Firms move to transaction fees for travel agencies

4 January 2001
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04 January 2001 | Cathy Hayward

More than 30 per cent of firms have ditched annual management fees for travel agents in favour of paying separately for each transaction, according to a survey by American Express.

"It's advantageous for clients to pay for services they actually receive and it provides transparent costing information for purchasing," said Olivier Sauser, European vice-president of consulting services at the company.

The move is part of a drive by firms to adopt more effective travel management strategies, as both the number of employees travelling and travel costs have risen. High fuel prices and shrinking airline commissions to agents have pushed up travel to the second most controllable company expense after salaries, the survey suggested.

However, independent travel consultant Kevin Artal denied that, through transaction-based fees, firms would end up paying for services they were not receiving. "Travel agents will charge an average transaction fee, regardless of the client's history. An efficient client will end up subsidising a less efficient one."

Artal warned that confusion over transaction fees would drive firms to abandon agents. "Employees will buy travel on expenses resulting in little management information. By paying slightly more to get this information, purchasing can negotiate better deals in future."

Online bookings were also an effective way of cutting transaction costs, and more than a quarter of businesses used them.

"It is a seamless end-to-end purchasing system that allows procurement managers to see exactly what is being spent where, leading to improved supplier negotiation, especially when used with a purchasing card," said Sauser.

But Artal claimed that the time-consuming nature of online booking, where it can easily take 20 minutes to make one booking, makes it a hugely frustrating process. "The transition to self-booking is very premature for many clients who are apprehensive," he said.

• The 10th Biennial Business Travel Management 2000-2001 survey was based on 424 interviews in the private sector. For a copy, call 020 7834 5555.

SMjan2001

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