The recent SARS crisis affected corporate travel volume, forcing travel management companies (TMCs) to implement cost-cutting measures in order to survive. N NITHIYANANTHAN details how those in Malaysia rose to the challenge.

As the external situation was beyond their control, TMCs in Malaysia looked internally to control costs in order to cope with the loss of income that was SARS induced.

At Boustead Travel Services, it was made clear to employees from the beginning that reducing their pay would be the last resort.

The first step was to give greater emphasis to the ongoing groupwide “Jimat” (cost-saving) campaign.

The focus here was the reduction of utility bills.

When the crisis continued in the second month, more drastic measures were introduced.

General manager, Mr Jayapala Abeysekera, said: “We reduced entertainment and mobile phone allowances by 50 per cent.

“Travel expenses were also curbed. All familiarisation trips were cancelled as the company still incurred expenditure (when employees took the hosted trips).”

The downtime was used for marketing and educational activities. E-mails were sent to its database of more than 1,000 corporate customers promoting domestic travel as a means to generate additional income streams.

The third month of the crisis led to a 100 per cent cut in entertainment allowances.

At Holiday Tours & Travel, the SARS crisis led to an even greater emphasis on cost reduction measures implemented since 9-11.

However, termination of staff was never a consideration.

Its managing director, Mr Thomas Chong, said: “When we make profits, it is the shareholders who benefit most. So when adverse events occur, not caused by the staff, we should not victimise them.”

Meetings to monitor and trim costs were held every week. “We became more cost-efficient with the use of phone calls and sending couriers,” Mr Chong said.

It also became aggressive with its marketing activities.

“We switched our outbound focus to Australia, Europe and some parts of the US from places such as Hong Kong. As we mainly cater to free independent travellers, we were able to do this quickly.

“We were fortunate not to be exposed to the China market,” Mr Chong said.

Diethelm Travel Management implemented a salary cut of between 10 and 20 per cent for all staff.

Its managing director, Mr Manfred Kurz, said: “As we have more than 100 staff, the salary cut saved a lot of money.

“We also implemented a five-day week and asked staff to keep to their specified working hours.”

Likewise, it embarked on an aggressive marketing programme.

“We worked with the hotels to develop special promotions and created a website specially for them complete with high-resolution photographs. There was good response to this.

“When business came back, we noted a lot of our bookings were due to these promotions,” Mr Kurz said.

With an upsurge in corporate travel since June, Boustead has reinstated all reduced allowances in full. Diethelm is considering reintroducing full pay.

Holiday Tours said its revenue for June was only down by one per cent compared to the same month last year. “We may even be ahead for July this year compared to last year.

“Further, the corporate travel business we lost during the SARS-impacted months has been made up with the increase in corporate travel at present and the securing of new corporate accounts,” Mr Chong said.

Despite travel sentiment improving and corporate travel rebounding strongly now, Mr Abeysekera is still cautious.

He said: “The travel industry is still very vulnerable.

“Just look at the incident in Jakarta. It was most unfortunate.

“One of our corporate clients immediately cancelled an incentive trip to Bali.”

Mr Kurz said another bombing such as the one in Jakarta (on August 5) in the future would affect the industry once again.

In contrast, Mr Chong was gung-ho about the future.

He said: “Now that SARS is over, there is a rebound and movement once again.

“People want and need to travel and will continue to do so.”

All three chief executives said increased airline capacity was the single most important issue to help them grow their business.

“The reduction in capacity, attractive promotions offered by airlines, as well as the pent-up demand for travel have led to a situation where we now face a shortage of seats.

“Airlines need to increase their capacity to pre-SARS levels,” Mr Abeysekera said.

Mr Chong added that governments faced with health-related or other problems needed

to be transparent and specific in reporting what they faced, and measures they had implemented to deal with them. “This is the only way to build confidence with the public.”

Mr Abeysekera said: “Lessons have to be learned from the SARS incident on how to manage other crises more effectively in the future.”

Mr Chong added: “Travel management companies must also learn their lessons from SARS and not be overexposed to any one particular market.”