THE vice president of one of the region’s most successful travel companies, responsible for the movements of hundreds of thousands of US military personnel as well as major corporate accounts, wants the Middle East’s travel agents to ‘raise the bar’ and improve both the efficiency and professionalism of their industry.
Benjo Van Laarhoven, executive VP Alshamel Travel & Tourism, said: “For the future I would like to look at the growth journey with some of our peers. In other regions travel agency is a well-thought-of career and I think perhaps some of us need to get together to raise the bar for our industry, improve standards, make it more professional and hopefully attract more local people to join us.
“When I speak of raising the standards, I’m talking about getting rid of practices such as agencies making use of a corporate rate, which has been negotiated by or for one particular corporate client, to cut costs for other customers.
“As far as I’m concerned this is unacceptable and I know a couple of the large airlines have recently billed travel agents several thousand dirhams for doing just that.”
But he added that he sees Alshamel as a travel management company, rather than simply a travel agency, managing clients’ travel arrangements from beginning to end and ensuring the best possible prices and the most efficient transactions.
The US currently has around 50,000 military personnel in Iraq and all of them have been brought in via Kuwait through Alshamel which is the largest contractor for the US military through its CWT- Sato Travel affiliation.
And Van Laarhoven said working with the military has helped to improve Alshamel’s service and make the company more efficient.
“We have built knowledge and experience – you have to learn to speak their language,” he explained.
“It’s all about safety, security and transparency. A lot of corporate customers could learn a lot from the US military. Their travel arrangements are a very clean process and as a result we have become very efficient.
“We measure efficiency on the number of calls per transaction (also on other things such as the cost savings over a period of time) and this can be more than two and a half times as high in regular corporate travel.
“For example by the time the US military makes the call or sends the email requesting travel booking, much of what comes into the discussion with a civilian corporate customer has already been taken care of in their prearranged travel plan.
“They can only fly with certain airlines, where they are going to and from is preset and payment is automatically organised through Washington so it is a very quick and clean transaction which means that we can be extremely efficient in our dealings with the military.”
And the fact that payment is pre-authorised is something Van Laarhoven would like to see become the norm for corporate travel through the use of credit cards.
He explained that one of the most obvious differences between travel agencies in the Middle East and those in the rest of the world is that here agents are forced to act as banks.
The bank settling plan (BSP) system is used for them to pay the airlines – this used to happen monthly, then fortnightly and is now weekly – meaning that if an agency books a ticket and it is not paid by credit card, the agency has to pay the airline and then wait for the corporate client to settle the bill which can take months.
Van Laarhoven said: “Alshamel’s stated payment time is 30 days but realistically by the time the invoice even reaches the accounts department of the corporate client it can be a couple of weeks and it may well be that the client pays on a 60 day turnabout so that the agency is paying out and not getting that money back for two months, hence it is performing the function of a bank – it’s not efficient to be using our resources in this way when they would be better employed investing in technology and training to provide an ever improving service to our clients.
“On the subject of us having to carry the financial cost for clients who take months to pay, I would like to see us all working together to stop that happening too. It would benefit us all.”
In fact Alshamel is trying hard to encourage the use of credit cards and is even incentivising corporate clients to make the switch.
Van Laarhoven added: “Actually organising corporate travel by credit card also gives the procurement/travel planning department a great deal more control. For example it can greatly simplify expenses, although getting companies to buy into that in an area where the per diem is still in common use can be quite a hard sell!
“But arranging expenses through a company credit card is not only more efficient and transparent, it can also save money.”
He emphasised that financial savings are an important incentive in bringing in new clients and also in retaining existing ones with the company looking not only at the actual travel costs such as airline tickets and hotel accommodation but also examining the behind-the-scenes costs such as administration.
“As I said, the experience of working with the military has made us extremely efficient,” he explained.
“Everybody wants the best price and, for those corporate customers who set up an account with us, we will go through their travel parameters and I will ask them the average ticket price on their top 10 destinations for the previous year and I will reduce that – if I am not achieving that reduction I will reduce my transaction fee but if I am achieving a greater saving then I will negotiate to keep a percentage.
“When people look at the cost of travel they see the obvious outlay – flights, hotels, car rental – which makes up around 90 per cent of the cost and they look at agency fees which are three to four per cent. What is often forgotten is the internal, behind-the-scenes costs, that other six per cent which is within the company itself and covers anything from initially finding the lowest fare – which in some companies will consist of calling four travel agents and asking each to give four quotes, which is not efficient for us or for them – to getting the travel authorisation up the line and then through to payment.
“All of this makes up around six per cent and when you consider that many of our clients are dealing with travel budgets in the millions of dollars or dirhams, that is a significant amount and it is where I will look at making efficiency savings.
“Obviously we also look at savings on the major expenditure, the 90 per cent, for example we are negotiating with the hotels quarterly as the rates are so fluid and educating our own staff and making efficiency savings in our own process as well.
“Of course we would not expect to make that initial saving every year but we would intend to keep shaving costs, again through efficiency, for example by looking at the lead-in booking time – perhaps the optimum time to be booking flights is 10 days before and the client is coming in at seven, this may be because of their authorisation process or for other reasons. We can work with them so that they can make sure they are booking sufficiently ahead to get the best deals and the account manager will be looking at various other ways of saving money or making the process easier and more efficient such as online booking using a tool which automatically selects the best price.”
Each of the company’s corporate accounts has its own ‘go to’ person, a travel programme manager, who is responsible for customer retention, satisfaction and the profitability of that account and the approach is clearly paying off, so far in 2010 Alshamel has seen transaction growth of around 30 per cent.
by Liz O’Reilly