Losing your travel management company to cut costs may be a false economy – they wield the sort of clout that money can’t buy, says Jenny Southan.
With the festive season behind us and a new year unfolding, it is the ideal time to consider how we plan, budget and manage our business travel, especially given the icy grip of recession on our wallets. Cutbacks on unnecessary luxuries are becoming the norm and one of those cost-saving measures may well be to lose your travel management company (TMC). After all, how difficult can it be to book your own travel? But, as Fiona Vandersluys, director of global sales and marketing for Chambers Travel Management, explains, this could be a false economy.
“It’s important to retain your TMC because if times are tough, the first thing you need to do is go to a professional,” she says. “You don’t just start doing your own dentistry, for example.” A valid point, but what if you can’t afford to see your dentist this year? Ian Windsor, managing director of travel management company Hogg Robinson Group UK, points out that there are plenty of quick fixes that may seem tempting to the cash-conscious firm but might not offer the most value in the long run.
“People think getting a self-service booking tool [an online travel information system], for instance, will take a lot of the cost out of the business, and while I think there is some validity in that, they are really only any good when booking simple point-to-point trips,” he says. “You don’t want employees who are supposed to be doing other jobs sitting there scanning through a long list of things, wondering which button to press. Companies can book the simpler trips themselves but should leave the more complex ones to their TMC.”
Tony McGetrick, BCD Travel’s director of sales for UK and Ireland, agrees. “Firms who allow their travellers to search the web for better deals, and ignore the fact that their day job is something entirely different, create a hidden cost that can often go untracked,” he says. To continue the analogy, avoiding seeing your dentist for a year may therefore see you develop more serious problems, and consequently generate a bigger bill.
So how can a TMC help? If you are a small company, you may not have the purchasing power to get good hotel and airline deals, whereas a TMC will be able to negotiate these. For the larger corporation it provides superior expertise as well as saves time. Windsor says: “We are not there simply to take bookings but to use the knowledge we have and feed it back to the company. If there is a carrier or hotel group that’s doing a particular deal, we make sure we get that down to the grass-roots level as quickly as we can.”
According to Nigel Turner, director of industry affairs at Carlson Wagonlit Travel, if you are a company with a travel spend of £25,000 or more a year then you may need your travel to be managed. “You need to maximise your influence with suppliers,” he says. “If you haven’t got a managed programme and employees just go off and do what they like, you are losing all your purchasing power.”
But, Turner says, the biggest challenge facing organisations in these uncertain times is not deciding whether to use a TMC but making sure staff follow the travel policy they have put in place. “People don’t like changing behaviour but if they go off contract [book outside their preferred supplier] we have lost all ability to help them – we don’t know what fares they are paying,” he explains. This means it will be almost impossible to assess how cost savings can be made because while a TMC will keep tabs on all your travel spending, it is much harder to do yourself. McGetrick agrees: “It’s [policy] compliance and regular reviews of traveller behaviour that will reap the biggest benefits for organisations,” he says.
Another plus point in today’s economic climate is that corporates are wielding more power over the travel industry, demanding competitive rates and better service. One example of this is the agreement between Easyjet and the Guild of Travel Management Companies (GTMC) to reduce the cost of booking flights with the airline though global distribution systems (GDSs).
Previously, the budget carrier had charged a fee of e6 for flights booked by travel management companies through online GDSs. However, in September the fees were reduced to e4 per sector, making it a third cheaper for the end user. In addition, the agreement allows companies to access a special rate for Speedy Boarding and Speedy Boarding Plus if they go through a TMC.
This is good news as GTMC members account for about 80 per cent of business travel spend in the UK and facilitate more than 11 million transactions, including the sale of more than six million airline tickets every year.
Another piece of good news is that, according to Carlson Wagonlit’s Turner, 2009 rates will be far more competitive. “In the past few years hotels have had a boom time with high occupancy, so they have been able to demand high rates. But that’s all changing so there will be a lot of good deals,” he says. And with airlines cutting capacity and keen to fill seats, competitive pricing won’t only be affecting the hotel market – carriers will also be vying for custom by reducing fares.
However, Debbie Carling, executive general manager of FCM Travel Solutions UK, believes value does not come simply from cheaper airfares. “It involves reviewing each company’s travel policy to achieve efficiencies, educating their people on the benefits, negotiating regularly with suppliers to ensure year-on-year savings, and controlling costs with effective technologies and reporting,” she says.
BCD Travel has been paying special attention to when reservations are made and is encouraging corporates to come around to its way of thinking. McGetrick says: “If you book three weeks in advance you’ll get a much better deal than if you book one day ahead. I appreciate many companies can’t always do this, but there are plenty of examples where people are simply being lazy in the way they purchase travel and leave things to the last minute. This is particularly important if you are hoping to book with a low-cost carrier, as their fares rise dramatically two to three days before departure.”
Given that many organisations are facing complete travel bans, Vandersluys says TMCs need to provide creative solutions. “One of our clients used a lot of hotels in London’s West End until our business manager came up with the idea of using airport properties instead, which are only 15 minutes away on the Heathrow Express train. It’s a bit like staying around the corner but at half the price,” she says.
TMCs have an ideal opportunity to create value in a market where the stakes have rarely been higher and, as BCD Travel’s McGetrick says, “the result of this has been a huge acceleration in cost-saving ideas”. It may seem obvious to focus on the big savings, such as travelling economy instead of business or staying at a four-star hotel instead of a five-star, but Windsor from Hogg Robinson points out that you can save just as much by looking at all the elements that make up the big picture.
“Travel is much more than jumping on and off an aeroplane – it’s the whole end-to-end package, from expense management to how you book the trip. If you use an online tool it is quicker, but it might be more cost-effective to talk to somebody if it’s a more complicated trip as the fare opportunities are better,” he says.
Whatever this year holds, TMCs are already adapting to the changing needs of clients. If a company has decided that it cannot justify sending several members of staff to New York for a meeting, TMCs such as Hogg Robinson are happy to arrange video-conferencing, and all the facilities that go with it, instead.
While corporate travel is no doubt on the decline, business still needs to go on and people still need to get from A to B.
But, as Turner notes, “the justification for going on a trip is higher and people are looking for better ways of doing the journey”. Travelling by train instead could save you money, as could booking transport further in advance and avoiding overnight stays, which will incur the cost of accommodation.
TMCs sell themselves as making life easier, be it by researching the best rates, finding suitable accommodation or even offering traveller tracking, which allows employers to know where staff are, where they are staying, which flight they are on and the dates they are out of the country. The Mumbai attacks in November are a good example of how a TMC can go the extra mile and help a company to keep tabs on where its employees are in a crisis situation. Those firms whose employees did not book through a TMC may not have known whether their staff were staying in the hotels under attack, so would have found it harder to come to their aid if they were in danger.
McGetrick concludes: “The holy grail of travel is to be able to go to one place and find out everything you need to know, as well as get access to the best rates. It’s vital to use the expertise of a TMC as there is no other vehicle that will offer this to you.”
