That Big Vacation You Scrapped Is Already Selling Out for Next Summer

Many organizations delay their most important travel plans until the last minute. Employees often outsource travel arrangements, and those who’ve canceled a business trip say it adds up to hundreds of dollars in potential expenditures.

That’s an unacceptably high financial burden on organizations, and it’s why a growing number of businesses are embracing premium price sharing for international business travel.

Premium price sharing works this way: when you book business travel online for travel this summer, you’ll usually see a “price” that starts at $200 to $300 for a round-trip international flight. That price includes premium or first-class seat, as well as a cash bonus for reaching the peak travel dates.

The traveler then books the trip based on that price with a travel vendor – a niche agency, a general online travel agency (OTA), or a bona fide business travel partner. The group of individuals who benefit from a program like this are (1) the traveler, (2) the travel vendor, and (3) the travel agency that subcontracted the travel arrangements.

For the travel vendor, premium price sharing means that when you book travel, a good chunk of your expected revenue is guaranteed to flow through to the online booking platform that provides you with that ticket. For example, Uber, the uber-popular U.S. taxi company, realizes that nearly 85 percent of its trips will require a single driver on the road for over 15 hours each day. The “drop-out time” during which a driver won’t show up – and thus is unable to make the payment due – can range from 30 to 50 minutes. As the driver costs Uber in lost commission per trip, and as the number of trips increases, the company’s aggregate drop-out time jumps by about 20 percent.

By using premium price sharing to bring more revenue to a particular travel vendor, Uber is less vulnerable to drivers dropping out. On the consumer side, everyone wins: the traveler who gets a great deal on airfare, the travel vendor who recoups its marketing expenses by charging the traveler on a fee-for-service basis, and the travel agency who takes a commission. And that’s just the beginning. Organizations can reduce their overall overhead by using a premium price sharing arrangement.

Because the travel agency owns the travel tickets but is the only one to cover the expense of transport, it’s able to reduce the cost of its travel expenses. As a result, travel agency revenue, costs, and profits all rise, benefiting the organization and increasing its bottom line.

Premium price sharing has the potential to transform business travel, but only if the organizations and vendors involved do their due diligence.

First, they need to know that they’re currently competitive with other travel vendors. You want to ensure that the travel vendor that best serves your business – and pays the most – is running a premium price sharing program.

Second, they need to remember the partnerships they signed. The seller pays the travel agency a hefty commission for their travel reservations, but the traveling customer pays the travel agency. As a result, the traveler doesn’t expect to see the traveler/seller’s transaction fee or the travel agency’s commission, and as a result they won’t ask the traveling agent about why you paid an extra 1 percent or 2 percent.

There are more partners who sell travel on behalf of companies than you might think. There are virtually as many travel voucher or credit card companies as there are travel vendors. However, most travelers don’t know what they’re getting when they buy their travel through a particular travel vendor. That’s why it’s essential to ensure that a travel vendor is a trusted travel partner; one that carries your business travel insurance, and when necessary, waives the cancellation and change fees for you.

All of the major banks offer a substantial cash bonus for travel bookings that includes a world travel sweepstakes that could put much more money back in your pocket if you win. Many hotels and airline companies also offer very competitive rates that don’t tie the traveler to a business travel partner. In my experience, travelers are often surprised to find that these discounts typically come in the form of travel vouchers, not cash – and that the fee is not part of the online booking process.

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