Cutting Out The Middleman?

<H1>Cutting Out The Middleman?</H1><H3>by John Caldwell</H3>Renting plates or entering the travel distribution system offers some distinct benefits for clients, especially as direct relationships with suppliers expand and technology threatens the role of intermediaries. The real question is who offers the best value at the best price with the least risks. While I have clients who have converted in both directions, and others are considering the plunge, there are elements of risk.

1. Using an outsourced agency arrangement can provide legal risk protection by insulating the corporate client to the extent of not making reservations or running the operation. Having the agency between the corporation and the traveler provides more protection from tort liability than being directly in the business through plates or renting them.

2. With technology expected to replace people, a corporation must consider the risk of severance and wrongful discharge issues.

3. Holding down company labor costs is difficult, and having a dual scale for travel and non-travel personnel can produce conflicts. By offering career advancement, agencies can offer a strong inducement to their people. In addition, an outside contractor has a stronger incentive than the company to motivate staff because it could lose the business.

4. As volume grows, the challenge of finding and holding large numbers of res agents is greater, especially if you are in a remote area.

5. A single agency with menu services can simplify the travel management process, allowing for use of third parties where the one provider cannot or will not deliver the best services and products.

6. Company-operated departments can result in the same revenue conflicts that used to characterize rebating-too much emphasis on profitability based on commissions.

Insourcing the travel business can lower costs and improve productivity. But there are real trade-offs, and taking responsibility for all parts of the puzzle is not for the faint of heart.