14 October 2009 - Travel management in the Asia-Pacific region "has started to evolve more quickly along Western lines," according to an August report produced by AirPlus International and the Association of Corporate Travel Executives. But advancing travel management requires organizations to overcome a unique set of challenges in a diverse, expansive region, according to the report. "If multinational travel management is, to some extent, a triumph of consolidation and standardization over diversity, then the battle in Asia-Pacific will be harder because there is greater cultural, socio-political and infrastructural diversity than anywhere else," the authors asserted.
Nevertheless, travel management evolution "is likely to accelerate in the region," according to the report, partly due to expected growth in business travel volumes as the region's economy improves and the elimination of airline commission payments to travel agencies in such markets as Hong Kong, Japan, Korea and Singapore. Organizations operating in those countries no longer will enjoy subsidized travel, prompting greater interest in travel management practices.
Currently, such practices are most apparent in the more mature markets of Australia, New Zealand and Singapore, but the level of sophistication across the region varies, with many countries lagging. As a result, implementing single solutions for policy or process is not easy or necessarily advisable.
In a survey of about 1,000 travel managers from around the world conducted by ACTE and AirPlus, 42 percent agreed that travel management in Asia-Pacific "is a few years behind" Europe and North America. Almost 20 percent said travel management in the region "is different but will eventually adapt to the rest of the world," while 18 percent said it "will always be different" than the rest of the world.
"In a market that is more unified like the European Union, the approach there would not work in Asia-Pacific," said Andreas Wellauer, who runs the Australia-based travel management consultancy Galiant AsiaPacific and previously served as a UBS travel buyer, during a follow-up webinar conducted this week.
"The cultural differences are too big. The market sizes are too big."
"There is recognition that at least in Asia-Pacific there still is room for improvement in travel management," added John Kwong, AirPlus account manager in Singapore. "In China in the last five years, there has been a drastic change in the cultural aspect of travel management. The way some of the travel agencies in China were doing business 10 years ago is totally different than the way they are doing business now."
The research found that corporate travel policy is the element of a managed travel program most used by represented organizations, of which 72 percent said policies exist for "all" countries within the region where there are travel operations; another 19 percent indicated policies are used in "some" Asia-Pacific countries. Policy was followed by corporate payment solution (50 percent in all countries, plus 27 percent in some countries), accurate spend data for supplier negotiations (35 percent in all, plus 35 percent in some), a travel management company "that provides advisory services in addition to transaction servicing" (33 percent, plus 35 percent), automated expense reporting system (32 percent, plus 21 percent) and online booking tool (14 percent, plus 39 percent).
"In every case, with the exception of corporate travel policy--where Asia-Pacific and Europe are almost the same--a clear pattern emerges," according to the report. "All tools and attributes are less common in Asia-Pacific than Europe, where, in turn, they are less common than in North America."
Kept Offline
The least adopted item on that list, online booking, is stymied by domestic global distribution systems in China, Japan and Korea. In China, state-owned TravelSky is the only GDS authorized to provide air ticketing, and, according to the report, it "has limited functionality for profiling and scripting. The better-known multinational GDSs can be used only for checking information and making international hotel bookings."
As a result, "your normal online booking tools cannot operate--that's just a given," said Wellauer.
The report explained that booking tools displaying information from TravelSky "show the best fare on the day but when travelers try to book the fare, it is rarely available." But it also noted "fast-growing enthusiasm for self-service reservations" and TMC efforts to design tools for the Chinese market. Those TMCs "are effectively using their back offices as data warehouses," said Wellauer. "It has led to a big improvement in the last 18 months."
In Japan, airlines and railways operate their own domestic distribution systems using Japanese characters. "Even if you can get people to use online booking tools in Japan--and some there are very good--you cannot get the data out," Wellauer said. That complicates data standardization and management information.
Asked if travel management systems and solutions from Europe and North America have been customized sufficiently for Asia-Pacific, 68 percent of respondents said no.
Numerous Challenges
The ACTE/AirPlus report detailed many other challenges to travel management in Asia-Pacific, ranging from a multitude of languages and dialects to the high level of service expected by Asian travelers. They also cited government bureaucracies and regulations; a general lack of transparency ("many markets are dominated by net fares and grey-market fares, making it hard to assess the true cost of travel"); airlines' unwillingness "to make fares available outside their home markets," (which makes the development of pan-regional call centers "close to impossible"); poorly adopted corporate payment systems (many countries remain "cash-based societies" and corporate clients oftentimes "settle through monthly invoices"); and a comparatively lower "status" for travel managers, who therefore "lack the ear of senior management to force through a more aggressive, strategic travel management program."
Country-specific challenges identified by the report include:
Australia: Due to "geographic remoteness, Australian business travelers tend to combine several meetings in one trip, meaning a high proportion of their itineraries are multi-sector" requiring "skilled TMC intervention."
Japan: Because negotiated discount agreements are not as widespread, the best fares "often" are available on direct supplier Web sites accessible on mobile devices, which, according to the report, "goes a long way to explaining why the use of TMCs by corporations is extremely low for a developed market."
India: Low-cost labor has muffled the drive to automate various processes. "Service expectations are high, with the overwhelming majority of bookings made through TMC implants, yet TMC fees are the lowest in the world," according to the report's authors. "It means that using a booking tool can prove a more expensive option once the booking tool transaction fee is taken into account." This business reality is described as "counter-productive globalization."
These and other challenges add up to create a daunting task. "As a result, most companies do not even try to manage their travel regionally, preferring to operate on a country-by-country basis instead," the report stated. "The problem, which arises time and again, however, is that global management sitting in Lubbock, Texas or London, England, are either unaware of these formidable challenges or grossly underestimate them. It leads to frustration and misunderstanding when they try to implement the same program they have in their home region."
According to the ACTE/AirPlus research, 72 percent of respondents "said travel managers based outside Asia-Pacific do not have a good understanding of the region."
Nevertheless, these challenges "are not insurmountable," the report asserted. The authors suggested that travel managers involved in the region foster two-way dialogue between those in the region and those based in more mature travel management markets, seek compromises by deploying local practices when Western ones are not appropriate, consider the differing needs of both local employees and expatriates, and patiently learn the nuances of the various Asian cultures "and their implications for managing corporate travel."
