Whilst the COVID-19 pandemic has caused companies across the globe to restrict non-essential business travel, it has also served as a reminder to many about the importance of having a consolidated travel program.
Over the last few months, as countries began closing their borders and airlines canceled thousands of flights, organizations have hurried to locate and evacuate their traveling employees. At the same time, they have also sought ways to track unused and canceled bookings in an effort to secure compensation from airlines, hotels and other suppliers. In this fluid and fast-changing environment, it’s likely that companies who have taken a more consolidated approach to managing their travel have fared better than those with more fragmented programs.
What does consolidation mean?
Consolidation refers to the convergence of all components of a managed travel program at a local, regional or global level. In practice, this means leveraging a company’s total travel volume and concentrating sourcing with an optimal number of suppliers, as well as standardizing travel policies, processes and tools, and using data to drive decision making. This approach helps organizations achieve many key goals including driving cost savings, being better positioned to meet their duty of care obligations, creating an improved experience for their traveling employees – and by and large being more strategic in how they manage their travel programs. Simply put, when choosing supplier partners, the goal should be to maximize coverage and minimize overlap.
Still, a relatively small proportion of companies in Asia Pacific have well-consolidated travel programs. Many fast-growing multinationals in India and China still have incredibly fragmented programs, with wide variations in policies, processes and suppliers across different countries, and sometimes even within the same country. Often, this is viewed as a risk management strategy, as companies are worried about suppliers going bust. Furthermore, there is a sense that working with multiple suppliers keeps them all on their toes as employees can choose between them, and this in turn improves service levels. However, this also impedes the ability of companies to meet many of the key objectives outlined above. Instead, they should do proper due diligence on suppliers to address concerns around the viability of their businesses. At the same time, they should secure commitments from suppliers to ensure their service expectations are met.
From our conversations with travel managers in the region, we have learned that while they generally recognize the importance of consolidation, they often face resistance to change from within their organizations and find it difficult to articulate the benefits to senior leadership. So while now might not be the best time for companies to initiate large-scale RFPs, it is a great opportunity for travel managers to start building the case for consolidation with their internal stakeholders by outlining the clear advantages.
What are the benefits of consolidation?
- Greater transparency – Having centralized data in a standard format gives a clearer picture of what is happening with your program across the world. When you are able to quickly retrieve crucial information from a single platform, analyzing and strategically improving your travel program becomes much easier, and it also yields many other benefits.
- Cost savings – Research from CWT Solutions Group has shown that consolidating travel programs can help companies reduce their total travel cost by up to 20% on average. This is partly because you are able to more efficiently analyze data related to your travel program – such as booking behaviors and spend patterns – and identify opportunities to drive savings. At the same time, you can also leverage bigger travel volumes and spending to negotiate lower rates with suppliers like airlines, hotels and ground transport providers.
- Improved safety & security – Centralized data also makes it easier to quickly locate all of your traveling employees in the event of a security risk, and make arrangements to bring them home safely, instead of trying to piece this information together from multiple data sources.
- Better travel experience for employees – Working with a single TMC globally means your organization’s traveling employees will have a more consistent experience, no matter where they are based or where they are traveling to, leading to greater satisfaction and well-being.
- Reduced complexity – Working with fewer suppliers makes it easier to implement changes across your travel program. This includes the ability to standardize travel policies such as class / category rules, advance booking etc., as well as implement new technology solutions such as booking and pre-trip approval tools across different markets.
Consolidation has long been considered a best practice in managed travel on account of its many benefits. However, moving from a highly fragmented program to one that’s consolidated requires some planning and preparation. In our years of experience helping companies advance their travel programs, we have observed some common mistakes. In the next installment of this series, we will discuss a few important things to consider before starting on your consolidation journey.
This article was first published on TTGmice and is republished with permission.