Who you going to call? Net Trans.

by Yeoh Siew Hoon

I had half expected him to walk into the room, wielding a club or some instrument of coercion. After all, he was the chief operating officer of a company that does nothing but chases and collects debts on behalf of travel agencies.

But Trond Sorensen, chief operating officer of Net Trans, carried only a briefcase and a smile. And a brochure of course to explain what the Norway-based company was all about.

Net Trans was started in 1999 to do one simple thing – to recover commissions on behalf of travel agencies.

“One of our friends left his banking job to join the finance department of a travel agency and got a shock when he saw how backward the whole system was.

“He was amazed by how nobody seemed to have any idea of how much had been paid in hotel commissions and what was outstanding,” related Torensen.

“And as he dug deeper into it, he realised it was not just a Norway problem but a global issue.”

Net Trans estimates that about 50% of the commissions owed by hotels is never paid to the travel agencies which have earned it.

Net Trans works on a simple business model – the agency pays for what it collects. It processes commissions for 15 million room nights each year on behalf of 9,000 agency locations in more than 80 countries.

Sorensen estimates that it processes US$2 billion worth of hotel bookings each year, or US$100 million worth of commissions.

And while it has always had an operations office in Manila, it has decided to set up an Asian office in Singapore to bring more travel agencies in the region into the fold.

Currently, Asia represents about 10-15% of its travel agency network.

Net Trans estimates that agents in the Asia-Pacific region lose an estimated US$20 million of revenue every year and at a time when travel demand is down and profits are plummeting, it sees a golden opportunity for its entry.

“This is a time when every dollar counts. People are looking for value add services and in Asia, airline commissions are disappearing which means agents have to look for alternative revenue streams,” said Net Trans’ director of sales for Asia Pacific, Stuart Wines.

“Hotel commissions are a good alternative and companies such as Abacus and Amadeus are all trying to push non-air. We can provide a service which makes it easier for agents to earn, and collect, more commissions.”

According to Net Trans, Asia-Pacific agencies book around 2.5 million commissionable room nights through global distribution systems alone each year, generating $400 million of commissionable hotel bookings.

“That figure should earn agents $40 million in commission but only 50% of it is getting through. Recovering the money through Net Trans is an absolute no-lose choice for any agency,” said Wines.

Sorensen said the company had a pretty good strike rate when it came to commission recovery. “Between 85 and 90% should be achievable. We are pretty persistent in our follow-ups,” he said.

Sorensen also noted the potential in the growing online sector. In Europe, for instance, companies such as Opodo and TUI Interactive are clients.

In line with global trends, Net Trans has also seen a decline in transaction volume. The company is about 10-15% down currently and Sorensen expects it to fall further.

“It’s not only the volume of transactions but cheaper hotel rates.”

But good times or bad times, everyone needs somebody to collect money on their behalf. “You could say we are an all-weather service,” said Sorensen.

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