The state of business travel in Asia
SMEs are losing out big time
According to Asia-Pacific Economic Corporation (APEC), small and medium enterprises (SMEs) account for more than 97 percent of all enterprises across APEC countries. At the same time, this region is also the largest business travel market in the world, comprising 40 percent of global business travel spend.
Despite this, most of the options for managing business travel here are designed with large corporations in mind, leaving small businesses — the backbone of our economy! — out in the cold. Let’s have a look at why the current alternatives are just not cutting it.
1. Too costly for small businesses
For managing business travel, many companies would opt to work with corporate travel agents.
The upside of working with corporate travel agents is that they manage all your employees’ travel needs from end to end. All you need to do is tell them when and where your employees need to be, and they’ll tap onto their resources and connections to make it happen. Pretty straightforward.
More importantly, good corporate travel agents are also able to negotiate additional benefits on your company’s behalf, which might include discounted prices.
Unfortunately, SMEs are unlikely to be able to enjoy these perks, as they simply are not large enough — and hence lack the bargaining power — to negotiate for better rates.
In fact, the reverse might be true. Corporate travel agents are accountable to their network of suppliers, which might cause them to pick more expensive travel options to fulfil agreed upon requirements.
Not to mention the booking and management fees that some agents add into the mix, too!
At the end of the day, SMEs might find themselves shelling out even more cash than they might have if they had done the bookings themselves.
Even when the company opts to manage all business travel bookings themselves, they might end up incurring other unexpected costs. This is a situation that Joanna Nagalinggam Low, who takes the lead on administrative matters at iPrice Group, is familiar with.
“On air ticket comparison sites, the cost that you see is often not what you get,” she explains, referring to additional miscellaneous and processing costs that only appear when a user reaches the checkout page.
Many airlines, she adds, are also not included in the comparison, which means the options offered might not be the best, nor the cheapest.
“We also have to deal with last-minute requests from employees who need to travel urgently, which would results in more expensive bookings being made,” Joanna says. Employees from iPrice Group’s sales and marketing team travels around once or twice a month on average.
Similarly, other business travel management tools such as American Express Global Business Travel and BCD Travel have a plethora of fees — such as setup fees, on-boarding fees, and subscription fees — which put them well out of the range of small businesses.
2. Too inflexible for millennial business travellers
The old-school business traveller doesn’t care much about where they’ll be staying at, or how they’ll be getting there. As long as everything is comfortable and paid for, they’d happily allow their company to make all the arrangements.
Not so for the millennial business traveller. To them, having the flexibility and autonomy to craft the entire experience for themselves is equally important. This includes picking their own flight timings, picking an Airbnb apartment instead of a hotel, and riding Uber instead of the local taxis.
For instance, according to a study conducted by McKinsey, Asian business travellers are almost twice as likely to extend their business trips to include the weekend — giving rise to the term “bleisure travel.”
Unfortunately, this level of control is stifled if corporate travel agents are involved. Limited by a network of suppliers, employees would at best be able to pick from a pre-approved list of vendors and flights, stealing away the enjoyable bits of business travel from them.
A pity, since millennial business travellers are more than happy to fly low-cost carriers and save their company some money — an option that would likely not be possible with an agent.
3. Too much administrative work involved for the team
For small businesses, it doesn’t make sense to hire someone to handle business travel matters on a full-time basis. Instead, the finance or human resource teams tend to take up this responsibility.
However, if the company’s employees travel often, this responsibility can quickly expand and take up a big chunk of the respective team’s working hours.
This is the case even when companies attempt to offload some of the administrative work to travel agents.
Why? Most travel agents still rely on relatively antiquated means of communication, according to a spokesperson from Carousell’s people ops team.
Given their current rate of expansion, Carousell’s employees travel fairly often. “Every full-time new hire based in our international offices will fly to Singapore for onboarding, and also our yearly company-wide event, One Carousell,” explains Carousell’s spokesperson.
Each time they travel, employees search for their preferred flights and send it to a travel agency for booking.
“However, while they help us with our bookings, the main tool of communication will be WhatsApp and email,” says Carousell’s spokesperson. This process becomes messy very quickly, he adds, resulting in long email threads.
Similarly, Oddle’s human resources (HR) team tracks all data and information related to business travel through a Microsoft Excel spreadsheet, which they have to update consistently.
Oddle’s employees travel on a monthly basis, and the HR team makes all their flight bookings for them. However, transportation and other expenses claims will be done by the employees themselves, says Oddle’s assistant HR manager Chelsea Nguyen.
“Since everything is done manually, it’s quite time consuming,” she says.
Often, the team charged with handling business travel matters also have to contend with incomplete spending data. Employees might use their personal credit cards to pay for business expenses — to rack up points and miles — or miss out certain costs when rushing through their expense forms.
These issues are a major time suck for teams that have a hundred other things to manage. Worse still, it might even put the business at compliance risk.
The alternative? Not ideal
In sum, it is clear that business travel can become a major drain of time and resources for SMEs, who are already limited on these fronts. Despite this, the current tools and solutions for managing business travel aren’t much help, and they end up not using any of them at all.
The result? SME employees are left to handle their own business travel matters — a policy commonly known as “unmanaged” business travel. This means an extra load on their plates, which can cause company-wide productivity to sag.
In such cases, the already-limited visibility on travel expenses is also exacerbated further, and can make the finance team’s work even harder than before.
Unmanaged or otherwise, SMEs can’t seem to win when it comes to business travel.
There’s clearly a need for a business travel solution catering to the smaller players: one that keeps costs low, allows a level of flexibility for business travellers, and gathers all data and expenses into a single, easy-to-use interface for administrators to process.