In the midst of the global financial downturn, most businesses were forced to reduce travel costs and implement more effective policies. For many businesses, the current economic climate has become a catalyst for changes in the way they travel, changes in their travel culture and changes in their travel management consultancy (TMC).
Now, more than ever, is the time to ensure your TMC is helping your business maximize the savings opportunities that currently abound in corporate travel. If your TMC is achieving year-on-year efficiencies, benchmarking your performance, re-negotiating rates with suppliers and always offering you new solutions to new challenges, your relationship is gold.
But if your TMC is failing to continuously drive value, now is the time for change. Parking the travel transition until the economy settles, is ultimately costing – not saving – your business money. When deciding whether to stay with their existing TMC, many companies are quick to compare fee structures. The reality, however, is that the transaction fees of local travel agents and even large corporate TMCs, vary only within 10% of each other. Of the total travel expenses companies incur, less than 5% of the total cost consists of transaction fees. The decision should therefore not be based on a fee reduction strategy, but on a Return on Investment (ROI) strategy.
The costs of change are far outweighed by the long-term investment returns and savings gained from strategic travel management. In fact, the potential savings of booking with the right TMC can be more than 20% of your total travel spend.
The cost of change is generally felt by way of 'soft dollars'. For example, employees' time spent running tenders, attending meetings with bidders, negotiating the final deal and completing traveller profile forms. In some cases, there is also the hard dollar cost of employing RFP analysts (whether internal or third party), to help manage the process. The return on investment from effective change management eclipses these costs with gains that are measurable and tangible.
Adopting Corporate Traveller as your preferred TMC, your business would benefit from efficiencies and savings in various forms.
When a major company first approached Corporate Traveller, it was looking for travel management strategies to reduce its costs, particularly in domestic air travel. At the end of their first year with Corporate Traveller, the client's total cost of change was 3.9% of their domestic spend. By improving their travel policy and booking patterns, and by accessing Corporate Traveller's multi-source platforms to secure better fares, the client was able to reap savings that far exceeded the year-on-year cost of change.
Through enhanced travel management, Corporate Traveller achieved savings equivalent to 12% of the client's domestic spend, relating solely to the client's reduction in the use of full class fares. Further savings in other areas of the client's travel activity were also realized.
A TMC change is the first step in a process of ongoing improvement to achieve cost-efficiency across all elements of your travel.
Making the actual selection can be simplified by using closed bids rather than open market tenders or requests for proposals, as closed bids usually yield better outcomes faster. There is less time and administration involved in the bid preparation and meetings with bidders and you can be on the road to savings a lot sooner. Once you have selected the right TMC, much of the remaining work rests in their hands.
Corporate Traveller's change management process, which forms part of a comprehensive business travel plan, represents industry best practice. Please refer to the diagram on the following page to view the key steps in this process.
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