THE TRAVEL MANAGEMENT industry continues to be faced with growing challenges that are driving providers to enhance their offerings and expand their role in the marketplace. In 2005, an emphasis on speed and cost, and a misperception that basic online offerings can fill complex booking needs, are factors to be weighed up by companies looking to control travel spend. Travel management companies must therefore address new ways in which client companies can manage travel and information through a combination of applied technology and human expertise.
On the logistics front, ever-increasing competition from single-supplier internet travel sites forces providers constantly to prove their worth. Such products targeted to the individual purport to make life simpler for one-off bookings, but they also make tracking transactions, comparison of fares and ensuring compliance on a corporate policy level significantly more complicated.
On the budget side, a reduction in commissions from big airlines means that providers must rely increasingly on transaction fees for revenue. As in any service industry, higher fees means closer scrutiny; both agents and technology will be put to the test in the coming year.
Such changing expectations have sparked a noticeable industry shift for travel management companies looking to set new standards of service. Indeed, in the minds of many this shift is a critical turning point for travel management.
The opportunity is most apparent in the move from traditional to online services, as travel management companies are well equipped to integrate – and are encouraging – the rising trend of e-ticketing into corporate programmes. For travel managers, e-tickets also open a new world of convenience and translate more easily into cost savings for clients: there is no danger of lost or stolen tickets, no ticket delivery and associated charges, and it is possible to track and trace unused tickets for refunds and to make last-minute changes with ease.
British Airways is helping to lead this approach, and is already encouraging travellers to check in online and print boarding passes before they arrive at the airport. This saves time for travellers, as they can check in for flights up to 24 hours in advance from home and avoid queuing. In the longer term, this will help BA extend capacity when Terminal 5 at Heathrow is opened.
The electronic management of information is a valuable advance for travel management companies as it significantly enhances their ability to access data that help their clients get the most out of their budgets. This capability helps support corporate travel policies, which are put in place for a simple reason: without them, there would be no way to control spend from one trip to the next, and no way to pinpoint where unnecessary expenditures are a burden on the company.
For example, booking online in effect generates an electronic invoice almost instantly, and the expenditure can be recorded as part of a managed information warehouse. Understanding who spent what, where they flew, and under what parameters the ticket was booked allows managers to quickly flag off-policy travel. On the invoicing side, the resulting management information makes it easier to allocate invoices to a cost centre and be more accurate in analyzing which centres are overspending.
E-ticketing also makes it easier for travel management companies to track unused tickets. Before e-ticketing, in many instances when flights or travel plans were cancelled, a paper ticket would have to be returned to the travel management company to trigger the refund process. Travellers often concluded that the time and energy required to pursue a refund was too burdensome and so potential refunds were lost. But in the days of online convenience, tickets should be actively tracked by travel management companies on behalf of their customers and, especially for larger customers, a system should be in place to ensure that the money is recouped.
Conflict
Although online technology increases the range of services travel management companies can provide, it also produces a conflict that springs from the way customers perceive travel management companies' cost structures. Options such as single supplier internet travel sites stake their claim around rock-bottom prices, which in many cases tempt customers. Often, though, these do not reflect additional taxes and processing charges that only become evident in the final stages of a transaction.
Eventually, the short-term endurance of these players will be exposed as they will not be able to deliver the essentials for corporate clients – high-quality capabilities, accessible advice, and well-trained, experienced travel consultants. In the meantime, these sites present another obstacle to full service travel management companies as they work to validate their offerings.
Another hurdle has arisen because of changing relationships with airlines. Over the past few years, travel management companies have seen a significant shift in how airlines approach the payment of commission fees for their business.
A decrease in commission payment has been led by leading players as British Airways, American Airlines and Virgin Atlantic, and the result will be a greater reliance on transaction fees for travel management companies. These fees will increase and gradually take over the place of management fees. As the charges climb, clients will be justified in seeking full disclosure of what the fees cover.
Travel management companies are thus under an obligation to take on a policy of full transparency with regard to how their fees are presented. Although customers might initially balk at higher transaction rates, their attitude will soften when they realize that there are in fact key benefits that can be derived from being charged per transaction rather than via an overall management fee. As transaction fees are easily attributable to specific activities, transaction fees allow for the allocation of expenditure to individual cost centres; costs can be recharged easily; the cost of each transaction can be identified before booking; the fees are simple to administer; and companies will in the end pay only for actual travel booked.