Travel agents 'must focus on consultancy'

HONG KONG (JP): Some 37 percent of travelers worldwide have used electronic tickets, according to a recent survey by the International Air Transport Association.

In the United States, 50 percent of travelers expect to use electronic tickets by year-end.

For hotels, airlines and even car rental companies, information and telecommunications technology is the key that unlocks direct access to customers, whether by telephone, e-mail or the Internet without having to pay commissions to travel agents.

As competition intensifies, airlines, hotels, car hire companies are under relentless pressure to pare costs, and distribution costs -- including commissions to travel agents -- are an obvious target.

Is this the writing on the wall for travel agents?

Not necessarily, says American Express Travel Related Services Company (Amex TRS), a wholly owned subsidiary of American Express Company, which is a diversified worldwide travel, financial and network services firm with almost 44 million charge and credit cards worldwide last year and US$227.5 billion in card-billed business.

However, the changes are forcing travel agents to reinvent themselves to deliver value to customers through consultancy and advisory services and to invest in new technology that underpins any customer expense management program, argued Amex TRS senior vice president Tim Johnson at the 1999 American Express Corporate Travel Management Forum in Hong Kong last week.

Major companies, which spend a great deal on business travel for sales calls, training programs or conferences, still need travel agents, but smart ones that can help them through the tangle of promotional offers, rate complications and competing airlines, Johnson said.

"Companies want an agent that can give them additional purchasing power so they can continue to access better rates on flights and hotels," he added.

Travel agents, according to Johnson, must realize that their role is to act more as advisors, that is knowledge-based professionals capable of delivering independent, specialist travel consultancy and management services.

"This, I think, will become the role of the travel management company in the future, becoming more of a manager of multiple distribution channels for the benefit of clients," he pointed out.

Despite the advances in information and telecommunications technology such as facsimile, e-mail, the Internet and teleconference, travel will continue to be essential for developing new business, maintaining existing contacts.

"Teleconferencing, the Internet can never replace the face-to- face meeting," Johnson asserted.

Indeed, the increasing use of strategies that depend on global alliances and partnerships to meet global competition means more travel, not less.

According to the report of the 1999 Amex Corporate Travel Management survey which was released at the forum, business regionalization and globalization is putting more and more people on the road, rather than managing companies on a country-by- country basis ever did.

The survey shows that business or corporate travel for sales calls, training programs and conferences accounted for $400 billion, or 12 percent of the $3.5 trillion in expenditures worldwide for travel and tourism in 1998.

Companies in the Asia-Pacific region accounted for almost 20 percent of the $400 billion spending on business travel (airfares, hotels, car rentals and meals).

The survey found that major companies in Thailand spent an average $35,997 a year on business travel, in Singapore $127,790, Japan $700,000, Hong Kong $300,000, New Zealand $155,174 and Australia $300,000.

Brad Prentice, ASEAN director of Amex Corporate Services, said the annual survey, which has thus far covered 1,400 companies in 20 countries worldwide, had not yet included Indonesia.

Howard Allen, vice president of Amex Corporate Services, said in almost every country in Asia-Pacific business travel and related expenses were the third largest controllable expense for most companies after salaries and information technology.

"But many companies are failing to efficiently manage these expenses and as a result miss out on potential savings," Allen added.

Amex studies, Allen said, forecast a 4.5 percent increase in a typical business round-trip airfare across much of the Asia- Pacific region next year.

Corporate hotel room rates, however, will still drop by up to 4 percent next year because of the enormous decline in occupancy rates caused by the Asian economic crisis.

But the crisis has forced most companies to look closely at what they are spending money on and how they are managing business travel more efficiently.

It is not surprising that more and more companies are recognizing that a systematic travel policy, implemented globally, can play a major role in the drive to contain costs.

Fundamentals

According to Prentice, there are four fundamentals of effective corporate travel management that apply to companies no matter where in the world they are located: establishing clear- cut travel policy, administering the policy, the methods of purchasing and paying for travel and the way travel expenses are processed.

He suggested that companies designate a single travel management company that their employees must use to make their travel arrangements. This gives a company increased control over travel arrangements and complete information on travel patterns, expenditures which can then be used to evaluate policy compliance and analyze traveler needs.

"Why, for example, should your newspaper company permit individual members of the staff to choose the hotel they stay in if you can save money by doing an exclusive, global program for all your hotel accommodation," Johnson concurred.

Therefore, Johnson said, the ability to deliver purchasing savings through global travel management networks becomes an important ingredient needed to redefine the new travel management company.

Prentice said companies which spend a great deal on business travel should assign a single person or department to be responsible for implementing their travel management objectives and tracking performance against objectives.

"Companies also should reduce cash advances for traveling employees, as such advances represent negative float because cash is dispersed before expenses are incurred," Prentice added.

Amex research shows that business travelers often pay for items that can be charged and are slow to clear outstanding advances upon return from trips.

"The amount of money outstanding in cash advances can be put to better use somewhere else in the company," he said.

Therefore, Prentice added, multipurpose cards such as Amex Cards can offer many benefits as they allow employees to charge all types of travel purchases, from airline tickets to hotel rooms, restaurant meals on a single card.(vin)