‘Lack of trust’ in business travel agents revealed

Half of the UK’s SME market has lost faith in the corporate travel industry and one in four FTSE 500 companies have turned their backs on traditional travel management companies. 

The lack of trust in travel management companies is borne out by the fact that almost half of British firms do not believe that their agents are truly independent and do not give them best advice.

Of the companies that use a single TMC, 45% believe that their agent steers them towards preferred suppliers rather than seeking the best deal.

But one in three companies don’t realise that TMCs receive kickbacks from preferred suppliers and of those that are aware, 60% receive no rebate themselves for using their agents’ preferred suppliers.

The findings come from the UK Companies Business Travel Report, commissioned by online booking portal Hotel Reservation Service (HRS).

Despite being charged an average fee of £22.50 per booking, UK companies appear to have low expectations of the level of travel advice they can expect to receive from their TMCs:

*5% of companies expect to receive advice on best prices/deals.

*9% of UK companies expect to receive advice on visas, travel documents  and currencies.

*8% expect advice on vaccinations.

*3% expect advice on flight changes, delays and security issues.

With half of SMEs now choosing to book their travel either directly or through specialist agencies and nearly half (48%) of FTSE 500 companies organising their business travel needs on a local, individual or team basis rather than centrally, the role of the TMC is looking increasingly untenable, the survey claims.

This is despite companies admitting an average growth in business travel of 9% over the last two years and projecting a further 4% increase in business travel in 2007 and 2008, the business travel market has never been healthier. 

HRS commercial director Grant Appleton said: “The lack of transparency from TMCs that this report highlights is shocking.

“For far too long UK businesses have been serviced by agencies that don’t necessarily work in their best interest. No wonder the SME market has run for the hills and the FTSE market looks set on a similar course.’

The report found that there are stark differences in the levels of service given by TMCs to SMEs vs FTSE 500 companies:

*Just  1 in 3 SMEs receive advice on the suitability of hotels vs 60% of FTSE 500 corporations.

*Only a third of SMEs receive best room rate advice vs 66% of FTSE 500 companies.

*Only 42% of SMEs get advice on travel routings vs 80% of listed companies.

*Less than a quarter of SMEs receive advice on car hire vs 74% of FTSE companies.

However, the report also found that many companies are lax in managing and overhauling their travel policies with a quarter of all British companies not reviewing their travel policies in the last three years. 

The financial services sector was the worst culprit with one in three companies admitting to not knowing when, if ever, their company’s travel policy was reviewed. 

The IT & telecoms sector and the Healthcare industry were most likely to have reviewed travel policies in the last 12 months.

Companies are increasingly veering away from business class travel and demand  standard travel for all employees. More than three quarters of SME’s insist on standard or economy class for all employees regardless of distance travelled or length of stay. Only 45% of FTSE companies allow senior managers to upgrade hotel rooms and cars and to travel business class.

Further findings include:

*The majority of companies do not have preferred suppliers, for those that do British Airways was the most popular airline, Marriott and Travelodge were the most popular hotel brands, Hertz was the number one car supplier and Great North East and Virgin were voted most popular train companies.

*53% of business trips require an overnight stay, rising to 68% in the IT sector and dropping to just over a third for the public sector.

*The average length of a business trip requiring an overnight stay is three days, rising to four days for the IT sector and dropping to two days for the publishing industry

*SMEs are four times more likely to use independent hotels than FTSE listed companies

by Phil Davies