One Way Ticket

Here are a couple of additions to the Believe-It-Or-Not series. Did you know that 11.7 per cent of the world’s GDP (that’s worth $3.5 trillion) comes from the travel and tourism business, and that this industry provides 200 million jobs to people around the world? Of this, $400 billion-that’s more than India’s GDP-comes from the 75 million business trips that corporate executives around the world make every year. And if one goes by a recent American Express study on corporate travel, this figure is growing at four per cent a year.

Enough opportunity for corporate travel agents (like American Express) to rake in the moolah? Well, you’ll be surprised. Corporate travel agents are actually contemplating whether they are an endangered species. That’s because of three reasons. First is the Net which allows a corporate executive to book his entire travel programme with airlines, hotels and car rental companies online, himself. For instance, Qantas uses electronic ticketing domestically, United is now using it globally, and in Europe, Lufthansa has released a software product that allows travellers to book not only air travel, but hotels and car hire as well. If that wasn’t enough, airlines around the world are looking to cut down on the cost of ticket distribution, i.e. discounts offered to travel agents are being slashed. This means that the travel agent can’t pass on much benefit to his clients. And with corporate travel spending having grown phenomenally over the years, some corporates have such huge budgets that they are able to leverage bulk discounts on their own. Motorola, for instance, has a $100-million annual travel expenditure, and the company thought it more prudent to set up its own travel agency to leverage this bulk buying strength.

So, what does today’s corporate travel agent need to do to survive in tomorrow’s world? "Re-invent himself," says Tim Johnson, senior vice-president, American Express Travel Services Group. "Tomorrow’s travel agent will earn money not from commission but from management fee. That’s because companies want a smart agent who can help them through the tangle of promotional offers, rate complications and competing airlines. They must deliver specialist travel consultancy and management services." For, if a corporate executive is to book his travel programme himself, it isn’t as easy as it sounds. Websites are not always updated with the latest deals, and most executives don’t have the time to surf 20 sites for the most effective cost option.

And what re-engineering must travel agents do to cater to these corporate needs? "They must build their knowledge, be global in scale and be staffed by consultants who use advanced infotech management tools to deliver value," says Johnson.

Importantly, companies will expect agents to devise corporate travel policies. Take Motorola, for instance. "In 1997, Motorola Asia employees were booking their travel using 17 agencies, flying with over 35 airlines and staying at hundreds of different hotels. Since we had multiple travel policies, there was no way to leverage this volume for better cost savings," says Sherrell Watson, Motorola corporate travel manager, Asia-Pacific. Then came the single travel policy where all Asia employees use one standard corporate credit card for business travel, travellers book their own travel over the Net from a menu of approved air carriers and hotels. This has given Motorola substantial discounts over published fares, with agreements on a few preferred carriers. Through this, Motorola estimates to have pared travel costs down by about $10-15 million in 1999. All this with the help of American Express, which made its money via consultancy charges.

Corporate travel agents also need to make investments in technology to be able to harness the potential and take on the Net threat. American Express’ AXI Travel, the company’s online booking software that was launched in mid-1997, now has 240 clients with 358,000 users. AXI is customised to the requirement of every client, enabling executives to book themselves, using assistance from the software. "AXI allows executives to get a 20 per cent discount on the normal ticket price. Since its online travel advice is available 24 hours, planning, approval and booking a business trip consume barely a few minutes," says Tracey Bowra, vice-president, product development, marketing and consulting, American Express. Therefore, instead of the Net becoming a threat, travel agents can actually use it to their benefit. But for this, the travel agents must re-engineer, or they’ll be salted away in museums in 10 years next to the dinosaurs.