawn those lines in the sand and said that TNCs have to follow the rules, too.
SS: With organizations like GBTA coming out in support of ground transportation, the message is getting out there. Regulators would never allow a hotel to operate without smoke alarms or a plane to fly without being registered with FAA, but they’ll let a car operate without regulations where they are statistically more likely to be hurt?

CD: Has GBTA been dealing with similar concerns with Airbnb?
MM: I can’t talk about specific brands, but I think there are similar duty of care concerns here. What’s interesting about how the different brands that have approached the business travel space and their willingness to understand this industry—they either get it or they don’t. But the core issue always comes back to the duty of care. As an organization, even though some of the issues might be highly contentious, you can’t shy away from it. That’s the point of why we’re here: to foster exchange and discussion with our members. Otherwise there is no transparency and the issues never make it to the forefront.

CD: Can you tell us a bit about the GBTA Convention and how our readers could benefit by attending?
MM: The annual GBTA Convention has become the largest of its kind, and you really do have the entire business travel marketplace entirely under one roof. When it comes to the networking, you have in excess of $400 billion worth of buying in terms of the number of companies represented, you have the entire community there and every vertical represented, plus over 70 education sessions. It’s really a terrific way to get your work done in a matter of three or four days. It’s about connecting people who can provide services to each other. It’s always been about that. I highly recommend it for anyone to come. We are very happy that the ground transportation industry is well-represented there. You have a lot of chauffeured transportation companies that come, exhibit, and speak. They must see a benefit to it because they keep coming back year after year. [CD0315]