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We are in an age of content fragmentation - where finding the best fares relies on agent skill and/or technology that can consolidate inventory from multiple online and offline channels. Smart corporate customers are cognizant of this; aware that the largest savings on their travel programme are made by reducing their overall cost of travel (90% of an average programme's cost).
Yet many corporate customers in the region still source travel based on the provider who offers the lowest service fees, (on average only 3% of a travel programme's cost), seemingly ignorant to the fact that, as in all business, you get what you pay for.
Forward thinking companies are starting to truly assess service fees in corporate travel management against the SLAs offered by the provider. Telephone and e-mail response times, best fare guarantees and generated savings are just some of the things hotly negotiated by customers who seek the most for their money.
And yet it is not the cost of 'time' in service delivery that is baselining the service fees offered to clients by most TMCs, but the cost of 'money'.
Cash flow challenges
Cash flow in corporate travel management across the region has become one of the biggest challenges of the decade. With clients contracted to settle their invoices within an average of thirty days, and BSP requiring payment from travel companies within seven (in many markets), it is easy to understand why the landscape is challenging.
But it is the knock-on effect of this cash flow cycle that presents the bigger danger to the industry, and ultimately the corporate customer, in the region.
Today's travel companies are forced to juggle available funds to settle with BSP in a timely manner leaving little room in the day to day budget for things like staff training and technology investment. This is resulting in industry stagnation as many companies cannot finance development and growth, focused instead on meeting the financial rules and regulations of IATA/BSP.
Some corporate customers continue to exploit this cash flow weakness, moving their business between multiple agencies and never paying on time, adversely affecting their provider's cost-of-money which, in turn, affects customers who do pay on time.
It is not just airline bookings that feed the cash flow spiral. The pre-paid voucher system, so prevalent in the region for hotel bookings, puts added pressure on travel providers to pre-finance their clients travel and perpetuates a problem that desperately needs a solution.
Companies must adapt
Changes in client behaviour are a necessary part of the fix. Companies need to look at the benefits of corporate credit cards and what they offer; including insurance, loyalty rewards, cash flow management and potential savings. It is essential that corporate clients give their TMC the freedom from 'financing' so they can focus on improving service delivery, and developing staff and technology resources to truly help generate travel programme savings.
Research continues to demonstrate that a good TMC is more effective at generating programme savings than blindly shopping online for best available fares. The added value that a TMC brings to a corporate travel programme includes structured programme management, consolidated reporting (essential not only for monitoring policy compliance and generated savings but also for traveller security tracking) and programme optimization.
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