New Cendant TDS Research reveals Travel Buying Behaviour of SME's in Asia Pacific

Cendant Travel Distribution Services (TDS) has announced the results of research undertaken in Asia Pacific, to determine the travel buying behavior of small to medium-sized companies (SMEs).

The research, titled “Corporate Travel: The Next Frontier”, explores the Asia-Pacific SME corporate market, providing insight on this sector and outlining the opportunities and challenges for Travel Agents (TAs) of this largely untapped market, with particular reference to the potential of online booking tools.

Cendant TDS commissioned Hong Kong-based research firm MarketShare in late 2005 to conduct telephone interviews with 100 travel buyers from small to medium-sized companies in Hong Kong, Singapore and Australia.

“The small to medium-sized corporation represents an important opportunity for agents in the Asia Pacific region. The Cendant TDS research provides a snapshot of the SME market to provide them with a better understanding of the travel buyer and where the opportunity lies for developing service levels and introducing new systems for booking,” said Mr. Anthony Venus, Executive Director, MarketShare.

Results of the study indicate that there is no single model that applies to SMEs across Asia Pacific, with country-to-country differences in spending patterns, priority of travel agent services and attitudes to online travel all driving the need for a tailored approach.

Some general observations can be made however. For Asia Pacific SMEs, the research reveals that the majority of travel buying is decentralized with the function often sitting with a senior executive’s personal assistant or sometimes in the human resources department. There are few full-time travel managers in SME’s, unlike the larger corporations.

Other research results reveal that:

- In the SME category, the typical spend on corporate travel is up to US$ 500,000 for small businesses (Hong Kong and Singapore) and up to US$5 million for medium-sized business (Australia).

- Across all markets, SMEs still heavily rely on their travel agents for flights (Australia 89%; Singapore 60%; Hong Kong 56%) and to a lesser degree, hotels (Australia 27%; Singapore 33%; Hong Kong 30%).

- In terms of how travel is managed, there was greater consistency in all three markets. The majority of travel was controlled from a national head office location (Australia 65%; Singapore 90%; Hong Kong 70%).

- There is no clear trend across Asia Pacific on price competitiveness of corporate travel agents with Hong Kong and Singapore comparatively similar in that 33% and 36% of companies respectively believe they get cheaper prices from their corporate travel agent than other sources. This is also the case in Australia, where 26% of companies believe they get the same pricing; however 58% believe they get cheaper prices from a corporate travel agent. 

- In terms of cheaper alternative pricing, the Internet emerges as the clear leader across all three markets.

Beyond pricing there are a number of key benefits that travel buyers list as most important for the corporate travel agents to possess. From these results, personal service, fast supply of air tickets and flexibility rank as the most important elements of service.

Also from the survey responses, it is evident there is a lack of understanding in how online tools might benefit the travel buyer. A clear opportunity exists for the travel agent to communicate to the buyers that online applications can provide improved productivity and more flexibility.

Mr. George Harb, Marketing Director, Asia, Cendant TDS said, “Contrary to the perception among the buying community that an online application may create additional work for employees and management alike, online tools actually do the research for the buyer and work within the parameters of the corporate policy.”

Harb added, “Online tools also allow business travelers more control over their bookings and online tools always find the right lowest price, rather than the lowest price which may not fit the traveler’s needs. This is a fundamental difference that needs to be communicated to travel buyers, whose existing knowledge of online tools believes it merely replicates the leisure travel experience, which is focused on price, self-searching for the right deal and little flexibility.”

Based on the survey results, the positive news for travel agents is that the corporations do not consider travel expense a significant issue nor do they believe that their IT systems are a barrier. “This represents an opportunity for the corporate travel agent to migrate companies to an online platform through education of benefits and the guaranteed maintenance of service levels when required,” Harb said.

Also, with the rise in the use of the Internet as a research and booking tool for travel, there appears to be an obvious opportunity for travel agents to deploy online booking platforms to be used within the corporate environment, while it must be noted that there is not one single online strategy to apply to all corporations.

“There are some clear benefits in online tools in both companies and agencies and these tools represent a significant opportunity for the agency. In educating the corporate SME about the benefits of online booking tools, the travel agent is able to add increased value to their customers at the same time as driving greater efficiencies,” added Harb.

Mr. Kurt Knackstedt, Senior Director, Corporate Channel International Markets, Cendant TDS said, “There are some clear benefits for both corporations and agencies that embrace this online technology. The travel agent is able to add greater value to the service it provides to its customer, the corporation is able to get more efficient control over its travel management, and both benefit from cost efficiencies.”

“The travel agent can identify the individual service needs of its clients and use this research to define its own offering. How travel agents address the online and service level opportunity will be important for gaining market share and loyalty as well as emerging as a travel agent that harnesses the future for competitive gain,” concluded Knackstedt.

The “Corporate Travel: The Next Frontier” survey is the third of a series commissioned by Cendant TDS to examine trends in Asia’s travel industry and the implications for how these trends impact business. The first survey, released in July 2005, detailed the impact of low cost airlines; while the second survey, released 15 December 2005, revealed the impact of rising costs and new technology on travel agents in Asia.

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