Why now is a good time to consider consolidating your travel programme
While 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 programme.
Over the last few months, as countries began closing their borders and airlines cancelled thousands of flights, organisations have hurried to locate and evacuate their travelling employees. At the same time, they have also sought ways to track unused and cancelled 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 programmes.
What does consolidation mean?
Consolidation refers to the convergence of all components of a managed travel programme 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 standardising travel policies, processes and tools, and using data to drive decision making.
This approach helps organisations achieve many key goals including driving cost savings, being better positioned to meet their duty of care obligations, creating an improved experience for their travelling employees – and by and large being more strategic in how they manage their travel programmes. Simply put, when choosing supplier partners, the goal should be to maximise coverage and minimise overlap.
Still, a relatively small proportion of companies in Asia Pacific have well-consolidated travel programmes. Many fast-growing multinationals in India and China still have incredibly fragmented programmes, 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 learnt that while they generally recognise the importance of consolidation, they often face resistance to change from within their organisations 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 centralised data in a standard format gives a clearer picture of what is happening with your programme across the world. When you are able to quickly retrieve crucial information from a single platform, analysing and strategically improving your travel programme becomes much easier, and it also yields many other benefits.
Cost savings – Research from CWT Solutions Group has shown that consolidating travel programmes can help companies reduce their total travel cost by up to 20 per cent on average. This is partly because you are able to more efficiently analyse data related to your travel programme – such as booking behaviours 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 – Centralised data also makes it easier to quickly locate all of your travelling 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 organisation’s travelling employees will have a more consistent experience, no matter where they are based or where they are travelling to, leading to greater satisfaction and well-being.
Reduced complexity – Working with fewer suppliers makes it easier to implement changes across your travel programme. This includes the ability to standardise 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 programme to one that’s consolidated requires some planning and preparation.
In our years of experience helping companies advance their travel programmes, we have observed some common mistakes. In the next instalment of this series, we will discuss a few important things to consider before starting on your consolidation journey.