To make the most of your corporate travel budget, it is critical to plan to leverage your program for all its worth. Telling travelers to select the lowest logical airfare is not enough. Here are the elements that should be considered when planning or evaluating your travel program.
1. Travel policy
A well-written and disseminated travel policy is the foundation of any good travel program, and I am consistently amazed that so many corporations have such an outdated and poorly conceived travel policy, if they have one at all. It is not difficult to find a well-written policy. One can be found online quite easily. All that remains is that it is edited to reflect corporate culture and disseminated within the company so that everyone understands and agrees to follow it. For this reason, it is a good idea to have everyone sign a copy of the travel policy to ensure that it is read, understood, and owned by all company staff. I suggest that everyone in the company signs a copy of the travel policy, whether they travel or not. They may change positions in the company later and be required to travel. A travel policy need not be long or complex. Some of the best travel policies I have ever seen were only a few pages long.
2. Centralized travel internally and externally
Many companies do not centralize their travel program, and they pay the price in terms of a loss of expense reduction opportunities and internal efficiencies. Many companies that do not centralize travel fear requiring travelers to do something they may not want to do, along with the idea that centralizing travel will require hiring a Travel Manager. Both of these may be legitimate concerns, but they do not have to be in most cases. By requiring travelers to book centrally, you are not necessarily causing them to lose flexibility. You can centralize travel while still allowing travelers to book independently, either with a travel agency of your choice or online through a provider that you have partnered with and have confidence in. By assigning someone responsible for overseeing travel, you are getting a single point of contact both internally and externally for travel issues. If your company spends less than $1 million in air travel, you probably do not need a full time travel manager. In these cases, travel oversight can be given to the finance department, human resources, or executive-level assistants. Here is a look at the advantages to be gained by centralizing travel.
When you centralize travel with a single agency, you gain in several important ways. You will have a single point of contact for problems while travelers are on the road, and you will have one entity to go to for all your travel needs. This eliminates the problem of consolidating a travel report from among several sources. By bringing travel together, you will gain significantly from economies of scale. If you can measure total travel among various divisions or locations, you can get more for your money from travel suppliers. This will allow you to gain more from airline soft dollar programs, which means more free tickets and upgrades, get a higher percentage discount from our preferred airline, and get better-negotiated rates from your hotel and car contracts. Your fulfillment costs will decrease as well, as your travel agency will often discount their fees for a higher overall volume of travel.
3. Mix of online booking and personal service
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This is an addendum to the previous element, which calls for centralizing travel with one travel agency. This is important, but in doing so, you need not require travelers to use an online booking system, and you need not require travelers to call the agency directly. By offering travelers the option of doing either, you are accomplishing several goals. You will reduce your fulfillment costs, as online booking is cheaper in terms of a service fee. Giving travelers the option gives them a sense of control, thereby increasing morale and standing a better chance of a high adoption rate. Thirdly, you leave open a best practice of using your online booking engine for less complex itineraries and allowing senior executives, frequent travelers, and complex itineraries to be booked directly with a travel agent that can offer a higher level of service and a better overall travel experience where it is most warranted.
4. Look under every stone
While most travel programs revolve around the air budget, there are several other areas one can investigate to find savings opportunities. There are a couple of more obvious areas to look at, such as negotiated hotel rates at your favorite hotels or car rental discounts with a favored supplier. Often your travel agency will already have discounted rates through consortia affiliations and agency car contracts. Some less common areas should be investigated. For example, if ground transportation is a concern, most suppliers will offer discounted rates and a direct billing option. Direct billing arrangements with hotels and car rental agencies are also a great way to increase efficiencies and make the accounting department’s job easier.
5. Leverage hard dollar and soft dollar contracts
Most major airlines today offer hard dollar discounts and soft dollar incentives in exchange for company loyalty to their product. If your travel program is over $1 million in air spend, you can secure a discount off of the lowest fares of your carrier of choice in return for a market share commitment. For your secondary carriers, or if your volume is less than the minimum required by the airline, you can enter into soft dollar programs for free tickets and free upgrades, as well as traveler status enhancements or airport club passes. These programs require little in the way of volume, but they are not well publicized, so you may need to hunt for them or ask Baker Travel or your current agency to point you in the right direction.
6. Do not neglect hotel volume
Hotel volume is sometimes overlooked, but it should not be. Negotiated rates can be had through your travel agency or directly with the hotel properties of your choice. Individual hotels near corporate locations will negotiate discounted rates for you in exchange for a minimum room/night commitment. By utilizing a travel agency, you are likely to receive 5% to 50% discounts on thousands of hotels worldwide.
7. Have at least one car rental contract
Rental car contracts are easy to enter into and require little in the corporation’s commitment. Choose a partner that has airport locations and a reputation for excellent customer service. You can save 5-10% very easily and negotiate frequent renter membership for all your employees. This will make them more efficient and enhance morale. You can also enter into direct billing agreements at the same time that can make the jobs of your travelers and accounting staff much less stressful.
8. Understand group and meeting contracts
Airlines and hotels will discount your fares and rates when you have groups traveling together or meeting at a single destination from multiple points of origin. These meeting contracts can bring you airfare discounts of 2-10%, and if you have enough travelers on a single airline, you may be able to negotiate for free tickets to be awarded at contract completion. The minimum requirement is usually 10 travelers going to the same place at the same time. Some airlines have higher minimums, so be sure to ask before a contract is generated. Hotels will similarly discount their rates with a minimum of 10 room nights. These discounts can range from 10% to a much higher discount depending upon occupancy rate and seasonal variances.
9. Use reporting to improve metrics consistently
Well-managed travel programs require constant monitoring and financial controls to be properly leveraged. Insist on timely and customized reports that can be designed to bring you the information you need most. By receiving regular reporting on traveler behavior and provider contract performance, you will be in a better position to fulfill contract obligations, achieve cost reduction objectives, and see where opportunities for future savings may lie.
10. Use all avenues to enhance traveler comfort and efficiency
Lastly, any well-managed travel program will take into account the comfort and productivity of their travelers. When travelers are comfortable, they can focus on their main priorities that help propel your business forward. If travelers are happy, they perform at a higher level. Ask if your travel agency can upgrade traveler status on a preferred airline. Look into purchasing blocks of airport club passes to be used strategically during long and complex itineraries. There are many ways to reward travelers for the difficult and often grueling chore of travel. These kinds of rewards generate feelings of loyalty and increased productivity and efficiency.