Globalized Travel Management 'Accelerating' Despite Difficulties - Business Travel News

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Globalized Travel Management 'Accelerating' Despite Difficulties

April 13, 2011 - 03:25 PM ET

By David Jonas

For several reasons and despite various roadblocks, travel management is becoming more global. According to two recent industry papers on the subject, the benefits have outweighed the challenges for many companies, including smaller firms. While there are many ways to approach the effort, some basic tenets apply.

"Globalization of corporate travel programs is not only growing but accelerating," according to an AirPlus International/Association of Corporate Travel Executives paper published this month. Owing to "inherently different circumstances" for corporate travel programs in each country, however, "tensions persist between global goals and local realities."

While 57 percent of 136 ACTE members polled in February "believe it is less difficult to manage a multinational program now than it was five years ago," 26 percent do not. "Furthermore," according to the paper, "47 percent see significant conflict between the global and national needs of their travel programs."

Even so, the advantages of global programs compel many companies to undertake such projects. "Reducing cost is clearly the priority for firms choosing travel management globalization today," according to an American Express Business Travel paper, also issued this month, produced in conjunction with Business Travel Media Group (BTN's parent company). "Savings are found through leveraging increased volume with suppliers as well as through efficiencies that come with managing the program in a more centralized and consistent way. To that end, procurement and finance teams are likely to be the driving forces behind globalization efforts."

According to the AirPlus/ACTE research, about 30 percent of buyer respondents indicated their programs encompass 21 to 50 countries and another 19 percent said programs cover more than 50 countries. When asked about their program's reach five years ago, the numbers were 18 percent and 10 percent, respectively. It follows that the number of respondents representing organizations with single-country programs has fallen, from 29 percent a decade ago to 16 percent five years ago and just 3 percent today. These findings led researchers to conclude that "managing travel on a global basis has switched from being the exception to the rule."

Why?

Authors of the AirPlus/ACTE paper offered several reasons for the accelerating trend. For one, "travel spending is clearly becoming more dispersed, geographically speaking," they wrote. When survey participants were asked about the percentage of their companies' travel spending that originates in Europe and North America, 24 percent indicated that between 91 percent and 100 percent of spend originates in those regions, down from 32 percent five years ago and 38 percent 10 years ago.

Authors also highlighted improved automation ("cloud computing allows travelers, bookers and travel managers to access the same web-based tools worldwide, even in smaller markets") and more suitable global products and services developed by suppliers.

Both papers also cited the need to track travelers as part of global security program, and concluded that more smaller companies are globalizing their corporate travel. "It used to be just the large companies, the Fortune 100, that you would call global," said Amex senior vice president and general manager Tom Bligh, speaking this week at an ACTE conference in New York. "But now we see it across the whole strata of companies. Even the smaller ones now are looking for advice on how to take their programs global."

Both papers suggested that the economic crisis at the end of the last decade served as the spark for many global initiatives.

"Companies have traditionally been satisfied with controlling 80 percent of their travel costs," according to the AirPlus/ACTE paper. "Now they have mature travel programs and are chasing the remaining 20 percent as a new source of savings. Corporations improve the completeness of their data through introducing a global travel policy and consolidating their selection of travel management companies and card issuers. This strengthens their ability to negotiate with suppliers—the guiding principle of travel program globalization."

Components

The AirPlus/ACTE research asked travel buyers about the extent to which certain travel management program components have been globalized. For all seven components listed, "global deployment increased from 2001 to 2006 and then increased at an even faster rate between 2006 and 2011," according to the paper. "The results show that companies have globalized the internal aspects of their travel programs more than they have globalized tools and services from external suppliers."

For example, nearly three-quarters of respondents said their organizations have a global travel policy (up from 43 percent five years ago) and 59 percent indicated that global data reporting systems are in place (up from 27 percent in 2006) even as "anecdotal evidence suggests the quality of the tools, and the quality of data input from different parts of the world, remains highly variable."

Meanwhile, 51 percent use global corporate card programs (up from 28 percent) and 50 percent use global expense management systems (up from 19 percent). The prevalence of global TMC programs doubled among the survey base to 55 percent.

Consolidating global travel operations to one or a few TMCs "is often regarded as the first and most important step to globalizing a travel program," according to the AirPlus/ACTE paper. "It provides the data for establishing compliance and creating supplier deals which ultimately meet the strategic objectives of the program. There is a strong counter-argument that a single global TMC is unnecessary because the corporate client can integrate data from different TMCs, especially if it has a good data warehouse. However, advocates of a single TMC worldwide point out that it avoids duplication of effort in several respects, such as communication and enforcement of travel policy, for example by switching preferred suppliers in the TMC's reservations system."

Meanwhile, according to AirPlus/ACTE survey results, 87 percent of buyers said TMCs "have improved and/or expanded over the past five years to support global travel programs more fully."

Amex suggested that by using a consolidated TMC (or TMCs), buyers "should be able to realize significant savings—not only through leveraging increased volume with fewer partners but also by reducing service redundancies from country to country."

Preferred global deals with airlines, hotels and car rental companies also have become more commonplace, with 64 percent of AirPlus/ACTE survey respondents indicating their companies negotiate such contracts, up from 26 percent five years ago. "Hotels are generally considered to be the most achievable," according to the white paper, "but experiences in dealing with multinational airline alliances vary."

The "major exception" to globalizing travel management components is online booking tools, according to the authors. While the number of respondents who reported that their booking tool is globally deployed was more than double that of five years ago, the figure still was just 23 percent. "Many buyers conclude no single tool performs adequately in every market, for reasons including lack of localized content and lack of support in that region," according to the paper. "The other reason is that many buyers have decided a single booking tool is not a strategically important objective so long as they have a common data reporting platform and payment system, and the chosen TMC or TMCs can support several different booking tools."

Amex corroborated those observations. "Online booking tools exhibit regional strengths and weaknesses that are generally associated with the global distribution systems that power them," according to its paper. "While some online booking tools can be integrated with multiple global distribution systems, their functionality can suffer."

Though it discussed the possible benefits of global supplier deals, Amex suggested that consolidating to a single provider "for these key travel management services and technology, however, has not been the defining characteristic of global travel programs." Rather, Amex argued that such programs are defined by global governance, a single travel policy and "data transparency."

Challenges

Given the number of buyer respondents who see continued tensions in balancing global and local needs, AirPlus/ACTE paper authors wrote "the story of travel management globalization is far from complete, and that there is a further implication to this gap between aspiration and reality, which is that significant barriers are still impeding progress."

They cited the various cultural differences, "local hostility" to supplier selections and policies, data inconsistencies, disparate accounting and reporting systems throughout global enterprises, and technology shortcomings (especially in China, where card companies and GDSs are heavily constrained).

The paper also noted that "respondents especially criticized TMCs for offering patchy service across their networks" and conveyed "a perceived gap between the image of consistency suppliers present in their branding and the reality when it comes to operations and account management. Suppliers are criticized too for sometimes bypassing the client's global procurement structure and offering rates directly to local offices."

Amex in its paper made a similar observation: "Unique supplier relationships complicate the picture of travel management globalization, and it is a rare company, indeed, that avoids regional politics during a travel globalization effort." 

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