How a Travel Management Company controls Business Travel Costs (Part 2)

Part 1 of this series explored why controlling the cost of employee travel is difficult due to issues that cannot be eliminated and are not easily handled. Part 1 also discussed why these difficulties often lead organizations to use travel management companies (TMC) for their business travel -  with their responsibilities ranging from administering corporate travel policies to booking employee business trips.

These service providers typically play a role within the scope of business travel similar to that of the company's procurement office: they leverage technology to facilitate travel arrangements; they communicate and administer booking policies; and they leverage economies of scale to negotiate highly competitive supplier prices. Now, Part 2 will cover TMC best practices.

 Travel Management Company Best Practices

An effective travel management company approach should establish and maintain a balance between employee satisfaction and optimized costs.  Best practices should embrace the fact that employees like autonomy, especially when it comes to travel, and encourage them to book their own travel – guiding those activities with wide choices and customized reward programs.  Other best practices include:

Scrutinize the travel policy: in the majority of instances, a TMC will inherit an existing corporate travel policy with each new corporate account: it’s unusual for the customer to tear up an active policy and start from scratch. Regardless, the corporate client should expect it to scrutinize the policy and cost control outcomes.  Discovery and analysis of outcome issues should lead to policy revision recommendations.  

For example, travel policies can come from the company’s procurement group. Procurement is often better suited for vendors than internal operations. If the procurement group designed the travel policy without good communication and healthy collaboration between parties (travelers, sales/department managers, finance/accounting, etc.) buy-in will be difficult to achieve. Without buy-in, the motivation needed for good compliance is unlikely and the policy could easily fail. If that’s the case, starting over with a new policy is probably the best option over the long run.  

Consolidate and communicate: consolidating corporate travel into targeted suppliers of travel services like airlines, hotels and rental cars is essential to get preferred rates and save travel costs. At the same time, there should be a communications strategy to explain the nature and rational of the consolidation. Business travelers all have their favorite suppliers but can appreciate the need for consolidation tactics; explaining what and why will make acceptance and compliance easier to achieve.

Use technology: the management company should have a well thought out travel technology strategy that delivers innovation in such functional areas as: simplified booking; real time information on bookings & status; policy compliance; service level monitoring; issuance of travel and weather alerts. 

In particular, travel technology should provide data supporting insight and action based on customer travel behaviors – actions such as exception-based policy re-configurations. For example, restricting choice to lowest airfares would maximize cost control. However, as a practical matter, certain employee roles could easily make such strict compliance a mistake – being late for a key client presentation but saving $50 as an example. 

Having the technology to recognize behavior patterns, then using the data to make sensible compliance adjustments, will enable the right people to take sensible actions – without rewarding others who might simply be in a bind due to poor planning.  

Mobility: a highly functional travel app, customized for the corporate client, will play an important part in the overall travel company's value proposition. In a recent survey, the most useful features of corporate travel apps were real-time flight information (84%) and instant itinerary access & sharing (19%).  Given the growing acceptance of apps, it’s certain user expectations for additional capabilities, particularly around key activities as online booking and itinerary changes, will increase. 

Familiar faces: whenever possible and practical, the travel management company should assign specific agents to handle the support of client business units or departments. Immediately, all travelers in those areas will benefit from, and perceive value in, knowing they have a highly individualized escalation point for critical travel issues. Over time, those agents will learn the nuances of their area’s travel requirements and become a valuable source of knowledge and relationship management. 

Dashboards and reports: the TMC’s technology must support intuitive and insightful reporting on client travel expenditures and behavior. This reporting should be of two types: 1) a real-time dashboards providing instant status on service level performance (SLA), key performance indicators and issue escalation; 2) standard, scheduled, reports that summarize SLA outcomes for contractual purposes and enable TMC/Client management to clearly see how policy outcomes are progressing and base any changes or decisions on accurate and easily understood information.  

Examples of data points that would fall into this reporting scope include: unassisted online booking activity; non-compliance travel costs by type of travel service; unused tickets; trip miles & cost per mile by business unit/department; total savings attributed to compliance; justified (by role exception) lost savings; unjustified lost savings. 

These best practices emphasize the value of sound technology investments and good communications strategies. Despite good execution, these practices could still result in some business travelers encountering booking annoyances and poor travel experiences. But, even with those travel situations, a well-run travel management company will find itself addressing exceptions rather than chronic conditions.