Op-Ed: Strong Travel Managers, Tech-Savvy TMCs Critical
Once again, today's business travelers and corporate travel managers are facing monumental changes in pricing structures. Now that the negotiating process is complete, the airline industry believes it has successfully restructured its programs with the global distribution systems. These new contracts have enabled the airlines to reduce their costs, while passing some of the costs through the GDS to the travel management community and ultimately business travelers. As an industry, we have been in similar situations in the past and, in times such as this, the role of the travel manager is more important than ever to a corporation.
Even though additional costs will ultimately be passed down to business travelers, it is unlikely that the changes will influence travelers and way they book travel. While it may change the nature of the relationship between companies and their suppliers, almost all business travelers are reimbursed when purchasing tickets. By being reimbursed, travelers won't see the full impact on their bottom line that the change has made, which will be minimal on an individual basis, but more significant across an enterprise.
Historically, travel is the only industry where suppliers have paid for the cost of distribution. In most industries, distribution costs are rolled into a product's price. The global travel marketplace is maturing and becoming more efficient. This trend will continue to shift travel industry pricing models until they more closely reflect those of other markets. As a result, travelers will continue to face rising prices as distribution costs shift, which may tempt individual travelers to book flights directly to avoid additional fees.
While many corporate travelers may not be aware of the changes, the corporate travel industry itself will likely see a 10 percent increase in travel spend this year. In this environment, a strategic travel management program will diminish the impact of increased industry pricing. Travel managers who leverage the right resources will be better able to understand the changes, and will be better equipped to position themselves to others within an organization. This will allow them to lessen the impact on a travel management program and corresponding travel budget.
Travel management partners should look to provide clients with a cost analysis of the impact the new fee structures will have on their programs. The biggest decision faced by today's travel managers is the choice between lower fees and complete content. A survey of Expedia Corporate Travel clients found that today's travel managers would choose complete content versus lower fees, which reaffirms the industry's position on this issue. While companies may save money on individual booking fees, access to the full range of fares will ultimately save a company more. The more airline transactions a company completes, the more long-term savings they will realize with a complete-content program. Travel managers' corporate travel partners should be helping them determine how to maximize complete-content programs and adjust accordingly to benefit a company's travel program.
Well-negotiated contracts with GDS and airline partners will improve a corporate travel program. Aligning your company with a corporate travel agency that will champion your interest to airline and GDS partners by assisting with negotiations will allow you to realize more benefits from these relationships. A strong corporate travel management partner combined with insightful information about your program will help your company realize greater returns on your contract negotiations.
Today's technology tools empower travel managers to bring more detailed information about a travel program to bear for negotiations and help recognize real savings for a company. Ensuring that your travel management company provides an online solution with the right resources is key. Strong online adoption, compliance and the ability to access detailed information for a proper analysis of travel management programs are the results a good online solution will offer a corporate travel manager.
It's imperative that both travel managers and business keep an eye on the industry's future. While it's hard to predict at this time if global distribution system fees will be introduced in foreign markets, travel managers have the opportunity to enact changes on a global basis that will lessen the impact if this happens. The online adoption rate in Europe is growing steadily, and companies with a strong global presence can utilize a single technology platform to contain costs.
More than ever, today's travel managers need to remain nimble and make sound business decisions that will allow them to recognize savings in travel programs for their corporations now and in the future. Partnering with a strategic and successful corporate travel management company that offers top-notch technology will demonstrate the value of the travel manager's role within a company.