American Business Publishing
TIME TO REVIEW YOUR TRAVEL PROGRAM
Appeared in Travel Manager’s Executive Briefing (American Business Publishing) Jan. 2000
As a result of airline commission cuts and new travel agency fees, many companies will have to write a check to their agency for the first time. Since this new arrangement affects every element of travel management, a review of current agency pricing and business travel processing is essential. The commission reductions have been dramatic and some bold action may be required; travel procurement formulas will have to be reinvented or, at the very least, revised.
First, corporate travel buyers need to interpret and comprehend exactly what is included in their agency fees. Understanding what services are incorporated into the transaction fee and what type of direct expenses the agency is charging back to the company is crucial. Are these services needed and/or priced competitively? How are non-recurring or one-time costs (i.e. implementation, technology installation, etc.) charged back to the travel program? On the other hand, corporate travel buyers need to be realistic about agency transaction and service fees. While a corporation should only be paying for services that it is using, the agency should also be paid a reasonable fee for the services they are providing. If a company wants more services, they should be willing to pay more in fees. Once corporate travel buyers have a better grasp on the agency fee structure, an appropriate evaluation can be made of the current internal operation preferences. Also, travel managers need to research what other travel procurement options may be available. Choices such as an on-site travel office vs. agency call center, self-management (CTD) vs. traditional agency relationship, net/net airline discounts, additional travel policy discipline, and controlling the CRS/GDS automation contract now all need to be analyzed. Also, third party technology (i.e. on-line booking, electronic expense reporting, etc.) should be investigated. It may be time for a change!
When this sort of agency fee comprehension is linked with an internal review, it will lead to more informed decisions regarding travel management selections that will best match the travel program’s intentions. Conducting an internal review typically includes the following activities: assess the present method of travel service delivery, measure the efficiency of operations processing, validate the current agency’s accountability, review the preferred vendor selection, determine the degree of traveler compliance, and confirm cost effectiveness to ensure the travel program’s aim is still being met. As a matter of fact, now is a good time to reconfirm the company’s travel management objectives. In this new environment, existing travel goals may no longer blend in with the overall corporate strategies. Making the right changes in travel procurement will be critical in year 2000 because business travel expenses are going to become a higher priority for senior management and travel managers need to be prepared. Almost certainly something in today’s process will have to be altered to maximized cost savings. In the end, none of the above actions can be accomplished without corporate travel buyers having a thorough understanding of the new travel agency pricing, complete insight into the company’s current travel procurement blueprint, and a keen perception of all the travel management alternatives.
