Saving money on business travel: Is there a better way? Where do I start?
6 actionable strategies from your Cost Savings Experts at Elite Travel Management.
Do we really need to spend this much on travel? You’re not alone in wondering. Oftentimes, business travel is one of the top three line items against a company’s bottom line, so it’s a valid area to focus on. Why has your company not looked at your $200,000, $500,000 or $5,000,000 corporate travel program and evaluated to reach better savings? Why is there an approval process to purchase a new office desk, but a $2,000 company business trip can take place based on the preferences of a single employee? It’s likely that similar questions have led you to this article.
With many different suppliers involved with your company travel program, like airlines, hotels, car rentals, AirBnB and car services (just to name a few), determining where to begin can be a daunting task.
So, what can you realistically save on?
First thing’s first: Defining savings isn’t as clear cut as it may seem. Many individuals will immediately focus on hard dollar savings solutions. For example: “How much can we save on a hotel room?” or, “what discount will we receive on a flight”? And hey – those are very valid questions. We’ll break them down a little later, but let’s start with the areas of focus that will lead you to surefire success. We’ve even ranked them in order of % of savings opportunities:
1. Uncover and intervene on traveller behaviour
Understanding the patterns and approval process used by your employees will help you pick up on some travellers booking whatever they want, and others spending money as though it’s their own. Our number one savings tip is to implement (or review) a company travel policy that outlines guidelines for booking travel. From there, ask your Travel Management Company to report back on who’s booking outside of the policy, and why. Often, when travellers encounter new travel policies or are required to state why they have booked outside of policy (through automation), it prevents them from booking more expensive suppliers. When paired with the right tools, this understanding of traveller behaviour unlocks the number one savings opportunity for your business.
2. Consolidate your internal resources
Travel is a complex area of your organization as you do a lot of it. We’re here to save your company money, and internal resources dedicated to travel is often one of the major costs. Time is money! On top of your company’s corporate travel line item are all the wages that go towards supporting it. When adding up the salaries of all those who book travel, negotiate corporate rates, chase up hotel invoices, reconcile statements and more, it becomes clear how many internal departments are a part of your company travel program.
How about travellers who book their own trips? Did you know the average traveller spends 2.5 to 3 hours researching and booking company travel? At their hourly rate, it’s easy to do the math and realize this soft dollar savings quickly amounts to real money.
We’re not saying to remove any jobs here! Our suggestion is simple: Consolidate all duties to one internal employee at your company who works with one Travel Management Company. When we get to Travel Management providers and the anticipated fees, you will see the savings are undeniable.
3. Take full advantage of your company’s airline credits
How much does your company spend on airline travel? Of that, how much is lost each year in expired airline credits? On average, companies that do not monitor airline credits lose 15% annually of their total air travel spend. When airline credit is available, is it being used to its maximum value? What happens when an employee leaves the company with a long list of unused airline credits?
Let’s be honest: The airlines will not be calling you anytime soon to make you aware of a credit that is about to expire. To make the most of your company’s airline credits, implement a program that proactively advises each traveller on available flight credits along with a company-wide monthly credit report.
4. Use a trusted expert to rise above corporate rate myths
Are you surprised it’s taken this long to bring up corporate rates? It’s true: The most common misconception in corporate travel is to start with corporate air, hotel and car rental rate programs.
Use an expert in corporate rate negotiations. You likely have an IT department or a service provider that specializes in IT. The same goes for HR, finance and sales. So, why put corporate rate negotiations in the hands of someone who doesn’t live and breathe business travel?
If you currently work with a Travel Management Company, are they negotiating the best possible rates? Even when using an expert, ensure it’s a brand and team you trust. If you already question whether your existing corporate rates are truly the best available to your organization, you’re likely on to something.
Did you know the best possible corporate rates are based on your individual company travel spend, and not from what a Travel Management Company may sell to you as “exclusive” savings? The fact is, suppliers that work with one Travel Management Company want to work with ALL of them! Don’t be fooled by “global airline rates” and “tens of thousands of hotel property discounts.” For the best possible savings, work with a Travel Management Company you know and trust to follow through on rate negotiations.
To get even more specific:
Airlines: Choose one preferred airline, and aim to shift market share to that one provider. Airlines often provide increased corporate rates based on % of market share increase, rather than airline revenue commitments alone.
Hotels: Involve a Travel Management Company early in the process when negotiating hotel rates. By using the expertise of a third party, they will operate in the best interest of your company. With many properties, your Travel Management Company can benchmark based on other client rates earned for similar spend. Hotels may ask you to contact them directly to avoid owing commission to a Travel Management Company. However, that is a step in the process you are looking to get rid of!
5. Ask your expert for proof of savings
A supplier or Travel Management Company will commit to (for example) 2%, 5% or 15% of savings – the numbers will vary. Ask your provider to clearly prove these savings after the first six months of working together. As the client, you deserve proof of walking-the-talk when it comes to your bottom dollar.
6. Understand the realities of Travel Management Company service fees
Organizations often focus on a Travel Management Company’s booking or service fee first. We’re here to de-myth service fees:
Service fees: Service fees will typically equate to no more than 2% to 3% of your company travel spend. On a $1,000,000 travel spend, that’s less than $30,000 per year.
Hidden fees: Are there hidden fees? Not all, but some Travel Management Companies and Travel Agents will mark up your travel and offer less in fees. Do your research!
Low fees: Much like vehicle makes and models, not all Travel Management Companies are created equal. Low fees could indicate that your provider does not have staff to be available when you need support most. As the old line goes: You get what you pay for. This is especially relevant in corporate travel.
Ready for your free company travel audit?
There are many moving parts to driving down your company’s travel spend. At Elite Travel Management, we’re experienced in doing just that – with commitment to business with integrity every step of the way. Our #AskUsAnything program encourages all travellers to lean on Elite Travel Management as their trusted travel resource.