Managing Corporate Travel

Travel and expenses are most companies' largest controllable expenditure, after salaries. As conducting meetings in person – thus travelling – is crucial to the success of any business, it is imperative for finance professionals to keep a close eye on corporate travel spend and actively maximise travel budgets.

The recession has presented opportunities for savings, and as companies resurface from the economic crisis, it is particularly critical that finance professionals ensure that their companies are controlling travel costs and maximising value from their travel management company (TMC).

Consulting

First and foremost, it is crucial to make certain that your company's corporate travel policy is reviewed regularly. Corporate needs change often and suppliers frequently alter their service offering, both of which can impact on cost. An effective TMC will offer consulting services to advise clients on which travel options will suit their travel needs and how to best leverage their budgets. Its most experienced consultants, expert procurement specialists and analysts will provide support in creating or reworking the corporate travel policy to implement savings and optimise travel and entertainment (T&E) programmes globally.

Specifically, a TMC consulting team must ask clients how their travel policy fits in with their specific business requirements, explain changes in suppliers' behaviour (particularly different pricing models in the airline and hotel industries) and help them apply new policy guidelines to ensure they are meeting their objectives with their chosen suppliers.

Buying power

Companies can also benefit from a larger TMC's buying power and relationship with suppliers by taking advantage of its ability to negotiate lower fares and rates. For instance, negotiated hotel deals can save businesses money if the company can guarantee a minimum number of hotel nights per year. If their volumes are not sufficient to achieve preferred rates, the TMC should be able to offer special fares and rates that are uniquely available to them.

Hotel rates

Although Hogg Robinson Group's Annual Hotel Survey for 2009, which looks at hotel room rates in 75 countries, reported a bleak year for the industry, it also highlighted new opportunities for both corporate travellers and hoteliers. Finance professionals have traditionally perceived airfare as the prime area for travel savings, but recent trading conditions have highlighted the potential for significant hotel savings.

Your TMC is the key to navigating the existing travel market as it may be possible for them to negotiate, on your behalf, items that represent a 'real' cost in terms of total cost of stay such as lower pricing, food and beverage discounts, free wi-fi access and reduced parking charges.

The majority of hotels have adopted sensible long-term pricing strategies to offer value rather than significant price cuts to customers in order to maintain their share of the market. This is a more sustainable approach in order to avoid rate cuts and price wars, which offer no long-term competitive advantage and often dilute their corporate business.

Fine print

It is important to understand that the lowest advertised air and hotel fares and last-minute deals are not always the least expensive. Depending on your company's requirements, booking restrictions and hidden charges may prevent these fares from translating into the cheapest option. Moreover, travellers frequently need to amend their plans at the last minute and low-cost airlines tend to charge a hefty premium for making these changes. Your TMC can determine which option is most cost efficient, based on factors such as price, restrictions and cancellation charges, and for instance, whether flying from a specific airport will add time and money to a trip.

Software features

Some large TMCs are able to offer their clients a customised service that includes online travel reservation software that searches for the lowest available fare and which is aligned to their travel policy. Companies can then choose to book via a tailored online portal or via experienced business travel consultants on the telephone. This can also be particularly useful when travellers are short on time and need a personalised one-stop-shop where they can book all their travel and be presented with creative ways to manage their travel expenditure.

One essential feature, which a TMC's software should be able to provide, is tailored, perceptive reports that focus on corporate policy, traveller behaviour, service scope and comparisons to others in the sector. Scrutiny of corporate travel spend is inevitably a high priority for finance professionals, and reporting features enable policy management decisions to control travel costs and maximise the value of expenditure. Such tools enable clients to easily access pre- and post-trip information tailored to their individual requirements, delivering total trip transparency and supporting proactive decision-making. When used in an integrated manner these tools maximise the savings derived from the design, implementation and monitoring of travel policy, and most importantly, show clear diagnostic evidence of what your company can do to better control travel costs.

A good TMC should be able to offer clients a traveller tracking device used to monitor travel policy compliance and highlight any bookings that appear to be out of policy. The personal passenger tracking functionality can also trace where the company's travellers are at any one time and contact them immediately.

The climate of cost control has seen a greater emphasis on managing the demand for travel and relocating the point of responsibility and control before the traveller undertakes the trip. This effectively allows a corporation to manage demand whether they have a mandate culture or an empowered culture. The management can assess a trip by their employees before they travel. The process can be used to manage exceptions, endorse authorisations and empower the business owners. Clients adopting this process workflow recognise greater compliance to policy and increased support for their preferred suppliers.

Conclusion

This most recent recession has been fundamentally different from its predecessors. Whereas other crises have been consumer oriented, we now face a crisis rooted in the financial systems that affects entire corporations. Unsurprisingly, one consequence of the global economic crisis is a push by finance professionals to question corporate travel costs and keep a close eye on spend. However, with careful assessment of your company's travel policy and support from an effective TMC, your company can actively maximise travel and expense budgets.