NEW YORK -- Following the international commission caps, travel
managers and agencies are moving faster than ever to cut the cost
of processing tickets and filing expense reports.
Agencies, faced with a drastic cut in commission income, are
looking for any overhead left to cut by driving electronic tickets,
raising transaction fees and dropping unprofitable accounts.
Corporations, faced with the prospect of writing checks directly
to their agencies, are pushing up plans to automate expense
reporting, install self-booking systems and in some cases are
telling their agencies to reduce head count.
Carol Salcito, president of Stamford, Conn.-based Management
Alternatives, said one of her firm's clients plans to speed up the
rollout of a self-booking program from the second quarter to the
first quarter in an effort to save booking costs.
Salcito said her client is also alerting various departments
within the company to budget for additional transaction costs. For
example, she said, if a department booked 200 tickets last year, it
should budget for another 200 tickets plus a flat transaction fee
that would pay for the ticket.
Salcito said the client is perfectly willing to make the agency
reduce its overhead costs. "I heard the travel manager say if we've
got to knock off another agent, then we do," Salcito said.
Salcito said the cost of booking a ticket can be between $12 and
$75 per transaction, depending on the company and its relationship
with the agency. The cost of processing a trip, including expense
reporting and issuing management reports, can run in excess of $200
per transaction, she said.
Ralph Brown, president of R.D. Brown Co., based in South Elgin,
Ill., said companies are looking at every possible method of
cutting costs. "I know a couple of clients have lost 30% of their
commission [income]," Brown said.
Cheryl Hutchinson, travel manager at American Management
Systems, based in Fairfax, Va., said the caps cost her company
about 10% of its commission revenue. Her company is speeding up a
plan to roll out a self-booking system developed by Internet Travel
Network. She said the company will also push more electronic
ticketing and try to get the agency to operate more
Earl Foster, director of global travel management at Joseph E.
Seagram & Sons Inc., said his company will negotiate better
fees with his travel agency depending on what type of tickets are
issued. For example, an electronic ticket calls for a lower fee
than a paper ticket.
Foster, who is also president of the Association of Corporate
Travel Executives, based in Alexandria, Va., said corporate
agencies will eventually cut the number of staff servicing
corporate accounts. "All the major agencies are gearing up for the
time when there will be [fewer agents]," Foster said.
Phil Dunphy, travel manager at New York-based Pfizer, said his
travel department will lose $1 million from the international
commission caps, but he is concerned that cost cutting will hurt
the quality of service provided to his company's employees. "That's
the money we use to pay for agents and support services," Dunphy
Pfizer starting this month will roll out an automated
expense-management system from Concur Technologies and also has
plans to automate its booking process.
Dunphy said that, despite the need to cut costs, he still has
concerns about using electronic tickets. He said tracking unused
electronic tickets is difficult, and he said travelers still run
into problems when they have to change flights.
Dunphy said he is interested in the Airline Reporting Corp.'s
program to accredit corporate travel departments. He said the idea
of outsourcing specific duties to appeals to him. He admits,
however, that he will have to sell the idea to senior