TOWARD Europe Launches Blueprint to Cut Costs

20th Dec 2004

A blueprint for how travel industry companies can cut costs and improve efficiency was today launched by TOWARD Europe, the pioneering organisation created to maximise the profitability of the industry.The landmark publication, ‘Facing the future with confidence: improving business processes and cutting costs’, identifies pressure points that are causing operators and travel suppliers to operate ineffectively. The report goes on to reveal how companies can address these problems by automating processes and integrating new systems.

TOWARD Europe’s report is the result of an eight-month research project by the organisation’s Business and Cost Analysis Group (BCG), chaired by John Smith, Norwegian Coastal Voyage’s Head of Finance and IT, and includes representatives from Accor, Anite, British Airways Holidays, Cendant, DER Group and Hertz.

Tour operators are urged in the report to follow the lead of online travel agents and automate their product creation processes - especially service contracting, rate loading and allocation management - to relieve a significant burden on internal costs. To further improve what is often a manual, time-intensive process, the report reveals how suppliers should provide their content in one standard format.

TOWARD Europe’s blueprint for improved industry efficiency also highlights new opportunities for companies to identify operational cost weaknesses through a new approach to financial accounting, using the Activity Based Costing model (ABC), which is already used extensively in insurance, financial services and pharmaceutical industries.

John Smith, working group chairman, said: “Recognition of the cost pressure points in
top-level business processes is the first, crucial, step towards identifying areas where cost can be stripped out of travel companies’ business.


“With the ABC model TOWARD Europe has identified a new approach through which companies can improve their profitability quickly. Norwegian Coastal Voyage analysed our own costs using ABC against our traditional revenue methodology, and found a bottom line shift of £270,000 on one product when comparing internal resources with sales - a situation we’ve now addressed, to our enormous benefit.”

Bill Barnes, TOWARD Europe management committee member adds: “TOWARD Europe’s work will help companies across the travel sector examine their own business in a new light, and identifies opportunities for small changes that will trigger big results. This report is one of the practical guides to industry success any organisation has ever launched.”

The Business and Cost Analysis working group was created in response to member recommendations, and its aim is to provide members with a strategy for reducing overheads and increasing profits.


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