The Benefits and Drawbacks of a Dedicated Travel Agency for Small Businesses

Corporate travel fuels in-person meetings, strengthens bonds for remote teams, and connects companies with new clients. It’s an invaluable component for many small businesses. Finding the right partner, however, can be a daunting task for growing companies operating with limited resources and tight budgets.

In fact, small businesses have several options to improve their travel programs: partner with a travel agency, hire a travel manager or adopt travel management software. Here’s what to know about each.

The Importance of Travel Management for Small Businesses

Travel expenses can represent a significant portion of a company’s overall spending, often ranking as the highest or second-highest overhead cost. That cost includes any expenses related to transportation, hotel accommodations, meals, coffee, and additional charges (like seat-selection fees).

Managing and processing these expenses can be challenging. For the traveling employee, it involves keeping track of numerous receipts and invoices. And the accounting team often has to deal with a cumbersome bookkeeping process. It’s time and money that could be better spent elsewhere.

That’s where effective travel management comes in. It helps small businesses control costs, reduce safety risks, and simplify travel booking and management. By using structured travel management systems, small businesses can avoid logistical issues, making company travel more cost-effective and productive.

The Role of Travel Agencies in Modern Business Travel

Travel agencies serve as intermediaries for individuals and companies that need to book travel itineraries. Agencies typically work with airlines, hotels, car rental companies, and other travel-related vendors. Their business model may rely heavily on commission for bookings with preferred travel partners or on charging service fees for their expertise.

When working with a travel agency, small businesses can delegate travel bookings and itinerary arrangements, unlock access to distinct travel packages with specific vendors, and receive customer support in case of itinerary changes, cancellations, or emergencies. Agencies can also help navigate visa applications and other travel-related paperwork so that all travel requirements are met.

Note: Many travel agencies simply respond to client queries and organize travel arrangements without acknowledging the needs of a company travel policy, which sets guidelines for employee travel. A travel management solution goes further, by integrating features like policy compliance, real-time spend tracking, and automated approvals. These elements give businesses greater control over costs than a traditional travel agency.

Working with a Travel Agency: Additional Benefits for Small Businesses

For small businesses with limited corporate travel budgets, handling all travel management logistics in-house represents a big investment in time and resources They also have to assume the risks associated with unexpected itinerary changes and human error during the booking process.

Enter travel agencies. Here are some benefits for a small business working with a travel agency.

• Cost control: Access to exclusive offers and discounts is one of the many perks clients of travel agencies enjoy. These deals can significantly decrease travel costs for small businesses, making more effective use of their travel budgets.
• Time efficiency: Small businesses can find themselves bogged down by the time-consuming task of managing travel logistics, particularly if they lack dedicated personnel for the role. In such cases, turning to travel agencies can be a game-changer. A travel agency’s comprehensive services — including booking flights, hotels, and rental cars — save small businesses valuable time and allow them to focus on their core operations.
• Customer support and assistance: Besides booking logistics, travel agencies offer valuable assistance with any questions about reservations, furnish detailed insights about travel destinations, and extend support in addressing travel-related complications.
• Expert insights: Skilled travel agents can offer personalized advice and recommendations suited to the needs of small businesses.
• Employee satisfaction: By handling most of the planning, travel agents can reduce the stress associated with travel logistics and help safeguard a smooth travel experience. Employees can then focus on their core responsibilities and companies can maintain happier teams — which can help increase productivity, engagement, and overall performance.

Travel Agency vs. Travel Manager

Is a travel agency the best way to simplify corporate travel and expense management? It depends. One option is to hire an in-house travel manager. The scope of this role encompasses most of the services a travel agency provides, with the added layer of strategic oversight of the company’s travel program.

Here are some of the differences between what a travel manager does compared to a travel agency.

• Travel policies: A travel manager creates, oversees, and enforces travel policies that aim to reduce costs, decrease risks, and maintain regulatory compliance.
• Expense management: While travel agencies do not manage budgets, travel managers are directly responsible for managing all expenses associated with corporate travel.
• Company focus: For a small business using a travel agency, there’s always the risk of overspending, since agencies create revenue through their partnerships and mediating bookings. A travel manager who creates travel policies according to the company’s budget and safeguards company interests may be more motivated to find budget-friendly travel solutions.
• Provider relationship management: Similar to a travel agency, a travel manager is responsible for fostering good relationships with different service providers, like airlines, car rental companies, and travel management providers.
• Reporting and analytics: Using data from existing company travel policies and travel history, travel managers monitor and report travel expenses. They can then leverage this data to make informed travel decisions about existing or new policies, budgets, and vendors.

How Technology is Revolutionizing Corporate Travel

For many small businesses, paying the commission fees of a travel agency or hiring a full-time travel manager are feasible options. But opting for a travel management solution can be a more cost-effective solution.

With AI and modern technology, many companies can save time and money with a travel management solution by automating processes, gaining real-time travel updates, and quickly scanning a broad range of inventory in search of the best deals. These features can help reduce costs and save time while offering a better travel experience.

With travel management software, companies can enjoy the best of both worlds. They gain access to all the discounts and support typically offered by a travel agency, while also benefiting from the cost control and compliance that a travel manager provides. They can be most effective by using an all-in-one super app that empowers corporate travelers with the freedom to choose what works best for them while staying within company guidelines.

Discover everything Navan’s modern corporate travel solution has to offer. Book a demo now.