As the economy strengthens and market conditions rebound, businesses should focus on strategic travel management to drive cost and time efficiencies. For exporters conducting business across borders, a strategic approach to travel management will help to create savings as the market shifts into a new cost-cycle phase, following the Global Financial Crisis. The most effective way to contain costs on your travel, whether your business is in the small to medium or mid to large market, is to use the expertise, travel information intelligence and negotiating capabilities of a travel management company (TMC). An experienced TMC can help to guide you on all aspects of your travel program including bookings, visas, insurance, expense management and most importantly travel policy development. Working closely with a TMC will enable you to implement procurement strategies that will continue to generate savings for you as the market recovers, demand increases and prices rebound. Corporate travel specialist FCm Travel Solutions recommends exporters focus on four main areas of their travel program to generate immediate and longer term travel cost savings.
1. Demand management
The overall efficiency of your business travel is determined largely by your corporate culture. Employee attitudes towards when, where and how they fly, the airlines they choose to fly with and the hotels they stay in can dramatically affect the overall cost-effectiveness of your travel. To help reduce unnecessary costs, it is essential your organisation fosters an internal culture that supports a consistent and centralised approach to travel. Demand management is a holistic approach that not only addresses culture but also looks at factors such as the need for travel, volume and price. By applying demand management, you can improve how your business travels and manage your program to suit market conditions. Demand management involves * assessing how people in your company travel. You can do this by working with a TMC to pinpoint areas where costs can be reduced * considering what style of travel you value the most. Is it productive, flexible and safe business travel for your people or are your priorities focused on booking the lowest cost travel options across your air, hotel and car hire needs? * creating a central travel policy that guides the way everyone in your organisation travels and provides greater ability to negotiate more competitive rates. In a changing market it is crucial that everyone abides by the policy to achieve maximum savings.
2. Air travel
Air travel accounts for the vast majority of all corporate travel related expenses. Because of this it’s crucial that companies work on streamlining this aspect of their travel program to combat changes in market conditions. To leverage the most value from your spend on air tickets, FCm Travel Solutions suggests streamlining your air travel by working with your TMC to source the lowest logical airfares-also known as Best Fare of Day. A Best Fare of Day policy means a company will select the cheapest fare as offered from across a spread of suppliers at the time of booking. Referred to as an ‘open sky’ policy, this strategy ensures businesses maximise the discounts offered through low-cost fares. It’s also recommended that businesses include guidelines in their travel policies around advance purchase. Encourage staff to plan their travel and book air tickets as early as possible to secure early booking discounts. Businesses can also consider using budget airlines for domestic travel and using more cost effective classes of travel to generate extra savings eg book Economy tickets for domestic flights, Premium Economy where available and Business Class instead of First Class.
The key indicators of growth in the hotel industry including occupancy, average daily rates and revenue per available room are increasing across many global markets. As a result of increased demand and minimal new supply, hotel rates are expected to rebound during the next 12 months, with Asia leading the way. Organisations can consider mandating that all company hotel bookings go through your preferred TMC where possible, as this enables your TMC to negotiate using consolidated figures on your room night volume. FCm also suggests that now is the time you should be working closely with a TMC to identify how you can get the most value out of your hotel and accommodation expenditure. Ask your TMC to assess your room night volume as a way of boosting your rate negotiations with preferred hotel suppliers. Identify where your people are staying to determine whether more cost effective hotels can be booked that are just as convenient. Negotiate on the total cost of your accommodation by including value added services specific to your company’s requirements (eg. Wi-fi, breakfast, laundry etc. Monitor your organisation’s compliance to your specific hotel program by identifying leakage and lost opportunities for savings. When staff book their own accommodation online, rather than using your preferred TMC, it makes it more difficult for organisations to track and monitor their spend.
Benchmark your hotel rates against similar sized clients in the market to ensure your rates are competitive relative to current market conditions. This is important in a rebounding economy as rates can change as a result of tighter occupancy. Ask your TMC to re-negotiate your company’s specific hotel rates if they are found to be uncompetitive.
4. Ground transport
There has been positive growth in the car rental industry which means organisations may need to call on the expertise and negotiating power of a TMC to secure the most competitive rates and up-to-date advice. When it comes to ground transport, there are plenty of options to get you from A to B. But for cost conscious exporters looking to optimise their travel spend, it’s not simply a case of first cab off the rank will do. Like every other aspect of corporate travel, ground transport must be managed strategically to contain costs. Effective strategies to drive savings on ground travel include: Businesses that use car hire frequently can consider consolidating their car hire with a preferred supplier to leverage corporate rates and customer reward and loyalty programs Reducing the size of your hire car from premium or luxury to economy, compact or intermediate. This not only saves money on the cost of the car rental but also economises on fuel If travelling to two or more destinations that are a fair distance apart or in regional locations, consider car hire rather than catching taxis Refuelling before returning your vehicle to the car hire depot Checking for toll roads if you are travelling in foreign cities Asking for GPS systems to be included in your car hire rate Checking if insurance excesses are already covered in your company travel policy before paying at the counter to save paying twice If flying internationally, check if the airline has free door-to-door transfers included in the fare. Alternatively, check if a hotel offers airport pick-up. As changes to demand and supply dictate new market fluctuations during the next six to 12 months, businesses will need to take a planned and measured approach to buying travel to contain costs. And while there are many strategies to increase savings on your travel program, there is no one-size-fits-all solution. Every business will have different requirements and it’s a matter of working closely with your TMC to define what strategies are best suited to your travel needs. -Sally Gordon is the communications manager for FCm Travel Solutions. www.au.fcm.travel