Companies become their own travel agencies to save money
— -- Some companies are finding that it pays to be their own travel agents during the recession.
"Every company is looking for the benefit of lowering expenses," says Teresa Asbery, senior manager for travel administration for Wal-Mart Stores.
Wal-Martwmt is one of 129 companies and organizations, such as universities, that have established fully accredited in-house travel agencies to better manage their business travel and reduce costs.
That lets them buy airline tickets and arrange hotel rooms and rental cars just as a regular travel agency does.
It also lets companies collect commissions on bookings, and in many cases, avoid paying booking or transaction fees to an outside travel agency.
And more companies are looking at doing it, says Mike Premo, a vice president at Airlines Reporting Corp., which does accrediting for travel agencies and serves as a clearinghouse to settle booking transactions.
Premo says the idea is more attractive now because the difference in cost between handling travel in-house and having an outside travel agency do it has narrowed, as more volume discounts on airfares and room rates are available.
"It's been incredibly good for us, in terms of cost-saving," says Belinda Borden, manager of the University of California Travel Center, whose 11-member staff is based at UCLA but books travel across the state system. "Since we've become (a travel agency), we've never cost the university a penny. We're totally self-supporting."
Same as a retail agency
The key for a business becoming its own travel agent is to get accredited by the Airlines Reporting Corp. as a corporate travel department and get an ID number to account for transactions. Any organization, large or small, can do this, Premo says.
An accredited corporate travel department can perform all the same functions as the nearly 20,000 traditional retail travel agencies — though it's prohibited from selling travel to anyone outside the organization. Premo describes a retail travel agency as a seller of travel, while a corporate travel department is a buyer of travel.
"The basic idea is that the corporation can get the same sort of travel agency identification number and authority to process ticket sales through the airline reservation systems and through our settlement system," he says. The cost is small: a $2,000 application fee and $160 to renew annually.
The first corporation to do it was Republic National Bank, now a part of HSBC, in 1998. Andy Menkes, who was Republic's global travel manager then, says the concept was simple: "I'd rather pay a fee and collect all the commissions myself as a corporation."
Retail agencies already pass on most commissions to their corporate customers. But many companies prefer to receive airline and hotel commissions directly.
"We wanted a direct flow of the money," Menkes says of Republic's reasoning for becoming the first corporation to do this. "We wanted to be able to audit the flow of funds."
'Mix and match' as needed
Another reason to bring travel operations inside: Some companies are concerned that their travel information or records could be lost or hard to access if their travel agency is sold or they switch agencies.
"There is enough flux in the industry that agencies do get bought, sold and merged," Menkes says. "In addition, corporations change agencies from time to time for various reasons."
Menkes now is CEO of Partnership Travel Consulting, which provides advice to companies on how to become their own agents.
With interest on the rise, 30 organizations have joined the recently formed Corporate Travel Department Association, according to the group's chairwoman, Kathy Hall-Zientek, who manages travel services at Moog. Among its members: Macy's and the Massachusetts Institute of Technology, in addition to Wal-Mart and the University of California.
Not every company that's become its own agency has a full-service operation with reservations, accounting, ticketing, 24-hour support and negotiating hotel rates. Some still hire an outside travel agency to augment the in-house operation, Premo says.
At the University of California, for instance, the in-house travel agency is joined by two outside agencies in providing travel for the state system. The in-house operation is writing about $12 million a year in airline tickets, roughly 25,000 tickets a year, Borden says. That's out of about $250 million the university system spends annually on all travel, including airfare and hotels.
Wal-Mart's Asbery says a company can "mix and match" tasks as it needs.
"It's an opportunity to control the program as little or as much as they want," she says.
"It's not for everyone," Premo says of in-house agencies. But, he says, more firms are saying, "This actually makes sense for us."
Send David your feedback: David Grossman is a veteran business traveler and former airline industry executive. He writes a column every other week on topics of interest and concern to business travelers. E-mail him at travel@usatoday.com.