As business expands worldwide, travel management is pointing in new directions to navigate change
The world of travel management isn’t getting smaller – it’s getting smarter. Leading multinational corporations are rethinking their managed travel programs, and global travel management companies are adapting to meet the new challenges and rising expectations.
In the process, adaptation strategies vary. But while one size does not fit all, most strategic moves address a common goal: staying nimble in an unpredictable marketplace while making savvy travel management decisions.
Major OutsourcingOne of the most dramatic changes has been the recent move by KBR, a leading oil and gas engineering and construction company, to drop its in-house travel management in favor of TCG Consulting. Through an agreement announced this summer, TCG is now overseeing KBR’s corporate travel, meetings, payment and expense management from its new office in Houston.
Insiders point out that the move comes at a critical time, given the huge drop in oil prices and the likelihood of oil prices remaining lower for the foreseeable future. The move promises not only to meet short-term needs for reducing costs, but also to create a strong foundation for clients to scale and drive greater profitability once oil prices begin to increase.
While the repercussions of the huge drop in oil prices can’t be ignored, the development actually had deeper roots, according to Albert Teras, Global Managing Director, TCG. He notes that the move was being considered 18 to 24 months ago when oil prices were still high. At the same time, it addresses the financial reality of the scope of travel costs for any major company, which is typically the second largest indirect expense an organization has, often approaching two percent of total company revenue.
In addition to cost reduction and avoidance, he adds, the move supports strategic integration and process efficiency strategies while ensuring a positive traveler experience. “KBR is a long-time client with whom we’ve seen success over the years,” he says. “They were looking to do a total strategic review and optimization. The goal was not just to take out costs, but also to insure operational continuity.”
The change was accomplished with no disruption for the KBR traveler, Teras says. And former members of the company’s travel team were hired by TCG. “It’s a win for the travel team,” he says. “They can serve the KBR traveler as before, and their seasoned expertise can also be called upon with clients in other industries and other geographies.”
Teras notes that a trend emerging in corporate travel is a shift from the tactical to the strategic level in an organization, with more senior leaders having oversight of corporate travel than in the past. “One of the things we hear most from most senior people is that travel needs to become more strategic,” he says. “A travel program aligned with the strategic imperatives of a company makes sense.”
In the process, it has become apparent that efficiency in this area is not only about the expense involved. “It’s not just cost take-out – it’s the user experience,” he says. “How employees view travel is a big part of how they view the company. It becomes an important recruitment and retention tool.”
Multiple ResponsesOf course other developments which may not seem as momentous also reflect the growing challenges of global travel management. “Clients are always looking at ways to develop their travel programs, whether that’s saving money, improving traveler satisfaction, enhancing safety and security, or increasing compliance,” says Ben Scott, vice president of marketing for CWT Americas. “And global travel management companies are striving to help clients make the most of their programs.”
One approach is investing in new products and services. An example is CWT AnalytIQs, a new reporting tool which proactively identifies savings, safety/security and policy opportunities for the travel manager. The company has also developed CWT To Go, which gives travelers useful tools and information for making the most of a trip, all at the convenience of their fingertips.
CWT also releases several reports each year to help clients plan for the year ahead. This year included Travel Management Priorities for 2015, showing what travel managers think will affect their programs this year, and 2016 Global Travel Price Outlook with GBTA. Another report is Faster, Smarter, Better? a study into the five trends (mobile, customization, the sharing economy, new booking methods and new payment solutions) predicted to affect corporate travel in the coming months.
Scott points to mobile technology as a key in the evolution of travel management. “In business travel, company travel policy can have a massive impact on the booking experience of travelers, as they look for the same ease they experience when booking their leisure trips,” he says. “Today’s travelers want information at their fingertips, anytime, anywhere.”
He says that a mobile app is the most efficient way to meet this demand, providing the means for integrating information into the traveler’s life in the most seamless way. When his company recognized the need for an app for travelers on the move, it introduced CWT To Go, designed to assure that travelers get the convenient service they crave, while travel managers are reassured that they stay within company policy.
Scott notes that CWT has placed a priority on managed travel apps. Earlier this year saw the launch of hotel booking. Ground booking is currently being piloted, and plans are to pilot air in the near future. Other current functionalities include itinerary management, mobile flight check-in and syncing meetings from users’ calendars so that all trip details (leisure as well as business) can be maintained in one place.
He adds that over the past decade, travel management companies have shifted from simply providing travel options to developing personalized travel solutions. “Mobile technology quickly penetrated the travelers’ lives, causing travel companies to react,” he says. “Nearly every traveler has a mobile phone and most business travelers have a smart phone, a tablet or a laptop – or all three.”
The goals of corporate travel programs have not changed, says Craig Bailey, BCD Travel president, North America. Priorities are still keeping travelers safe and productive, and maximizing the company’s return on travel investment.
“I see a mature industry continually searching for ways to improve upon the previous year’s key performance indicators,” he says. “That means we must challenge our assumptions and test new ways of doing things. I think our most innovative travel managers are finding that managed travel still offers great value, so they’re looking for ways to manage travel even better.”
Responding to evolving technology remains an ongoing challenge, according to Christine Ourmieres-Widener, chief global sales officer for American Express Global Business Travel. “Today’s business travelers are well connected and are empowered by technology, thus driving new behaviors and expectations,” she says. “Digitization and the online space are changing the way customers expect TMCs to service them.”
At the same time, she says globalization is driving changes in how TMCs are dealing with the development of technology. And all of this affects the way in which TMCs approach new solutions for their customers, even when economic conditions are challenging.
“Traditionally, difficult economic times led to cuts in areas such as T&E,” she says. “In recent years, however, customers have become sophisticated in understanding their travel program spend and have found ways to sustainably reduce costs by changing the parameters of their programs. As a result, cuts to travel programs are not necessarily the first consideration.”
She too sees a swing away from tactical and transactional toward the value of aligning travel with larger strategic objectives. “What we are seeing now is that travel spend decisions are in close alignment with business priorities around company growth, priority markets or market expansion,” she says. “Travel is often viewed as a strategic driver of those business goals.”
Economic conditions and the strength of currencies in certain countries can also affect how global companies deliver their products and services, ultimately impacting the direction of their businesses, Ourmieres-Widener says. She notes that GBT works closely with its customers to provide deep insights, industry expertise and solutions that optimize program effectiveness, enabling global reach and safer travel experiences.
Corporate travel programs are also demanding greater access to more powerful data and meaningful insights. “Smart travel program management is often contingent on access to comprehensive, actionable data,” Ourmieres-Widener says. “Access to expense and travel data offers companies and travel managers greater visibility, as well as more opportunities to optimize their programs.”
She advises travel managers to take the broad view, noting that many companies see their travel programs as a contributor to overall employee satisfaction and talent retention.
“Travel managers should keep a clear focus on maintaining the traveler experience while managing cost pressures,” she says. “They should also ensure that a change in policy creates a better traveler experience by prioritizing new, innovative ways of improving the experience through mobile, traveler care or continuous after-hours support.”
She adds that travel managers should have flexible sourcing strategies that adapt to the changing marketplace, rather than being tied into long-term agreements. “It’s also important to have technology that enables travelers to be more self-sufficient,” she says. “This reduces the need to change staffing with changing conditions.”
The Innovation AngleFor travel in a new normal, innovation is the key to thriving, says Ron Dileo, executive vice president and chief commercial officer at Altour International. “Be willing to try things,” he advises. “There are some innovative travel managers out there – have some conversations with people who are willing to try new approaches.”
Of course innovating isn’t necessarily easy. “It’s risky,” Dileo says. “Travel is a very sensitive function. When something new works, everyone thinks you’re a hero. If it doesn’t work, people say, ‘What are you doing?’” But the risks are generally worth it, he adds.
One path to innovation is to take advantage of generational differences. “There are five generations of people in our business right now,” Dileo says. “There’s much to be taken from each of these generations.” Younger managers, for example, may be more open to change; at the same time, the experience of more seasoned employees can be extremely valuable.
While innovation is a key driver for today’s travel programs, Bailey suggests a continued emphasis on some of the basics. “Pick the low-hanging fruit first before breaking out your ladder,” he says. “That means grounding your program in sound travel policies, establishing well-negotiated supplier relationships and driving up online booking rates.”
Once the fundamentals are in place, new technology can be leveraged to achieve even more savings and to bring under management such nontraditional, if not challenging, categories as dining, airport-to-hotel transportation and mobile network costs. And with mobility, Bailey says, it’s possible to “use modern communication channels to influence traveler buying decisions in real time.”