FCM predicts swing to profit by second quarter of 2022 as the world reopens to business travellers
Optimistic outlook driven by pent-up demand, growing momentum and adaption to the new norm
25 FEBRUARY, 2022
Just a few months into 2022, FCM is reporting a positive trajectory across its global operations, with client demand and bookings emphatically on the rise as more countries open their borders to international travellers once again. This positivity is shared by FCM’s parent company, the Flight Centre Travel Group (FLT), which predicts its corporate travel division is likely to return to profitability as early as March-April.
In a statement to the Australian Securities Exchange today, the Group’s corporate business collectively rose more than 50% above January levels at February mid-month. The company also revealed an escalation in activity in February as the world rebounded after Omicron.
These improvements were seen across all regions and followed almost 150% total transaction value (TTV) growth in FY22 first half (1H) to AU$2.04b compared to the previous corresponding period (PCP).
After two years of lockdowns and restrictions, we are optimistic about the acceleration of FCM’s recovery and outlook. It is heartening to see the travel industry rebound in a meaningful way these past months as the world begins to reopen to international travellers once again.
- Marcus Eklund, FCM Global Managing Director
As the group’s flagship corporate business, FCM offers travel management solutions to larger, often multi-national corporations, and is major contributor to group TTV. FLT’s corporate business contributed about 60% of 1H sales.
Looking ahead, while average spend is unlikely to return fully in the near-term, the company believes that the global rebound will gather pace throughout 2022 and bullishly predicts its corporate TTV can now pass peak FY19 (monthly) levels during the FY23, assuming market conditions improve. Average client spend (market recovery) is expected to reach 60-75% of traditional levels as restrictions ease and as a result of pent-up demand for face-to-face meetings; as well as material TTV flowing through from the large pipeline of accounts won during the past two years.
Eklund cites a number of factors in fuelling current demand.
“It’s clear that decisive government action to ease travel and testing requirements alongside the restoration of vital international air routes have been key enablers and accelerators driving business travel growth. When combined with virtual meetings fatigue and the pent-up desire to resume face to face connections, these have all played a part in driving growth,” said Eklund.
Geographically, the EMEA and Americas businesses, which collectively generated 50% of 1H TTV and more than tripled sales during the period, are again leading the recovery with corporate TTV in these regions tracking 90% and 55% respectively above January levels.
In Asia, FCM saw an average 17 percent month-on-month growth in bookings for international travel from July to December which was primarily driven by the Vaccinated Travel Lanes in Singapore and the rebound in India. The number peaked in November before the arrival of Omicron. The last six months of 2021 has signalled a clear correlation between easing of restrictions and bookings for Asia, where consistency on both sides of the border having an immediate impact on demand has seen materialism into actual return to travel.
Although bookings are trailing and markets continue to be challenged by restrictive policies particularly around international travel in Asia, we expect some pick-up on the horizon between March to June from markets such as Singapore, Malaysia and India whose restrictions are slowing easing. This confidence is also buoyed by notable surges in interest from companies and travellers in January and February despite Omicron, so we are optimistic for an accelerated pace of recovery in the coming months.
- Bertrand Saillet, FCM Managing Director Asia
A leader in the tech travel space
Eklund believes the company has been able to spearhead recovery and growth due to a continued focus on innovation and game-changing technology.
“FCM is proud of its reputation as a leader in the tech travel space, borne through a strategy of continuous development and complementary acquisitions,” said Eklund. “Through accelerated investment, we have developed powerful and intelligent tools to support our clients travel programme aims in a post-COVID world as we all adapt to the new norm and forge a path back to business travel in the year ahead.”
FCM has addressed this through the development of its new proprietary platform. Rolling out globally in 2022, it will offer a raft of industry-first features that addresses pain points, provides exceptional flexibility and personalisation, while vastly improving the user experience. It will also leverage the recent investments made by FLT to introduce new platform components to improve customer experience and capabilities.
Changing priorities for new and existing corporate clients
In this evolving travel climate, customer requirements and market dynamics are creating opportunities for us to develop our services and programmes for existing and new customers.
Corporate account wins since the end of the FY20 1H have now reached $4.5b in annual pre-COVID spend which would represent circa 50% growth on the global corporate business’s $8.9b FY19 result if all clients were retained and were trading at previous levels.
Furthermore, 12 of FCM’s 20 largest clients globally have now been secured during the pandemic, enhancing what was an already a diverse client book with several multi-national, household brands alongside major government accounts in France, Singapore and the United Kingdom – the UK government is now one of the company’s largest clients in the country. The business is consistently gaining market-share across its key regions, while preparing for post-pandemic recovery.
In terms of customer needs, safety concerns are likely to lead to reduced leakage, higher adoption of managed travel programmes and a shift away from supplier direct offerings. While some legacy TMCs are struggling to respond to client concerns, FCM has reinvigorated its duty of care capabilities to provide a sophisticated ecosystem of communications to inform, support and safeguard clients before and during travel. The company is also seeing a growing number of independently minded business travellers turn away from supplier direct offerings or booking outside of policy in favour of a managed travel programme. So, the appeal of FCM’s advanced technologies, combined with the services of a dedicated team of travel consultants 24/7/365, are indicative of business travel priorities resonating with clients in the pandemic era.
A further positive consequence of the COVID-led hiatus on travel has also been the elevated focus on sustainable travel from clients, with FCM incorporating solutions into its platform and service offerings that contribute to positive action and sustainability goals.
For full details of the Flight Centre Travel Group’s 2022 fiscal year first half accounts, view via the following link.
Notes to Editors
Flight Centre Travel Group follows the Australian financial year (also known as a tax year or a fiscal year) which runs from 1 July-30 June each year.
FCM is one of the largest global business travel management companies with a 24/7 worldwide reach in almost 100 countries – so when we say global network, we mean it. The flagship business division of the ASX-listed Flight Centre Travel Group (FCTG), FCM has the leverage to deliver access to the widest worldwide network of airfares, hotels and ground transport for unique and best-value travel solutions. Thousands of national and multi-national organisations around the world, including many household brands, Fortune and FTSE 100 companies, rely on FCM’s intuitive technology and expert teams to move their business travellers effortlessly and maximise their return on investment.
FCM’s agile and flexible travel technology platform anticipates and solves the needs of each business. Our flexible, globally connected teams are experts in negotiating the best deals for their clients, and offer in-depth local knowledge and duty of care support to provide the ultimate personalised business travel experience. FCM is a trusted travel partner for businesses that have regular international travel needs, take single trips at the last-minute, or have centralised their business travel across multiple markets.