What Do The Best Corporate Travel Programs Have in Common?
If there is any common theme in business travel over the past several years, it can best be described as “change.” While every passing year seems to carry with it some watershed moment for the corporate travel industry, none seems more pronounced than the past 12 months which were highlighted by concerted efforts by airline suppliers to change their content distribution models and organizations whose travelers are demanding better and smarter technology solutions.
These two big changes may seem mutually exclusive, but they are not. Air and hotel providers have historically needed a centralized reservation system that would enable content distribution, the ability to assemble various supplier types into a single traveler record, and provide partners such as TMC’s (Travel Management Companies) the ability to service reservations. These capabilities came by way of the (GDS) Global Distribution Systems but at a cost. The notion of mitigating that cost from a supplier perspective is not new but as the traveler demographic has pivoted from Baby Boomers to Millennials and Gen Z, the perceived value brought by legacy GDS technology is beginning to fade. The result of a changing demographic within organizations may be just the thing to help suppliers start to shed some of its distribution costs through the GDS.
Indeed, the younger generations who are more experienced with technology and more adept at self service are willing to trade some of the service perks in lieu of brand loyalty and a direct relationship with the suppliers they prefer. For the first time I can remember we are starting to see user preference outweigh corporate travel policy and, in some cases, travel policy more reflective of user preferences.
The result is not a wholesale changing of the guard in terms of how travel is managed but it is a significant change. A subset of travelers still strongly desire and need a full service model that requires agent interaction and close support. Another subset of travelers would prefer to be left to their own devices, booking where they choose and taking care of their own servicing needs through the trip. One of the major impacts this will have on the industry is a broader adoption of managed travel particularly among small to mid-market organizations who never believed a managed program was right for their business. The managed corporate travel tent is expanding but the way services and products are being delivered is in a rapid state of change.
Even in normal times, when we think about optimizing our corporate travel programs we always recommend a yearly review from top to bottom and an honest program evaluation. But today, this fundamental shift in user behavior and supplier strategy requires us to take an even closer look at corporate travel best practices and what the best programs have in common.
Travel Policy That Reflects Business Objectives and the Times
Over the past decade the corporate travel business owner has become more business savvy. In some cases, traditionally trained indirect procurement managers have been groomed to take on internal leadership responsibilities for the corporate travel category. In nearly every instance even traditional Travel Managers now report to key business executives and have been pushed to make corporate travel decisions through the lens of the betterment of the company, not just siloed through the lens of pure cost savings and customer service.
How expensive are the routes we are taking on airline number 1 vs. number 2? What impact does the cost basis dealing with air, car, and hotel purchases have on the company’s overall indirect costs? Should I look at T&E related costs when considering how my supplier mix looks when dealing with purchasing direct goods for the manufacturing of my product? Is the return on investment (ROI) sound? How competitive are we in terms of employee retention and how should our travel policy reflect our recruitment and retention goals?
When thinking about travel policy, we tend to think of it in terms of those items that must be defined and managed to help our Travel Management Company successfully implement its solutions. But times have changed. More and more we are seeing bookings through shared economy sources such as Airbnb, Lyft, Uber, HomeAway, et cetera. The Travel Management Company doesn’t book these supplier sources, yet these options are important to today’s traveler and should be reflected in our policy documentation.
Duty of Care
While every company has its own threshold in terms of traveler risk and safety, most agree that, at a minimum, companies have a moral and ethical responsibility to help a traveler in the event of an emergency. Today, providing basic risk management can be as simple as specifically mandating Travel Management Company compliance in a corporate travel policy or by providing technology that enables corporate travel data capture when a traveler books outside of the Travel Management Company. Both options are inexpensive ways to provide a much needed layer to your program that not only ensures well-being but is the right thing to do.
For those organizations that are multi-national or travel to hot spots around the world, a more sophisticated program can make sense. Here, all of the company’s corporate travel bookings are handed-off to a third party risk management provider. These solutions enable traveler tracking to include emergency help, medical attention, hostage negotiations, and real time communications to help the traveler through the particular situation. It is important to review the data hand-off process from the Travel Management Company to the risk management solution provider to ensure both timeliness and accuracy of data. It is also important to recognize that only those reservations booked through the Travel Management Company will make their way to the risk management solution provider. Any bookings made “off-channel” will not be captured.
Well Thought Out Preferred Supplier Program
Developing a preferred supplier program that provides a combination of dynamic discounts, flat rates, and incentives can play a critical role in optimizing your corporate travel program. It is important to understand the drivers that impact changes to your traveling population’s travel patterns. Access to decision makers is critical. If your company is planning a strategic key acquisition, you need to know and be prepared. Conversely, if your company is divesting of certain assets you also need to be aware. Airline deals in particular do not happen overnight. The airline suppliers require data and time to consider discounts and incentives on particular routes and you will need time to consider how much influence corporate policy may have in driving traveler behavior to maximize the preferred vendor relationships.
It is also important to understand what motivates your supplier partners when negotiating deals. Today, suppliers have multiple layers of cost including GDS distribution fees and incentives paid to the Travel Management Company who actually books the reservations. For those travelers that do not book through the Travel Management Company for whatever reason, keep in mind that booking directly on the supplier website typically will not enable you to enjoy the same discount structure provided for in the preferred agreement unless this is something you have taken into account when initially structuring the discount.
Technology that Helps Drive Corporate Strategy
It has become cliché to say that organizations should let corporate strategy drive technology use and not the other way around but in the corporate travel industry there are a lot of “shiny objects” that may look really good but may not add value to your travel program.
Today, there are more third party technologies than ever that can integrate seamlessly into your program. Choose wisely. Have a clear understanding of your company’s travel behavior, are your travelers early adopters with technology, what other areas of your business have been automated, and are you capturing enough data including both Travel Management Company and off-channel booking data to make well-informed decisions?
Historically, your Travel Management Company developed much of the technology its clients required to run their programs. Today, a lot of the technology is coming from third party technology providers. This shift has largely been beneficial to corporate clients because it provides them technology built to integrate into their existing solutions and built by a company whose sole focus is that one piece of technology. Use your trusted Travel Management Company relationship to help evaluate technology options in the marketplace.
Change will continue to come fast to the corporate travel industry that has seen more investment in the past few years than ever before. We expect to see the historically under-served small to mid-market ramp up and with it even more options for all corporate travelers. Staying on top of these changes can be difficult, but the result will be better traveler experience and increased efficiencies. Good news that we all need for sure.
KesselRun corporate travel consulting has been working with companies to ensure their corporate travel program is performing well. Learn more about our team and how KesselRun can help you.