Steve Reynolds is founder and CEO of Tripbam
Corporate travel management has always been a balancing act between cutting costs and looking out for traveller safety and wellbeing. It’s no surprise that during Covid the industry turned its full focus to duty of care. Fewer people were travelling, so programme managers eased cost restrictions in favour of measures that would make the people who still needed to travel feel more comfortable doing so.
What is surprising is how quickly the game has changed again. In speaking with travel managers in recent weeks, it’s become clear that the new directive for corporate travel is to save money and get the greatest ROI for travel. Wellbeing is back down the priority list.
What’s driving this rapid shift? Company travel budgets for this year were set in late 2021, just as the Omicron variant was making its way across Europe and the US. Many corporate travel managers anticipated costs and bookings would both increase but that they would do so slowly, so they set their budgets at 50 per cent of 2019.
Few predicted where we’d be now, with rapid increases in travel volumes combining with even faster increases in rates and fares. Across most major markets in Europe and the US, rates are well above 2019 and continuing to go up.
The result? 2022 travel budgets are about to be blown and we’re only halfway through the year.
Here’s the point where you, travel manager, may be asking what you should do. First, don’t panic. Now’s the time to earn your keep. Second, make the mental shift from traveller wellbeing to cost savings. Create a list of tasks and recommendations for how to generate more value from travel budgets. Trip avoidance should be top of the list. Implement additional budget approval steps to make sure travellers are only taking trips that are necessary and replacing the rest with virtual meetings.
Next, get the communication channels flowing. Discuss trip alternatives with budget managers to get more value from travel spend. Let them know what’s coming – high costs and low availability – and that you’re there to help.
Now is the time to try initiatives that wouldn’t have been considered in the past. Think hotel rate caps applied by month and by market, implemented at the point of sale to both deliver control over dynamic hotel discounts and also push travellers down-market to lower-cost alternatives (in which case, some travellers may not want to make the trip). For Tripbam clients, we’re recommending using clusters of preferred hotels with reshopping to drive cost savings, shift share to preferred suppliers in key markets and keep rates below caps.
Source new discounts as you see volumes appear – it’s called continuous sourcing and has been used across non-travel procurement departments for years. Identify new markets for hotel deals and new city pairs to add airline agreements. Strive for at least 80 per cent coverage driving at least 20 per cent in cost savings when compared to public rates.
Use rate and fare availability auditing to monitor every negotiated booking for compliance and grade suppliers on how well they deliver against LRA. If the discounts aren’t being applied or aren’t generating the expected savings, don’t hesitate to contact the supplier (NAM) to get things on track.
Finally, now is the time to show the value of next-generation travel management across the organisation. Ask for the budget to implement new solutions to take your travel programme to the next level. Technologies including:
• Fare and rate re-shopping with automated rebooking. No agency touch fees required;
• Hotel clustering (only include preferred hotels) and alternative airline routing (international);
• Auditing every contracted booking for compliance;
• Benchmark your discounts by market against other companies with similar volume within that market or city pair. If below the benchmark, renegotiate the deal;
• Consider market share-based agreements to obtain additional discounts taken away due to lack of volume;
• Continuously searching for deals that need to be improved or where coverage is lacking.
These solutions will drive significant cost savings (20 per cent or more) and maximise the money spent. You can’t be a travel management hero if you don’t have the solutions and analytics to fight the battle.