As business travel expenses nose upward, companies are realizing that better cost-management techniques can make a difference
US. corporate travel expenses rocketed to more than $143 billion in 1994, according to American Express’ most recent survey on business travel management. Private-sector employers spend an estimated $2,484 per employee on travel and entertainment, a 17 percent increase over the past four years.
Corporate T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Corporations are realizing that even a savings of 1 percent or 2 percent can translate into millions of dollars added to their bottom line.
Savings of that order are sure to get management’s attention, which is a requirement for this type of project. Involvement begins with understanding and evaluating the components of T&E management in order to control and monitor it more effectively.
Hands-on management includes assigning responsibility for travel management, implementing a quality-measurement system for travel services used, and writing and distributing a formal travel policy. Only 64 percent of U.S. corporations have travel policies.
Even with senior management’s support, the road to savings is rocky-only one in three companies has successfully instituted an internal program that will help cut travel expenses, and the myriad aspects of travel are so overwhelming, most companies don’t know where to start. “The industry of travel is based on information,” says Steven R. Schoen, founder and CEO of The Global Group Inc. “Until such time as a passenger actually sets foot on the plane, they’ve [only] been purchasing information.”
If that’s the case, information technology seems a viable place to hammer out those elusive, but highly sought-after, savings. “Technological innovations in the business travel industry are allowing firms to realize the potential of automation to control and reduce indirect [travel] costs,” says Roger H. Ballou, president of the Travel Services Group USA of American Express. “In addition, many companies are embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to substantially improve T&E management processes and reduce indirect costs.”
As companies look to technology to make potential savings a reality, they can get very creative about the methods they employ.
The Great Leveler
Centralized reservation systems were long the exclusive domain of travel agents and other industry professionals. But all that changed in November 1992 when a Department of Transportation ruling allowed the general public access to systems such as Apollo and SABRE. Travel-management software, such as TripPower and TravelNet, immediately sprang up, providing corporations insight into where their T&E dollars are being spent.
The software tracks spending trends by interfacing with the corporation’s database and providing access to centralized reservation systems that provide immediate reservation information to airlines, hotels and car rental agencies. These programs also allow users to generate computerized travel reports on cost savings with details on where discounts were obtained, hotel and car usage and patterns of travel between cities. Actual data gives corporations added leverage when negotiating discounts with travel suppliers.
“When you own the information, you don’t have to go back to square one every time you decide to change agencies,” says Mary Savovie Stephens, travel manager for biotech giant Chiron Corp.
Sybase Inc., a client/server software leader with an annual T&E budget of more than $15 million, agrees. “Software gives us unprecedented visibility into how employees are spending their travel dollars and better leverage to negotiate with travel service suppliers,” says Robert Lerner, director of credit and corporate travel services for Sybase Inc. “We have better access to data, faster, in a real-time environment, which is expected to bring us big savings in T&E. Now we have control over our travel information and no longer have to depend exclusively on the agencies and airlines.”
The cost for this privilege depends on the volume of business. One-time purchases of travel-management software can run from under $100 to more than $125,000. Some software providers will accommodate smaller users by selling software piecemeal for $5 to $12 per booked trip, still a significant savings from the $50 industry norm per transaction.
No More Tickets
Paperless travel is catching on faster than the paperless office ever did as both service providers and consumers work together to reduce ticket prices for business travelers. Perhaps the most cutting-edge of the advances is “ticketless” travel, which almost all major airlines are testing.
In the meantime, travel providers and agencies are experimenting with new technologies to enable travelers to book travel services via the Internet, e-mail and unattended ticketing kiosks. Best Western International, Hyatt Hotels and several other major hotel chains market on the Internet. These services reduce the need for paper and offer better service and such peripheral benefits as increased efficiency, improved tracking of travel expenses and trends, and cost reduction.
Dennis Egolf, CFO of the Veterans Affairs Medical Center in Louisville, Ky., realized that the medical center’s decentralized location, a quarter-mile from the hospital, made efficiency difficult. “We were losing production time and things got lost,” he says. “Every memo had to be hand-carried for approval, and we required seven different copies of each travel order.” As a result, Egolf tried an off-the-shelf, paper-reduction software package designed for the federal government.
The software allows the hospital to manage travel on-line, from tracking per-diem allowances and calculating expenses to generating cash advance forms and authorizing reimbursement vouchers. The software also lets the hospital keep a running account of its travel expenses and its remaining travel budget.
“Today, for all practical purposes, the system is paperless,” says Egolf. The software has helped the hospital reduce document processing time by 93 percent. “The original goal focused on managing employee travel without paper,” he says. “We have achieved that goal, in part due to the efforts of the staff and in part due to the accuracy of the software.”
With only a $6,000 investment, the hospital saved $70 each employee trip and saved almost half of its $200,000 T&E budget through the paper-reduction program.
Consolidation of corporate travel arrangements by fewer agencies has been a growing trend since 1982. Nearly three out of four companies now make travel plans for their business locations through a single agency as opposed to 51 percent in 1988. Two major benefits of agency consolidation are the facilitation of accounting and T&E budgeting, as well as leverage in negotiating future travel discounts.
A major technological advance that allows this consolidation trend to flourish is the introduction of satellite ticket printers (STPs). Using STPs enables a travel agency to consolidate all operations to one home office, and still send all necessary tickets to various locations instantly via various wire services. As the term implies, the machinery prints out airline tickets on-site immediately, eliminating delivery charges.
For London Fog, STPs are a blessing. London Fog’s annual T&E budget of more than $15 million is split equally between its two locations in Eldersburg, Md., and New York City. Each location purchases the same number of tickets, so equal access to ticketing from their agency is a must. With an STP in their two locations, the company services both offices with one agency in Baltimore. Each office has access to immediate tickets and still manages to save by not having to pay courier and express mail charges that can range up to $15 for each of the more than 500 tickets each purchases annually.
Conde Nast Publications’ annual T&E budget of more than $20 million is allocated among its locations in Los Angeles, San Francisco, Chicago, New York and Detroit. Since 1994, travel arrangements have been handled by a centralized agency, Advanced Travel Management in New York City, by installing an STP in each of these five locations. In addition to increased efficiency due to consolidation, Conde Nast now has the ability to change travel plans at a moment’s notice and have new tickets in hand instantly.
The real benefit is that the machines are owned and maintained by the travel agency., so there is no cost to the company. Due to the major expense involved, however, STPs remain an option only for major ticket purchasers. “STPs are a viable option in this process for any location that purchases more than $500,000 per year in tickets,” says Shoen.
As airfare averages 43 percent of any company’s T&E expenses, savings obtainable through the various uses of technology have become dramatic. For example, the ability of corporations to collect and analyze their own travel trends has led to the creation of net-fare purchasing-negotiating a price between a corporation and an airline to purchase tickets that does not include the added expenses of commissions, overrides, transaction fees, agency transaction fees and other discounts.
Although most major U.S. carriers publicly proclaim that they don’t negotiate corporate discounts below published market fares, the American Express survey on business travel management found that 38 percent of U.S. companies had access to, or already had implemented, negotiated airline discounts. The availability and mechanics of these arrangements vary widely by carrier.
Booking air travel, making hotel reservations and arranging vacation travel in general has changed completely with the advent of the internet and many people try to be their own travel agents. While you can arrange seemingly most of your travel yourself, you can’t do as well as your travel agent in a long run!
Travel processionals, whether your local travel agent, tour operator or destination specialist still possess contacts that you as an industry outsider do not have. As in number of other professions, travel agents, whether in a shopping center near your home or an online agency, wherever they may be located, do know something you do not, have way to book and arrange travel for you in ways unavailable or unknown to you.
Traditionally you could contact a travel agent and ask for a quote, whether a price of an air ticket, hotel or a vacation package. For the most part travel agents still provide that kind of information, although there is a limit how much information they may disclose as not all information is readily available to them.
First of all, most travel agents indeed may have at their fingertips routine cost of air ticketing, hotel rates or certain vacation packages available and will be happy to provide the price information to you instantly when asked. But once your travel request will need to be somewhat customized, whether tailored to your dates of travel or your other travel preferences, to find a relevant answer will be time consuming. Because of this time element involved, do not automatically assume an agency is keen to spend the time to furnish the information you seek when there is no commitment you will travel at all.
Look at the situations from the following perspective. In the old days if you had a problem with your car, you’d drive it to your neighborhood car mechanic and asked him to see what was wrong with it. You would drop the car off at the garage, the mechanic would have a look and tell you what the problem was. He would also give you an estimate and it was up to you to decide if you wanted him to fix it right then and there, wait or seek another opinion and another quote. His services cost you nothing.
But not anymore. These days, no garage, no car repair mechanic is willing to spend time trying to find out what’s the problem with your vehicle without charging you at least one hour labor upfront. Pay and he will look and tell you. Up to you if you will decide to take your car to another shop or have him fix it, he has covered his time spent diagnosing what’s wrong with your car.
Similarly, many travel agencies and professional travel planners and tour operators will charge you an upfront travel planning fee if you are requesting travel arrangements that first of all are time consuming, or there is no guarantee you will book anything. All you are after are essentially private tailor-made travel arrangement s and there are no simple answers or options to give you, and the only way to find out will be for the agent to dig and consult all sorts of different sources he has at this disposal and then present the travel alternatives to you for you to decide upon.
When working with a travel agent, travel planner or any other travel professional such as a knowledgeable destination specialist, keep in mind that a certain protocol will assure you will get not only the kind of travel arrangements you want in general but also you’ll gain a true partner that will always work in your best interest whether you’ll travel away from home on business or for pleasure.
1. First of all, when contacting a travel agent, whether in person or online, don’t hesitate to give them your name – don’t worry, most agents won’t spam you back. Without your name when you’re asking for a valuable travel advice most agents won’t take your request too seriously. Call if you wish but most agents prefer not to take notes, email is a way to go and for an agent to look up a fare often a time means he has to plug in a name, so might as well that name will be your real name. If you decide not to accept the booking the reservation will expire and no harm done. If you decide later to purchase the reservation the agent does not have to rekey it into the system all over again.
2. If you’re trying to be you own travel agent, even in part, say you plan to book your own hotels online, disclose it to the agent your are contacting for assistance, he/she may still be interested to help you with the rest of your travel arrangements. Don’t hide your intentions from the agent as agents don’t like to be used for information gathering purposes only.
3. If at all possible, always contact your travel agent or destination specialist as soon as you know when and where you wish to travel, not last minute before your intended departure. That is even more important when you’re planning a trip to a lesser frequented destination.
4. Don’t book your flights and hotels online and ask a travel agent to do the rest, namely the difficult parts, such as complex transportation connections, travel arrangements in remote locations or to book segments that you just feel are not safe for you to book online yourself. Give your agent to design and book your entire trip for you. The worst you can do is design your own vacation package, then copy and email the same request to dozen different agents to see who may be the lowest bidder. Yes, the internet is perfect for that kind of information gathering but look at this from a perspective of a travel agent. If he/she knows you are sending the same request to dozen agents many of them will not be too interested in dealing with you. Then again, telling them the truth they will appreciate knowing what you are doing and approach the whole thing quite differently and in the end they just might offer you a deal.
5. If you’re after booking shoe-string cost of travel, for example wishing to book the lowest type of accommodations, best be your own travel agent. Do realize that agents can’t book services that are simply too cheap to begin with, not to mention that that kind of suppliers do not pay agent s any kind of commission. The agent may still help you but keep in mind he will be doing you a favor and will be working for you at no charge. If so, appreciate it, email your thank you.
Do realize that to ask an agent million questions, get all the answers, including time consuming quotes, only for you to never replay again is definitely rude and turns agents off completely. If you are polite and respectful many will often work without any commitment on your part, providing you with information you need, working for free. But because of those that just siphon info out of agents so they could possibly book travel on their own leaves not only a sour taste in agent’s mouth but certainly induces the decision to charge au upfront planning fees when a next inquiry comes.
6. On another hand, when it comes to upper end accommodations keep in mind these hotels routinely offer discounts to agents that agents can markup and still offer you room costs below hotel rack rates. Genuine agent is not interested in selling you a higher end hotel in order to make a higher commission but to tailor in a better trip experience for you where he deems it desirable.
7. Keep in mind that there is a difference between a travel agent and a so called Destination Specialist. Most travel agents use online reservation systems to book transportation, hotel and vacation packages. They essentially book or resell ready-to-sell travel offers from a variety of suppliers that do not require more than filling in your name and dates of travel. When it comes to you needing customized arrangements, they will need to contact tour operators and destination specialists that are either part of their consortium or a network they belong to. Depending on the connections they have they will or will not be able to help you.
8. Destination Specialists pride themselves in really knowing their destinations. Many of them have indeed not only traveled extensively but know a particular destination inside-out so they can arrange travel logistics for you based on knowing, rather than looking it up in a brochure or some kind of data base. Many Destination Specialists specialize in difficult, custom designed itineraries and do not sell travel packages. Often a time though not always that kind of service reflects higher markup.
9. Last, please note that many destination specialists as well as travel agents work 110 or more hours per week because especially custom-design travel is indeed very time consuming. Being good at travel logistics does take experience and while with the internet it seems second nature to be able to arrange travel on your own, many travel professional are indeed very good at what they do! They do know more about travel than you, give them a chance, they can save you not only money but also many headaches and above all, they can assure not only that you’ll travel worry-free but that you may have a trip of your life! Keep in mind, a good agent is not after selling you a single ticket or a package tour, they want you to become a repeat client, their go-to-travel processional for rest of your life.
This is rightly named as the age of traveler-centricity and with the evolution of the new era of personalized travel; it is leading to research and development of a host of new so-called intelligent services. The command-and-control perspectives of traveling have changed a lot from the past and the focus has shifted more on the traveler and the productivity of each trip. It has become essential to maintain that the travelers have the greatest return on investment on each trip. New generations of young employees and managers, who have been growing up and dwelling in a digital age, are moving up the ranks as travelers. It has become essential to recognize the need for greater flexibility acknowledging that the employees who travel on corporate trips also consider a percentage of their trip to be a leisure outlet. With increasing globalization and rise in companies sending their staff overseas to network and connect with their offshore prospects/customers/suppliers, corporate travel is a highly profitable tourism segment. Before we talk about how tourism companies can better cater to business travelers, let us first look at why they prefer to use specialized corporate agencies over traditional agents
Why do businesses use Corporate Travel Agencies?
This might be the most basic question for a travel agency as to why they need to use agencies specializing in corporate travel when there are plenty of regular travel agents in the market. Here is the importance of corporate travel agencies who have online systems which allow business travelers access to their complete itinerary.
The following information is at the fingertips of the CTAs:-
full business itinerary details
up-to-date tracking details of flights (including delays or rescheduling)
transparent details about additional costs such as baggage fees or in-flight fees
travel alerts, if any, in the destined area
complete and up-to-date details about the visa procurement policies and identification required
currency requirement and conversion rates
What do corporate clients expect from Corporate Travel Agencies?
The Corporate Agencies tend to have tie-ups with hotels, car rentals, flights etc. giving them access to lower fares which can be used only by the frequent business travelers. Discounted prices are not the only advantage though as they also offer flight upgrades, room upgrades, and VIP check-in lines as required.
In-depth information about the travel industry
Corporate travel agents have access to many travel resources and most importantly, quickly, than any other leisure travel agent. Additional information helps to make the business trips convenient and comfortable.
Changes in Itinerary
When an airline ticket needs to get rescheduled or cancelled, chances are the airline or the online service provider will charge lofty fees. When booking with a corporate travel agent, most of the times schedule changes can be done at zero or minimal extra charges.
Viable emergency contacts
It is important for the business travelers to reach the correct person at the need of trouble. Corporate travel agents have the experience and professionalism to relieve stress for both the traveler and the company.
What you need to consider as corporate travel increases?
Business Travel Barometer reported that corporate travel is witnessing an accelerated growth. However, when poorly managed, it may be no longer an advantage to companies and may, in fact become a burden. There are some factors which the corporations and CTAs must consider to get the best out of the time spent traveling.
Adopting a travel policy
The corporate must define a travel policy which is applicable to and respected by travelers at all levels. This policy should be used to establish the standards which will help to track the improvement of business travel. It will eventually help to reduce the costs of the entire package.
Do not limit the traveler’s autonomy
The management is responsible for budgeting the travel policy which helps to improve cost management however, it is also essential to give a degree of autonomy to the traveler. The policy should be flexible enough to allow the employee to adapt the trip as per the situation.
Traveler’s security should be a major concern
Business travelers need to have security in place. The company needs to stick to its definition of standards to ensure the employee’s integrity. The CTAs should have reliable partners (travel insurance, airlines, hotel chains etc.).
Mobility and automation
To optimize time and ease the processes, the administration of management platforms should have automated processes. This means they should adopt mobile solutions where search options, travel alerts, ticket reservations etc. can be accessed quickly, easily and on the go.
Corporate Travel Trends in 2016
Corporate travel trends tend to change regularly. 2016 has also not been any different and the travel management companies (TMCs) and corporate travel agencies (CTAs) are quite focused to provide steady if not strong axis all over. A growing MICE sector, investments in mobile and big data and enhanced focus on duty of care are some of their areas of focus.
The consolidated buzzword among global suppliers, airfares, hotel rates etc. is the rising fares. It is sometimes the move of the suppliers to generate discounts which encourage travel if there is a strong decline in demand. A positive 2016 world economy has been bringing an increase in air fares of a few percentage points, hotels are expected to see 4%-6% rise in average global rates and the competition will remain moderate in the car rental services.
Duty of care
Risk management is one of the major points of emphasis for corporations. Corporate customers are allowing new policies and improved technologies to monitor employees’ location in case of an emergency, especially when they are travelling to foreign destinations. For instance, Concur Risk Messaging helps to identify the travelers moving around in the world and alerts them with alternate travel arrangement as and when needed.
Focusing on MICE
Meetings industry is a major growing sector and the corporate travel trend is developing on it. The corporate travel agencies should better start aligning the various meeting procurement methodologies with its transient travel sourcing. One of the ways could be to broaden the variety of meeting services by incorporating incentive trips within it.
Investing in technology
A sharper focus on increasing value and becoming more traveler-centric can be done by bringing in mobile friendly technologies. Mobile and big data are definitely the two most significant technological investments which any corporate travel agency must focus to make their platform more appealing.
Business travel analysis after Brexit
Following Brexit, ACTE and CAPA shared their speculations. According to them, the greatest short-term effects on the travel industry will come from the weakening of the pound against other world currencies. Greeley Koch, executive director for the Association of Corporate Travel Executives said that the business travel industry will trend on currency fluctuations; with some companies taking advantage of the weaker pound and traveling more, while others may withhold business travel until world markets find their own level.
Impact of terrorism on corporate travelers
Travel policy makers and administrators need to be guided by rising terrorism scare. For executives and staff undertaking travel on behalf of businesses, the travel agents and corporate travel agencies (CTAs) should prove the reassurance for their safety through the travel policies. It is more than likely that the surveys conducted over corporate travelers reflect the general concern of the global business travelers about the spate of terrorism. However, there is no denying the fact that terrorist threat is changing the patterns of business travel. The key impact of this is to keep in mind that the companies providing travel services for business travelers need to enhance their focus on security and the associated risks in delivering the services to corporate clients. According to a recent finding, travel managers have higher estimation of their policy’s effectiveness in addressing risk compared to skeptical business travelers.
Although the corporate travel sector has continued to progress, there are a plethora of challenges faced by the industry. A rapidly changing consumer market, the emergence of new business models, the impact of technology, man-made and natural crises are some of the fulcrum points that need to be considered before planning corporate trips.