With the boom in corporate travel in India, the sector is expected to grow around 25 to 30 per cent this year to Rs 9,000 crore (Rs 90 billion). This has led to increased competition in business travel management segment.
While the segment has hundreds of small and medium players, the increasing global nature of Indian businesses is expected to lead to a consolidation around a few global players in the coming years.
"A shake-out is inevitable, smaller players will die out and only niche and huge multinational firms will survive," says Gopinath Nair, senior V-P and head at BTI-Sita, one of the three global companies which accounts for around 25 to 30 per cent of the total 'management' business.
The company, along with Carlson Wagonlit and American Express has seen their market share rise as more Indian companies sign the management firms to relieve itself of the bother of booking airline tickets and arranging hotel rooms for their employees.
"We have signed up around 40 new companies in the last one year alone," says Berthold Trenkel, who recently became the first Asia Pacific COO of Carlson Wagonlit, the world's second and India's largest business-travel management company.
"Indian operations are not only among the fastest growing, but also, the third largest in the entire Asia Pacific after Japan and Australia," he says.
With sales of Rs 815 crore (Rs 8.15 billion) last year, or around 12 per cent of the estimated Rs 6,800 crore (Rs 68 billion) spent by the Indian corporates on airlines and hotels, Wagonlit is currently the biggest player in the market.
"Till now, it was difficult even to estimate the size of the Indian market for corporate travel," says Trenkel.
But with IT and Pharma companies doing better than ever before (the two segments account for nearly 80 per cent of Wagonlit's sales for Indian clients), the smaller players are likely to be edged out of the market.
"It is the nature of businesses to go global," Nair of BTI Sita says, "and companies are opting for travel consultants who have a presence in all parts of the globe. In addition, arm of companies tend to employ the same agency as their parent," he points out.
Business or corporate travel management is a relatively new sector in India, with most of the big companies having set up joint-ventures and subsidiaries in India in the last few years.
Travel management companies are helping corporate negotiate the competitive and often complex pricing structures of the steadily enlarging aviation industry.
Most travel management firms operate on a service or transaction basis where airline and hotel commissions are pooled into the companies' overall savings in return for a fixed service charge to be paid by the service.
A few, however, survive only through the commissions provided by airline and hotel companies.