Why transaction fees for business travel services are misunderstood…

3 min read

Most people will outsource something these days, whether it’s cleaning, ironing, gardening, car washing, admin, investing – the list could go on and on. Paying someone else to do something because they are either better at it than you are, or because you just don’t like doing it, isn’t a strange concept anymore. But even though so many people have started to outsource different elements of both their personal and professional lives, many people still begrudge paying a fee for business travel services…but why?

Because it used to be free.

Instead of customers paying a fee to use a business travel agent, travel suppliers like airlines, hotels and rail companies paid corporate travel agencies a handsome commission. This is how they made their money – and it also meant the customer didn’t have to pay a fee for their service. Quite a few years ago now, the majority of commission payments disappeared and that left business travel agencies with a hole to fill, and that’s when transaction fees were introduced. The problem though, is that the expectation from the customer was that it should be free, especially when the Internet made it so easy for them to book business travel themselves online.

Many organisations these days happily pay for business travel services because in reality the fees often only account for a very small percentage of the actual travel spend. And by having a professional manage your travel programme, you’ll usually reap the benefits through cost reduction and time efficiencies. But even then, you may have some rogue travellers who just can’t see the value, and so instead of relying on their business travel agent to do the hard work for them, they’ll spend their own time searching different websites trying to find the best deal, bypass the business travel policy and book outside of the contracted travel management agreement.

It’s often easy to forget how much your own time is worth in monetary terms, so here’s a simple example:

The company CEO books all his/her travel themselves on the Internet. To keep things simple, let’s assume their time is worth £100 per hour to the business.

If he/she spends 30 minutes looking for and booking their business travel, the cost to the business is £50 in lost time. Not to mention, the time to claim the expenses and the lost efficiencies because the travel is ‘off contract’.

If they’d have sent their request to the corporate travel agent, and they paid a service fee of let’s say £10. That’s £40 saved straight away plus all the value (that’s not always easy to see) that comes from discounted rates, management information reports, cost-saving identification, traveller tracking, 24-hour assistance and crisis management to name just a few.

If you’re spending in excess of £10,000 per year on business travel, using a travel management company is definitely worth considering. By working with a professional travel management company you’ll make sure you’re exploiting every opportunity to better manage your business travel. And whilst someone else is spending their time finding you the best travel options, negotiating you a better deal or ensuring value for money, you can use your own time to do something more valuable. Even though you will pay a nominal fee for their service, your return on that investment should make it well worth it.