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Operators: how to cut costs
Operators should use technology and alternative accounting methods to strip cost out of their business, according to a recent report.
According to the white paper, operators should take a leaf out of the online agents’ book, and automate their product creation processes, i.e. service contracting, rate loading and allocation management. Another point made was that operators should provide their content in a single standard format.
A second point made by the report, which was issued by TOWARD Europe after eight months of research, suggested a new approach to financial accounting. According to the report, the Activity Based Costing model (ABC), which is used in other industries, enables companies to better identify and cut out operational costs.
Chairman of TOWARD Europe’s Business and Cost Analysis Group, which produced the report, is Norwegian Coastal Voyage head of finance and IT, John Smith. He says his company had adopted the ABC model.
“Norwegian Coastal Voyage analysed our own costs using ABC against our traditional revenue methodology, and found a bottom line shift of £270,000 on one product when comparing internal resources with sales – a situation we’ve now addressed, to our enormous benefit.”
Other companies involved in producing the report were British Airways Holidays, Anite, Accor, Cendant and Hertz.
The report is available from January 10 at www.towardeurope.org. The organisation was set up to help companies in the travel industry maximise profits through discussions in working groups and the production of white papers such as this one.
Report by Ginny McGrath
Ginny McGrath
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