Going Global In Vogue: Cost Savings, Technology, TMC Savvy Promote World View - Business Travel News

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Going Global In Vogue: Cost Savings, Technology, TMC Savvy Promote World View

February 12, 2009 - 07:54 AM ET

By Procurement.travel Staff

In recent years, observers have witnessed a trend toward travel program consolidation that follows the globalization of many more businesses. "Traditional views of globalization," noted a 2008 IBM report based on responses from 1,130 senior leaders, is "being replaced by a new focus: global integration." Though some respondents recognized change management challenges, "more than 60 percent" are "implementing a globally oriented strategy," and many said "the case for global optimization of back-office functions, like finance and human resources, is clear cut."( 1)

Travel management often is connected to those areas. To globalize it, multinational organizations attempt to standardize processes, policies and certain services across divisions and regional operations. To do so, those organizations use a variety of agency configurations, management approaches and supplier contracting strategies. Many choose one travel management company, or a few, to fulfill their needs on multiple continents. Some strike deals with airlines, hotel companies and other vendors that span several countries.

The are several reasons: A consolidated program can help provide a better handle on total spending, a unified traveler database, effective traveler tracking, consistent service delivery and elimination of redundant supplier contracts. It also can generate savings averaging 20 percent, according to a 2007 CWT Travel Management Institute client survey. ( 2)

To start the process and monitor progress, many multinationals convene global travel councils or steering committees. These groups often include local and regional travel staff, country managers, supply chain and procurement professionals and liaisons to senior management. Organizations with a decentralized structure may call on representatives from each autonomous operating unit to participate.

In some cases, regional travel managers report directly to global travel managers. In other cases, the regional travel departments call the shots. A popular approach is for headquarters to construct a global travel policy framework (after collecting feedback from various divisions and regional operations) and allow local offices to adapt that policy to fit their needs.

Sixty-two percent of "State Of The Practice" respondents work at organizations with travel policies that apply to local offices and staff in more than one country. About half have policies that apply to local offices and staff in more than two countries. The mean was nine countries.

TMC Arrangement

For those that choose to pursue such a strategy, implementing a single travel management company can provide streamlined account management and help organizations access favorable rates from other travel suppliers in various local markets. Consolidated travel data, in turn, aids supplier negotiations, policy compliance monitoring, benchmarking and other activities.

TMCs can serve multinational clients with a variety of configurations, including national reservations centers, regional/multi-country centers, onsite operations or some combination. Though only a small percentage of its clients use a multi country center, BCD Travel "sees a trend emerging as reservation technology advances."( 3)

According to Mary Ellen George, general manager for BCD Travel consultancy Advito, "As globalization drives technology platforms and more centralized processes within the corporate structure, the travel program configuration will follow."

By establishing a multinational structure, organizations may be in a better position to craft global supplier deals. Other than a deal with a single TMC, a global corporate payment system seems to be a top candidate, though many companies also consider similar approaches for air, hotel and car rental. Consolidating those areas can lead to average savings of 7 percent, CWT noted. ( 4)

Multinational airline deals can be developed with individual airlines or with global airline partnerships. Premium business traffic originating from various countries often will attract carriers to an organization's business, although "some airlines will look at the travel department's internal coordination, management structure and number of divisions that will be consolidated to gauge whether it [can] move share to the preferred carrier to meet volume commitments," noted an Association of Corporate Travel Executives report. ( 5)

Far-reaching hotel arrangements take the form of chainwide deals, as buyers negotiate with a single brand or family of brands, though some find that focusing volume on specific properties in certain locations can yield the greatest savings.

A notable exception to selecting one vendor worldwide may be travel technology, especially online booking tools and global distribution systems, which typically are selected based on what is best suited for each region. "Generally, it helps to remember that what works well for headquarters cannot be replicated everywhere," according to HRG North America. ( 6)

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