By John Sculley, SCRP
Looking back at the impacts of the relocation collapse is very sobering. As employers sharply curtailed their transfer volumes and new hiring, the first victims of declining moves were the relocation management companies. They had become so dependent on real estate referral fees as their primary revenue stream that they were hurt disproportionately because when volume dropped, fewer homeowners would or could sell, and extended marketing times strained cash flow and staff resources.
This earnings impact has accelerated consolidation of the relocation management industry, with some leading firms absorbed through mergers and acquisitions and others driven to restructure their ownership. We see this wave continuing for several more years in the aftermath of this overcapacity period.
Of course, brokerage-based relocation directors have been seriously challenged by these events, too. Shortfalls in referral volume and declining home sale prices have caused many brokers to scramble into repurposing their relocation departments, often into REO/distressed property services or other corporate/institutional-type services. Finding the right strategy for a recovering market is on the minds of many relocation directors.
Is the recovery real? Is the relocation segment still viable for brokers? Worldwide ERC’s latest Transfer Volume and Cost Survey (published 2012) reports a total of 184,433 moves by its corporate members, characterized by:
• 40 percent new hires and 60 percent current employees
• 41 percent homeowners and 59 percent renters
• Total spend of $9.3 billion