26 September 2008
“Organizing business travel is often done by the secretary or someone you know in the business,” according to CEO Joop Drechsel of BCD Travel. “It is an understandable worldwide phenomenon, especially for SMEs that are minding their budgets. But, it is exactly in these companies, where global business can profit from large international travel agents.”
SMEs and travel agents, large or small, have basically neglected each other. “But now, both parties are reaching out to each other”, according to Drechsel. “It is not a small market. Almost half of the total market of annual business travel 600 billion dollars – worldwide – concerns business travel for the SMEs, for which no travel management or travel agent has been used.”
In the days of booking online, some think travel agents no longer have a role to play, however, SMEs can save a lot of money by using a travel agent. Daan Lenderink, director of Schiphol Travel, calculates: “A day round trip ticket to Rome from Amsterdam, booked via the internet, costs Euro 843. We deliver the same ticket for Euro 324, so it is more than Euro 500 cheaper.”
However is this possible? “Travel agents are able to use many tools that are not available for individual online bookings. For example, a travel agent can make use of rate constructions with so called “weekend returns”, which are only partly used, and which are not available online” Lenderink explains.
“When travelling to various destinations, using so-called ‘circle trips’, booking online is almost always more expensive. The reason is the complex rate structure in Europe. The more experienced and the higher the education of the travel agent, the better they know their way around the rate jungle and the cheaper the ticket can be.”
And complicated it is… For a simple destination such as London, more than 100 rates with different restrictions exist. Saving of up to Euro 1000 on intercontinental tickets are not an exception! With a simple and completely legal construction, a round trip ticket from Amsterdam to Dubai and back, can be Euro 1300 cheaper than the normal rate.
According to Ed Berrevoets, director of VCK Travel, the primary focus of business travel too often remains restricted to saving money on the ticket price and on the costs of travel advice. “The whole booking process often is wrongly underexposed. Active support in making the direct and indirect travel costs more manageable is important”, so he states.
VCK’s own research revealed that in general the cost of a ticket is only 50% of total direct travel costs. In addition, 25% consists of indirect travel costs, caused by processes that are linked to business travel, such as authorizing and expensing travel. A company usually spends up to one hour getting all the necessary signatures on travel request forms for each business trip.
“In addition, authorization is often easily granted in order to speed up the process, which means that the value of such an authorization becomes less significant”, according to VCK’s director. “Also, processing expenses is often time-consuming, because it is still done manually in many companies. It takes an average of 45 minutes per expense report.”
This is why various travel agents, including VCK, have developed programs that take care of the larger part of this administrative burden, which saves aconsiderable amount on indirect costs.
Nevertheless, small companies still believe that by arranging for business travel themselves, they can save money. “In practice the opposite is true”, according to BCD CEO Drechsel. “The travel products that have been developed in cooperation with multinationals, can considerably benefit SMEs as well.”
What to take into account when choosing a travel agent:
- The level of education of the agent advising you on your travel arrangements.
- Available time per reservation.
- Open and fast manner of communication, preferably with one contact person.
- Permanent availability
- A sound and user-friendly travel management reporting system including all travel expenses and savings opportunities, as well as notification on offenders of the established travel policy.
A travel agent often offers their services against prime costs. The services for travel management are often paid separately, with a bookings fee, which usually consists of a few percentage points of the travel cost.
A frequently made purchasing mistake is to compare/weigh travel agents, just on the basis of differences in the booking fees.
The purchasing officer at a large company, driven by his or her purchase bonus, often quickly calculates himself the best bonus by taking the cheapest booking fee. But entrepreneurs have to realize that the work around making reservations often remains with the company itself, which means a disguised cost growth.
For the selection of a travel agent one must realize that for example, the booking of airline tickets is not a direct volume product such as pencils or carpeting, but is a knowledge product.
In the end, it is more about the total travel expenses and much less about the requested booking fee. Too low a booking fee can actually be fatal to a company, because in a sense it is saving on purchase strength. Differences of thousands of Euros per ticket are no exception!
Tickets are becoming cheaper, but flight taxes are becoming higher and higher. “Due to government policy, Schiphol Airport is becoming less interesting. On a round trip ticket from Amsterdam to America and back, a non specified tax in the amount of Euro 200 to 250 tax is added”, according to Daan Lenderink of Schiphol Travel. “As of November 1, these will rise again. It is becoming more and more attractive to depart from Dusseldorf.”
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