During challenging economic times, travel expenses are increasingly scrutinized. However, cutting travel can ultimately be detrimental to a business, according to Rob Turk, executive vice president of Professional Travel.
“Corporations have to look at why they travel and what travel does for them,” Turk says. “Does it drive revenue, does it strengthen customer relationships, and does it give them more visibility with prospects? In cutting travel, are they risking a higher revenue loss than what they’re mitigating? In other words, are they stepping over dollars to save nickels?”
Smart Business spoke to Turk about proactive approaches that can reduce travel costs without compromising core business initiatives.
Are there risks associated with cutting back too much on travel?
Absolutely. It is vitally important that every corporation examines its travel footprint and determines the business benefits associated with travel. For many companies, travel enables them to meet face to face with clients and prospects, attend industry trade shows, repair and service high-tech equipment, review internal plant/office operations and numerous other initiatives.
If a business is dependent on face-to-face selling and the servicing of its client base, an across-the-board reduction in travel can potentially negatively impact company sales and revenue generation.
Today, many companies are creating polices that scrutinize ‘unnecessary’ travel. However, you need to be cautious when establishing these policies, as the ROI for business travel can be far greater than the actual cost. The most important questions corporations need to ask themselves are, ‘Why do we travel?’ and, ‘What do we lose by not traveling as we have in the past?’ Many times the answers are surprising.
What are some nonharmful ways to cut back on travel costs?
There are several modifications to company travel policies and overall travel behavior that will create the desired savings, including:
■ Create or update a corporate travel policy that outlines guidelines for all travel.
■ Take advantage of advanced airfares. Generally, fares purchased at least 14 days in advance provide significant savings.
■ Shift hotel spending from upscale hotel properties to moderate, midscale properties.
■ Centralize all purchasing through one source to aggregate spend, resulting in greater negotiating leverage.
■ Reward travelers who utilize frequent flyer points to purchase business travel.
■ Track billable and nonbillable travel to identify internal and external travel costs.
■ Negotiate added-value amenities with industry suppliers, such as complimentary meals, car upgrades and parking fee waivers.
■Travel during off-peak hours to maximize opportunities for lower costs on airfare.
■ Implement a travel approval process.
■ Manage the usage of unused non-refundable tickets.
■Reduce airline change fees through more diligent planning and scheduling procedures.
What risks are companies exposing themselves to by not modifying their travel policy?
We’d all like to think that employees have a company’s best interests in mind when they make purchases, but you really need to monitor and audit transactions at a micro level as they occur. In other words, do a lot of pretrip auditing so you know the cost of the trip, why the trip is taking place and what other options are available to the traveler, such as booking a nonstop flight versus a connecting flight. With the proper data feeds, travel purchases are easily scrutinized.
How can companies obtain better supplier discounts?
Major travel industry suppliers, including airlines, car rental agencies, hotels, and meeting and conference facilities, are all looking for more business. The current economic environment has started to create a ‘buyer’s market’ for business travel. To maximize the opportunities for reduced cost travel supplier contracts, every corporation should consider establishing a centralized point-of-purchase relationship with a travel management company who can provide third-party advocacy.
Any effective negotiation begins with clear and concise travel purchasing data identifying historical travel trends and patterns, such as frequent travel destinations, number of room nights, frequency of airline travel to common destinations, number of meeting rooms booked and overall hotel activity, all broken down by city and property category.
There are significant savings to be realized from travel suppliers if you have a plan of attack in your negotiations with them. If your data is scattered and doesn’t reflect your aggregate spend, you cannot begin to leverage your spend to create meaningful savings.
What other services can a travel management company provide?
A key service is benchmarking, that is, to learn how you are doing compared to other companies of like size. A travel management company can conduct an audit of a policy, gauging it against other businesses with similar profiles. By comparing your activities to other companies in the market, you’ll know whether or not you’re on target with your strategies.
ROB TURK is the executive vice president of Professional Travel. Reach him at (440) 734-8800, x4029 or [email protected].
