Benefits a Managed Travel Program
Brings to Your Company
by Marina Velikova for the
National Business Travel Association
In a time when
videoconferencing has become a reality, Internet trip booking has gained
popularity, and the economic recession compels companies to cut travel
costs, some senior mangers might have called into question the role
and value of the managed travel program at their companies. The decision
whether to have such a program or not may depend on the specific circumstances
at each company but it is essential that those involved in the decision
making process are familiar with the full array of benefits that travel
management brings to a company.
to representatives of several different organizations from all over
the country, NBTA has found out that managed travel programs still bring
significant benefits to companies. Both travel and senior managers shared
that travel is still an essential part of doing business and that the
role of the corporate travel department extends well beyond simply booking
flights. As it became clear, travel management ensures cost tracking
and control, facilitates adherence to corporate travel policies, realizes
savings through negotiated discounts, and serves as a valuable information
center for employees and managers in times when travel is not as smooth
and carefree as it used to be.
Control and Policy Adherence
the cost of travel is a corporation's second or third largest controllable
expense, monitoring and analyzing travel expenditures is essential for
realizing cost cutting opportunities. When senior managers at Mitretek,
a non-profit research and consulting organization, gathered last year
to discuss the importance of their managed travel program, they came
to understand that it was a valuable cost-control tool. "You can
control costs only if you have the information that you need,"
says William Franklin, travel manager at Mitretek. "Our senior
management realized that a managed travel program was a necessity. They
were 100% behind the decision to continue with it." And Mitretek
is not the only organization realizing this benefit.
control and tracking have been pointed out by all companies as an important
reason for and benefit of having a managed travel program. Gathering
travel data and setting up lean travel policies is important but it
is only the first step to realizing actual financial benefits. Policy
adherence is the other essential factor. Although some companies in
search of fare discounts contemplate allowing employees to book their
trips independently on the Internet, many avoid this costly path because
corporations might loose control over adherence to corporate travel
policies. Having a centralized travel department can induce employees
to travel the way management recommends.
this year for example, Iomega, a worldwide technology corporation of
about 2,000 employees, is introducing a cost-cutting travel policy and
its travel department plays an essential role in implementing it. Booking
through the corporate program, all employees traveling overseas will
be getting economy instead of business class tickets. "Travel management
can empower corporate managers by giving them visibility to costs and
patterns within their department and helping them find solutions to
trim their budgets while still getting their job done," says Antoinette
Cirone, Travel Program Coordinator at Iomega Corporation.
Bottom Line: Managed Travel Program Costs vs. Company Travel Savings
over costs and policy implementation is needed, but at what cost? Is
it feasible to have a managed travel program now that videoconferencing
is an alternative to travel and that the Internet offers unprecedented
managers say, it is still worth having it. "It takes away the need
for employees to handle their own arrangements," says Anne Englander,
a senior manager at International SEMATECH, a Texas-based international
research consortium of thirteen semiconductor manufacturing companies,
with 600 employees. "It takes advantage of supplier discounts
and it pays for itself through cost avoidance and negotiated revenue
streams [rebates, incentive payments, etc.] On average we realize negotiated
savings of 15%, that is, cost avoidance for air, car and hotel,"
Oki Data Americas Inc., savings realized through the corporate travel
program account for even larger percentage of about 30%-40%, according
to David Jones, Manager of Corporate Services. A subsidiary of a Japanese
corporation, Oki Data Americas Inc. markets printers and facsimile products
to businesses in North and South America. About 200 of its 500 employees
travel during each year, taking mainly customer-related trips for sales,
training, support, and other purposes. "We do use videoconferencing,"
says Jones, "but travel still plays an important role in doing
business at our company. Face-to-face contact is essential for our business
relationships with our best customers."
companies, however, might have different ways of doing business, which
prompt them to look for alternatives to managed travel programs. They
might be lured by low Internet fares to let employees shop online for
themselves. Such an approach might seem to be a feasible alternative
to a corporate travel program but it hides some potential disadvantages
that experienced travel managers warn about, and that a senior manager
might want to consider.
employees occasionally find online fares cheaper than those negotiated
through the corporate travel program, Internet deals are usually highly
restrictive and therefore not appropriate for business travelers. Cheap
Internet fares are often rigid in terms of schedule options, and does
not have favorable refund and upgrading polices. While a few employees
can strike a deal, many others may have to purchase services at much
higher price if their schedules do not fit the deal options.
addition, when business trips need to be rescheduled urgently, the company
might end up not only losing the savings but also actually incurring
a loss due to non-refund policies and penalties. Adding the fact that
arranging a trip is a time consuming process taking employees time,
it turns out that in most cases the overall savings from a managed travel
program outweigh those from independent Internet purchasing.
the Immediate Impact on the Bottom Line
the monetary benefits of a managed travel program to a company are clear,
there are also valuable strategic, non-monetary benefits that are less
visible. At least they were before the tragic events on September 11th.
On that unfortunate day, travel managers at all levels realized the
enormous non-monetary benefits of their corporate travel departments
and the value of the human factor. "The importance of being able
to contact our travelers and report on their well-being was recognized
by our executive staff as they communicated with the rest of the company,"
says Antoinette Cirone. "The role of the travel department can
now be seen as a critical segment of any crisis management plan."
And there is little doubt that any senior manager would agree with her
new security policies and constant changes in the travel industry have
changed the macro environment in which companies operate and have expanded
the role of the corporate travel department. Its role as a provider
of critical information is now more important than ever before. Mark
Johnson, Corporate Travel Manager at Cessna Aircraft Company, describes
this recent change: "The role of the department has further evolved
into an information center that provides valuable insights on how to
save money when traveling, and allows the company to know specifically
where any traveler may be located when on the road conducting business."
management at Cessna Aircraft Company has recognized the full array
of benefits that a managed travel program brings to their organization.
Thus, Cessna has developed a new approach to corporate travel. As Johnson
says: " Since the September 11th incident, all travel must be booked
through the travel department - no exceptions what-so-ever."