Corporations Get What They Need, Want And Pay For

<B>Corporations Get What They Need, Want And Pay For</B>

Getting something for nothing just doesn't fly right in any business. It's a losing proposition for all concerned in that the service provider will end up financially distressed or out of business, and the other party will be spending both time and money looking for replacement services. On top of that, there's the psychology that favors the belief that if it's free, it can't be worth much. And once a service is offered for free, it's hard to justify its value later on. Travel agents, in fact, have been down that road and just in the past couple of years began to turn the corner on such an unprofitable past. New technology, dwindling commissions and an increased demand for customized services have paved the way for agencies to justify newly established service fees. Fewer travel agencies are now practicing the economic anomaly of giving away their services to corporate clients.

However, when I read, as I did recently in The Wall Street Journal, that some travel agencies are wanting to turn back time--"to do business the old way"--then I must press the issue because of the adverse effects on the industry as a whole.

Some agencies, angered at airlines for cutting commissions and for exhibiting a general lack of gratitude to them, are looking at ways to separate themselves from airlines. Fueling this was an article on Global Reservation Systems Inc. The new company evidently operates similarly to such CRSs as Sabre, Amadeus, Worldspan and Galileo. And, according to the WSJ piece, it claims no direct airline affiliation--an attribute appealing to some agencies. However, it does use the flight and booking schedules of Galileo, which is partially owned by United.

Interestingly, the article called the new reservation system a "savior" to those "squeezed by cuts and caps on commissions." I don't know of any product or system that I would call, in and of itself, a godsend. But I really wonder why travel agents would want to use any product that prompts them to take several giant steps backward, to go back to doing business the old way--relying solely on ticket sales and promising rebates to corporate customers. Is it worth it just for the sake of getting a sense of revenge? Luckily, the person interviewed didn't think most travel agencies would want to give up charging service fees. She called them "greedy." I call them smart. Travel agencies deserve proper compensation by their traveling clientele.

Corporations need travel agents. After all, consider that U.S. companies and their estimated 49 million travelers are expected to spend approximately $175 billion this year on travel and entertainment and take some 244 million trips. Know, too, that T&E is the third largest controllable business expense. Corporations are accustomed to paying for third-party services that help them meet their business needs.

Travel agencies today are better equipped than ever before to serve corporations. They help negotiate travel vendor contracts, implement and oversee travel policies, facilitate optimizing travel planning and purchasing, as well as offer technological options that monitor and manage expenses--all the while supporting these efforts with personalized service. I ask: Who else can do these things better than a travel agent?

Corporations want to be aligned with vendors that are going to be around for a long time and that understand their needs. Travel agencies are mistaken if they think their corporate clients want to read about specific airline boycotts or how they are aiming to sidestep the airlines overall. That's not necessarily reassuring news to a corporate client wanting and needing to consider all travel options. They want to know about how travel agencies are evolving with the times and technological advancements.

Forget about getting angry at the airlines. Get focused. The next time a reporter asks about commission cuts, the agency should use the press coverage to explain and describe the value-added services being employed for the benefit of corporate clients. Airlines will continue to do what they must to survive and be prosperous--so should the travel agency community. Agents can start by communicating to their clients the value of their myriad of services. Then they need to charge for those services, as the client benefits from them.

I admire those travel agencies that recognize their own value. And I am alarmed when others want to return to the "old way," as I believe it hurts the entire industry.

<I>Bill Diffenderffer, former senior vice president at Continental and past CEO and president of System One Amadeus, is CEO of Dallas-based XTRA On-Line Corp.