'Renegotiate contracts or lose out'

24 February 2000
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24 February 2000 | Elizabeth Bellamy

Business travel buyers who fail to renegotiate their supplier and travel agent relationships within the next year may suffer financially, an industry body has claimed, writes Elizabeth Bellamy.

Ian Hall, chairman of the Institute of Travel Management, said the scenario was prompted by a recent trend for companies to pay their agents and suppliers through transaction fees, instead of commission or management fees.

Transaction fees give firms greater visibility of travel spend as goods and services are paid for up front, item by item, Hall told conference delegates. But as the use of these fees becomes more widespread, companies must be aware that they could lose their valuable end-of-year commission rebates from agents and suppliers.

Firms needed to renegotiate now with their suppliers to minimise the impact of this loss, he added.

Iain Robinson, head of UK business travel at American Express, said an increasing number of customers had expressed an interest in the transaction method during the past year. The trend had also been driven by British Airways' decision to scrap commission payments for travel agents and corporate buyers by 1 January.

This will have a wave effect across the industry, as the average firm spends between 50 and 75 per cent of its travel budget on flights, said Robinson.

Hall said that small firms, which tend not to have direct relationships with suppliers, were particularly at risk.

SMfeb2000

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