Latest caps spur managers to trim


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 efficiently.

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 said.

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 management.


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