 |
 |
 |
 |
 |
 |
 |
|
|
|
|
|
|
|
|
Travel management is a specialized business function that balances employee needs with corporate goals, financial and otherwise. 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.
The economic downturn has allowed travel managers to take a front and center role within their companies and has made travel management, as a profession, an important part of every top executive's strategic planning. In many cases, travel managers have been asked to lead company-wide efforts to cut travel costs, track those savings and report them back to senior management.
But travel management is still misunderstood and undervalued by some corporations today. Therefore, the role of business travel within the corporate structure must be placed in proper context so that its value can be measured and appreciated.
Travel management plays a significant financial role and can contribute to a corporation's shareholder value. Since the cost of travel is a corporation's second or third largest controllable expense, having experienced travel management professionals manage and negotiate travel-related services provides measurable financial benefits to the corporation. In addition, monitoring and analyzing travel expenditures is essential for realizing cost-cutting opportunities.
In 2002, the Institute of Business Travel Management, NBTA's Education Foundation, conducted a survey of nearly 250 travel management professionals throughout the United States. The survey found that 33% of respondents reported to the Finance Department in their companies more than to any other department, illustrating how strategically important travel management is to a corporation's overall financial strategy.
Traditionally, the corporate travel department works with each department to determine its travel needs and develop its travel budget, based on current spending and planned development. Then, with the consolidated travel needs of the corporation, travel managers negotiate discounts and preferred rates with travel suppliers based on their company-wide travel needs. Corporate travel management professionals are the essential elements to managing the negotiation and review of vendor relationships. By negotiating discounts up front with selected travel providers based on volume and price, companies can maximize the value of their travel spending by fulfilling more of their travel needs through these preferred vendors and negotiated agreements.
In the dynamics that now define the environment of corporate travel management, more corporations have developed preferred relationships with travel suppliers and have moved to negotiate direct discounts with airlines based on volume. Over 90% of NBTA members have negotiated agreements with one or more air carriers, and over 87% of NBTA member companies have sought to negotiate with major airlines as a means to address rising airfares. Relationships are key to successful travel management.
The impact of cost avoidance and what can be accomplished under an effective travel manager is illustrated by an example given by one analyst, that $1.5 million in costs saved due to control of travel means $23.5M less in product sales that a company would have to realize in order to make up the difference. This can be viewed as a return on investment of 17%, contributing substantially to shareholder value. It puts travel management in a very different perspective.
Gathering travel data and setting up travel agreements with providers is important but it is merely the first step to realizing actual financial benefits. Corporate travel managers then are responsible for developing corporate policies that optimize the company's travel dollar. In order for a company to get the most out of their negotiated discounts, policies must be created that compel employees to make their travel arrangements through a corporation's travel department, using these negotiated rates with preferred suppliers.
And policy adherence is essential. Otherwise, the corporation may be wasting money through more expensive bookings with non-preferred travel suppliers. A managed travel program guides employees to travel the way management recommends. By taking advantage of supplier discounts, a managed travel program pays for itself through cost avoidance and negotiated revenue streams (rebates, incentive payments, etc.). For instance, a company may negotiate a contract with its preferred air carrier that offers discounted fares on key city pairs. In exchange for meeting its contractual obligation, the travel department receives overrides, or incentive payments, from their preferred carrier.
While the monetary benefits of a managed travel program to a company's bottom line are clear, there are also valuable strategic, non-monetary benefits that may be less visible. Corporate travel professionals are responsible for providing a valuable service to their customers, the company's travelers. This involves ensuring travel is both safe and productive. Travelers need a smooth, efficient travel process in order to reach a company's business objectives. And during times of national, corporate, or personal crisis, travel management professionals are crucial to reducing the risk to a company and its travelers through employee tracking and emergency assistance.
The corporate travel professional's important role is never more visible than during time of crisis. On September 11, 2001, professionals at all levels realized the enormous non-monetary benefits of their corporate travel departments and the value of the human factor. Lessons learned from that day show that effective communications and tracking systems managed by the travel office are essential for locating travelers, speeding their return, comforting their families and keeping the normal flow of business in times of crisis.
The new security concerns and constant changes in the travel industry have expanded the role of the corporate travel department as a provider of critical information. In a 2002 NBTA survey, 38% of travel managers said they were instituting new travel communication procedures, and 23% said they were revising their current crisis management programs. The role of the corporate travel department has evolved into an information center that provides valuable insights on how to travel safely and efficiently. The travel department can now be seen as a critical segment of any crisis management plan.
Successful travel management also has a substantial positive effect on employee satisfaction and increased productivity. A recent survey of 300 Internet business users revealed that a staggering 89.9% of employees utilize the Internet for personal use, mainly to make travel arrangements. Bypassing the travel manager thus decreases employee productivity. In addition, providing good service to a company's travelers makes it more likely that those employees will book their travel through the travel department, increasing compliance with travel policies and ultimately allowing the corporation to realize greater financial savings.
Today's environment presents real opportunities for travel managers to demonstrate their value to their companies and the industry as a whole, both financially and through traveler efficiency and safety. And with CEOs and CFOs now focused more on corporate travel and its effects on a company's bottom line and risk management, anyone who can deliver accurate data that can strategically help the company chart through tough times will continue to be a valued and key player in any organization. As technology progresses and as there are more and more developments in the business travel industry, corporations will need to rely even more on the expertise, experience and insights of the often undervalued corporate travel manager.
Reprinted with permission from the National Business Travel Association.
NBTA is the corporate travel industry's leading source for networking, advocacy, education, news and information.
