What risks do companies face if they don’t closely manage travel?
After the events of Sept. 11, businesses recognized that they needed to know where their people are at all times from a risk management perspective. If they allow their traveling employees to buy from various sources, there’s no centralized database of where people are. There are also risks associated with personal buying decisions. The challenge is that air, hotel and car suppliers all market loyalty programs to the traveler. So what has to be managed is whether travelers are buying in their own best interests or those of the organization. A third party can ensure that the traveler is comfortable and being provided the right supplier at the right cost, while the organization has supporting data that the decisions complied with policy.
Can an outside party be expensive?
Travel purchasing should be managed at the micro level just like any other high-cost purchase a company makes. Yet some companies think, ‘We’ll just do it ourselves; using a travel management company will cost more.’ However, statistics show managed travel processes can generate annual savings to an organization of 15 to 18 percent, while travel management fees generally only represent 2 to 3 percent of total travel spending. As a result, 96 percent of Fortune 1,000 companies utilize the services of an outsourced travel management company. It makes sense: You’re aggregating purchasing, you’re driving purchasing to select preferred suppliers, your people are following the guidelines of an established travel policy, and the firm you selected provides travel advocacy and updates you of changes within the industry and how to best take advantage of them.
There’s probably not a more volatile industry that exists from a standpoint of day-to-day changes, so you should have a travel expert monitoring it who will provide that daily information to you and your staff as to what to expect while traveling.
Many organizations try to maximize employee productivity, yet they expect employees to also become travel agents. How that fits or doesn’t fit into their other responsibilities and the cost of that productivity also needs to be factored into a decision of retaining a travel management company. Travel is recognized to be the most personal business service that employees use. It affects the framework of people’s lives because it takes them away from home and families, and so decisions associated with it are very important. The cost risks of nonmanagement far outweigh the minimal costs associated with hiring a travel management company.
Most companies are focused on return on investment. In this case, it includes the education of the traveler and the necessary communication between senior management and travelers. Only then can organizations reach the next level and begin examining areas like meetings management, international travel complexities, preferred vendor contracts and best practice benchmarks.
ROB TURK is the executive vice president of Professional Travel Inc. Reach him at (440) 734-8800 x4029 or [email protected].
