August 21, 2000

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Business-Travel Billing--With A Twist

American Express' Fee Allocator Program charges business travelers' company cards

By Cheryl Rosen

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usiness travel fees could take a nosedive if employees realized how much cheaper it is to use online travel marketplaces.

American Express Co. this month will launch its Fee Allocator program, under which it will charge travelers' company cards--rather than their employers directly--contracted fees for booking travel through an agent or an online exchange. Employees then can see that American Express, like most travel agencies, charges twice as much for a service fee when a reservation is made through an agent instead of an online exchange.

Though business travel buyers recognize the value in using a travel agent for complicated international itineraries, they agree that simple point-to-point domestic travel can be easily booked and cost much less online.

About 40 customers have signed up for Fee Allocator. Honeywell Inc. in Morristown, N.J., this week rolls out the program following a trial. Fee Allocator, combined with an incentive program that rewards assistants for booking their bosses' trips online, quadrupled the use of online booking from 15% of all reservations to 60% in just two weeks, says Patrick O'Halleran, travel reporting manager for Honeywell.

"We were saving money by buying online, but it didn't impact the travelers," O'Halleran says. "Showing the charge on company cards has been very effective." Employees itemize the charge on expense reports, and it makes them aware of the cost.

PricewaterhouseCoopers global travel leader Jim Lennon estimates that travel agencies charge between $40 and $60 for a travel booking handled by a human agent, but only half that for a fully automated booking. The nation's fourth-largest travel buyer, with an airline budget of more than $500 million a year, is about to choose a business-to-business travel exchange. Billing the travel-agent fees to travelers "is a tremendous motivational factor and helps people understand the benefits of online purchasing," Lennon says.

The financial-services firm does 900,000 transactions a year; it would save $18 million a year by trimming $20 off each transaction.

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