Optimising Your Corporate Travel Program

Guiding Principles

• Managing travel spend presents the dual challenge of establishing disciplined sourcing processes and involving appropriate parties to engender compliance.
• Strong arrangements with preferred suppliers only work where detailed attention to roles and responsibilities, thorough training, and a strong communication strategy is applied.
• Compliance will often require a change in the user experience; so make it easy to “do the right thing.”

Barriers to be aware of

• Within many organizations, travel management has developed organically with ‘ownership’ and existing relationships influencing people’s decisions. Any moves to change those relationships needs to be managed sensitively and on a strong fact base argument.
• Travellers will often be tied to one travel provider, affiliated with one airline or prefer a particular hotel chain. It may be necessary to break those ties for the benefit of the organisation; alternatively in some cases those affiliations can be used to leverage greater savings from the suppliers while maintaining peace within. In all situations be aware of loyalties and the reasons driving those loyalties.

Here are just some brief points on how to optimise your travel program – some we will expand on later:

1. Policy – well defined, understood and supported by senior management
2. Supplier arrangements – airlines, hotel, car rental, travel management company, corporate card – leverage spend and understand arrangements
3. Compliance management – measure compliance to use of preferred suppliers
4. Manage behaviour – traveller booking behaviour
5. Technology – On-line booking, streamline processes
6. Reporting – Management know the trends and travel patters
7. Expense management

Let’s address just some of these components

Technology – use of Self-Booking Tool (SBT) or On-line booking tool (OBT)

All competent TMC’s offer some form of SBT. The transaction costs for booking on-line is normally less than half the cost of booking via the traditional method through a consultant. As TMC costs normally represent about 4% of an organizations overall travel expenditure, the savings from transaction costs by booking on-line can seem minor. However, one of the major advantages is that SBT’s will normally present the traveller with a range of fare options allowing them to see the cost saving of choosing a low-cost restricted fare as opposed to a full flexible fare. Often consultants do not offer travellers this full view of fares.

SBT’s are currently only good for booking domestic fares, trans-Tasman travel plus some point to point international journeys. Even organizations with modest domestic travel spend can take advantage of the savings available from using a SBT or OBT.

Traveller Behaviour

Many travellers will be reluctant to change their travel or booking patterns, especially away from known suppliers, and especially where frequent flyer or other loyalty programs are in place. The majority of organizations will allow travellers to retain any FF points earned through business travel for personal use.  A policy such as this may prompt the selection of fares or suppliers which are not always the best value for the organization. All sorts of creative excuses are used to justify why one must use a certain flight, airline or hotel. Your communication must sell the benefits of the program, not only to the organisation, but to each individual traveller. A strong and structured communication strategy implemented in a timely manner can only benefit the selling of the program. But always remember, what you are selling must be better that what was in place previously.

A further issue of traveller behaviour to be considered, especially for domestic travel, is the use of fully flexible fares. The perception is that ‘my meeting or schedules change so flights must be changeable at short notice and without cost’. Consider however; the flight out, say in the morning, can normally always be fixed as individuals know the start time of the first meeting. So travellers should be encouraged to use the fully discounted restrictive fares. During the day as schedules change there may be need to allow some flexibility in the return flight. There can be a 70% difference between a fully flexible fare and a commonly available restricted fare (e.g. a QF ‘red-e-deal’ or ‘super-saver’).
Also consider that when using a low-cost restricted fare, if a change is necessary then paying the change costs may be less expensive that buying a fully flexible fare in the first place. Of course restricted fares do not deliver 100% of FF points and that can sometimes be a driver with some travellers.

There is clear evidence with one organization we have worked with of a $3M dollar annual saving simply by moving travellers away from booking fully flexible fares to using QF red-e deals, super-saver fare. This represented 20% saving on the organization domestic air spend.  There were no re-negotiations of airlines deals, just a strong campaign and communication strategy to change behavior coupled with the introduction of a SBT that illustrated to travellers just what the fare differences were.

Booking in Advance

It’s no secret that booking as far in advance as possible will provide the best opportunity to access lower cost fares, both for domestic and international travel. Lower cost fares do not mean lower service levels, or as some travellers think, a seat at the back of the aircraft. Low cost fares are normally available in restricted numbers across all cabins.

For international travel, booking early gives the best opportunity to secure the lower cost fares. Often there will a reluctance to book early until meeting schedules have been confirmed etc., but remember there will normally be no cost to change a booking up to the time of ticketing, usually about 3-5 days prior to travel. Once tickets have been issued there will be change costs involved if changes are made.

Domestic travel is now almost entirely ‘instant purchase’, so once a booking is made there are consequences when that booking is changed. Full flexible, and a number of other high end fares have no penalty if changes are made, as long as the same class of fare is available on the alternate flight. However, low cost restricted fares do have penalties for changes. While early booking for domestic travel is the best course for getting lower cost fares, paying attention to the time and day of travel is as important. Off peak services do afford many more opportunities to secure low cost fares, even at short notice, and when making meetings schedules travellers should be encouraged to pay attention to their actual time of travel, e.g. move that 9.00AM meeting to 11.00AM.

Compliance Management

Extensive work is undertaken by organization to select a TMC, negotiate deals with airlines and car rental, establish a viable hotel program and also establish a corporate card program. When all these programs are established they can be of minimal benefit without communication and training.

Ongoing communication of the travel program is essential to keep the policy, airline arrangements, hotel program all front of mind of the travellers. Business Travel tends to be a very personal event and most people book travel for private use, so many people may think they know what the best deal for the organisation is. Often what is assumed to the best is not in the best interests of the overall value of the travel program.  One hotel room purchased off WOTIF, KAYAK or similar site may look cheap – but every direct purchase outside the preferred program will dilute the overall program and diminish the ability of the organization to leverage rates.

Travellers must be encouraged to support the selected suppliers and some organizations will go as far as mandating only the use of preferred suppliers at risk of not being reimbursed for the cost.

Conclusion:

This article does not give all the answers but is designed to give a few hints on areas a travel manager can review and change to get better value for the travel dollar. Too much emphasis is often given to screwing down the costs with TMC’s, airlines and hotels. While these arrangements are important, never underestimate the value that can be lost by not communicating the company policy and the supplier arrangements in place and by encouraging best travel buying behaviour.

At Epago we are equipped to implement the above simple changes, but importantly have the expertise to manage your entire travel program.