Business travel is changing fast. Now’s the time to establish the corporate travel department as a strategic partner.
Which of the following statements is true?
1. The corporate travel department’s job is to process upgrades for our travelers.
2. Well-managed travel programs can create positive return on investment (ROI) that flows right to the bottom line.
3. The corporate travel department can offer alternatives to travel besides just saying “no” to any travel.
4. Travel distribution changes will happen, there will be more ancillary fees in the future, and the relationship between travelers and travel suppliers will be different.
5. All of the above.
I’m sure you have figured out by now that the answer is #5 – all of the above.
Actually, these five statements make a timeline of how the corporate travel department has morphed from the keeper of upgrade certificates to a valuable, strategic unit within a company. Of course, this metamorphosis hasn’t happened easily, it hasn’t happened overnight and in some cases it hasn’t happened at all. But nevertheless, it should.
Every corporate travel department should be viewed as a corporate asset that can add value to travel, improve travelers’ experiences, and make them more productive, all while saving the company money. Yes, saving money and improving traveler experiences are both important and they do go together. But to see how all these things work in tandem in today’s business environment, first we have to take a trip just a few years back in time, and remind ourselves of those magical relics that used to be the corporate travel department’s greatest strength – upgrade certificates.
The Hero Always Wins - SometimesBack in the good old days, when airlines were vastly over-capacity and basically had hourly service to every major business city pair, when hotels were being added on every street corner as if they were gas stations, travel suppliers had to get creative to get business in the door. So corporate discounts were plentiful and extremely generous. Does anyone remember the 90s when corporate airline discounts were in the 40-percent-plus range for domestic and international fares? I do. And I can tell you, it was a great time to be a travel manager. Travel managers could negotiate unbelievable discounts and, on top of that, have airlines and hotels literally throw stacks of upgrade certificates at them to pass on to their travelers. And believe it or not, some of the upgrades could be confirmed at the time of ticketing. Everyone wanted to be the travel manager’s friend to snag one of those confirmed upgrades for the next 10-hour flight to Asia.
The travel manager was a hero – most of the time.
But passing out upgrades was actually very stressful. What if travelers couldn’t get confirmed in advance? What if you ran out of Asia upgrades and only had European upgrades? What if you were saving millions in airfare only to have a senior executive bumped from first class? What if not having those upgrades started to affect how the travel manager’s performance was viewed by the C-suite? This was the case for many travel managers. Being viewed as the upgradehub could be hazardous to your career – and often was.
Meanwhile, off the radar of most travel managers, other factors started to shift beneath the surface, transforming the business landscape and the travel department’s role. It seemed one day we woke up and the travel world had changed. Airline commissions were gone. Those magnanimous airline discounts were reduced to a paltry one or two percent on restricted fares. Capacity was cut. Precious upgrades were scaled back and confirmed upgrades became as extinct as the dodo bird. For the most part there were no warnings of these changes. They just happened.
The biggest tool a corporate travel manager had to curry favor with senior executives – the upgrade – was gone. The millions in airfare savings vanished with the advent of single-digit discounts. Even the promise of the corporate travel department’s operating as a profit center disappeared with the elimination of commissions. The end result was that a lot of corporate travel departments and travel managers went away as well. They were no longer needed because the savings and upgrades were gone and travelers could book for themselves on the Internet.
Polishing the Crystal BallHopefully the history lesson didn’t get too long-winded or discouraging, because it is important to see where corporate travel management has been so we can see how it can prosper and flourish in the future. With the transformation of the business model, something else started to change; corporate travel management as a discipline began to get a reputation as a strategic partner within the company.
This sentiment has strengthened during the recent challenging economic times. Travel managers have taken on a consultative role, advising upper-level management on ways to support cost-containment initiatives within their companies. Travel managers have been able to work with various divisions to assess and develop tactics to reduce certain travel, such as administrative travel, while figuring out ways to support revenue-producing travel that creates a positive ROI for the company. Travel departments are now working with their IT groups to support the use of travel alternatives such as video conferencing and telepresence suites.
You don’t need to be psychic to see that there are more developments coming for the industry, so we need to keep this momentum going. In the past, transitions in the industry weren’t, for the most part, announced in advance; but this time, most of us can anticipate that profound changes are in the winds.
For example, all the signs point to a major revolution in the decades-old distribution model. Some argue that this might not happen and that it’s a distraction to pay attention to the noise. Others will wait until it does happen and then have to play catch up. Recently I moderated a panel discussion on distribution and was surprised to learn that most of the audience hasn’t been following the debate about how travel inventory is managed. This concerns me because this is a major industry change being telegraphed in advance.
Other harbingers of change may be even more fundamental, such as the proliferation of smartphones, giving travelers unprecedented access to information and thus to ways they can improve their own travel experience – no travel managers need interfere. Another significant shift is how travel suppliers are pricing their products, meaning we’ll see additional ancillary fees in the near future.
Winds of ChangeWe know the winds are blowing, and can anticipate them. Yet some in our industry have refused to believe that these transformations will happen, and others underestimate the impact the changes will have on their programs and the evolution of managed travel as a profession.
The next few years will allow the corporate travel manager and the corporate travel department to further cement their role as valuable strategic partners in the company. Our industry sits on the cusp of innovation that will revolutionize how travel is booked, how travelers are better accommodated beginning with booking through the completion of their trips, and how using travel alternatives will become a normal business practice.
Corporate travel managers should be leading discussions with their travel suppliers to learn what suppliers plan for distribution and pricing. Corporate travel should be embracing mobile capabilities, and helping travelers use smartphones and other still-on-the-horizon technology to improve their travel experience. And travel managers should be working with their IT groups to better link virtual meetings to the travel-booking process to reduce travel by providing effective, well-supported alternatives.
Corporate travel managers can’t be passive participants in this process. They can’t let the various travel suppliers make changes to the model without having a voice in the process. The travel distribution “noise” about direct connects and the GDSs is not going away this time – it’s real. The “noise” about travelers using unauthorized smartphone apps to take control of their travel experience is not going away – it’s real. The value of linking virtual meetings as a positive travel alternative – it’s real.
The most effective corporate travel managers will have a well-defined plan to tackle the future and set their corporate travel departments on a strategic path. They will be pushing for innovation both externally and internally. All the while keeping their eyes on the current operation – like the old adage of changing the tire while the car is going down the road at a hundred miles an hour.
If the corporate travel manager can truly grasp this opportunity to position the travel department for the future, continuing on the strategic path of improving the travel experience while keeping costs in check, everyone will soon forget about the good old days of high discounts and unlimited upgrades. That train has left the station. Now it’s time to get on board the new train driving innovation in the business travel industry.
Greeley Koch is director of strategy development for Acquis Consulting Group. He has more than 20 years of experience, bringing strategic insights andinnovative thinking to corporate travel.