Asked to highlight a primary goal for 2014, many respondents to BTN's Small & Medium Enterprise Report survey cited their desire to contain travel costs. It's no surprise. Cost containment is a perennial challenge and annual objective for travel programs of all stripes—from big spenders like IBM to small businesses with only a few travelers.
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The methods companies use to achieve those goals, though, vary as widely as the organizations that comprise the vast small and midsize segments, the former defined by BTN as those with less than $2 million in annual U.S.-booked air travel and the latter ranging from $2 million to $12 million.
Approaches to travel among companies in these segments can range from little or no management to mature, multinational programs. Some may control their travel spend with the sophisticated procurement strategies and internal resources that match organizations with multiples of their spend. Others might not have a travel management company, let alone a travel policy. Some are just getting started.
Of course, many factors beyond program size drive a company's approach to travel management. Industry segment, travel patterns, company culture and senior management support level, among others, play significant roles.
Yet, at the risk of generalizing, some features emerge as travel management practices slide down the spending scale: Internal resources can be strapped, a dedicated manager may not be allocated, supplier relationships could be lacking and many aspects of program management may be deferred to a travel agency, if one is used at all.
Even so, travel management goals and objectives have "to do more with the maturity of the company as it relates to travel program than it does the size," said Orbitz for Business vice president of strategy and account management Mark Walton. "I think this business is an equal-opportunity business, meaning what's available to the largest companies is available to the smallest, and therefore they should be looking at it as such."
Regardless of how small a company is, it's never too soon to take the first steps. "I don't believe there's a company out there that can't benefit from some level of a managed program," said Directravel president Sam DeFranco. "When a company feels like there's a lack of control of their spending and they only have basic expense processes in place, their antenna should be up."
The Fundamentals
Carlson Wagonlit Travel's consulting unit, CWT Solutions Group, last year established new consulting services that cater directly to the small and midsize segments. Its entry into that market posed as much of a learning challenge for CWT as it did to clients. In contrast to more mature programs, CWT's work in this segment has focused on program fundamentals, said CWT Solutions Group senior director of North America Joel Wartgow. "As consultants, we're very good at diving into the weeds and providing very comprehensive analysis," he said. "It was a little bit of a learning curve for us, where maybe we were overkilling this for some of these customers."
Instead, the initial focus within this segment has skewed toward what Wartgow called "a health assessment" of the travel program. "Taking their program as it exists today: Where do we think it's healthy? Where do we think it needs some attention, and where can we provide them with some guidance on next steps?" he said.
Getting the fundamentals in place was a clear target among a few respondents representing small companies. One highlighted a goal to secure in 2014 "executive management buy-in for utilization of a travel management company," noting the company, which has less than $2 million in annual air spend, "has a family-like culture, and few are familiar with the benefits a TMC and a booking tool can bring to the organization."
A similarly situated small-business respondent indicated plans to show in 2014 "the value of the travel area so stakeholders and leadership understand that there is a difference in being a traveler and the management of a corporate travel program."
Another cited the importance of documenting return on investment in addressing the challenge of "gaining leadership support for bringing in a TMC. Without greater visibility into our spending habits it is very difficult to present a solid business case whose ROI rivals other projects for resource allocation."
Few things can more quickly gain senior management attention and build support than a growing expense line, and quite a few companies in this segment have just that when it comes to travel. "At many companies," said Walton, "it's still the second- or third-largest controllable expense line item that they have, and therefore it's considerably important."
Wartgow noted that in the small and midsize category, "A lot of these companies are growing so fast. They start to look at their T&E line on the company portfolios, and it's increasing rapidly. We don't even know where these people are going or how they're getting there, so let's put some structure around it."
Laying The Bedrock
Citing challenges for some small businesses, Walton said that "senior leadership support" is the first step to building a travel program. After that, to lay the bedrock he suggested the formation of a travel policy, engagement with a travel management company and the implementation of a booking tool. "If you have those four, you are putting yourself in a position to not only achieve immediate savings but to control your business," he said.
As for policy, Walton said it's "more of a cultural issue, so you could have a very small company with a very strict policy and the opposite on the large side." Yet, he noted that as companies grow their global footprints, policy can become more complex in addressing specific local needs. "A larger company will have more supplier agreements, so they may be asking their travelers to be more compliant, specifically to an airline or hotel, because of the types of relationships and requirements they have to meet certain marketshare thresholds."
Unlike direct supplier relationships, policy controls to limit spending are at the disposal of any size company. For airlines, advance-purchase requirements, cabin-class restrictions and lowest-logical-airfare requirements can be effective. For hotel, tier restrictions or spending guidelines can drive down costs.
Some types of policies might even work better at smaller, less complex companies. "We receive more requests for client messaging and pre-trip authorization in the SME space," said DeFranco. "Larger companies express an interest, but many do not move forward with integration due to the complexities on a larger scale."
Jerry Richerson, strategic sourcing director for real estate services company Stewart Title Guaranty Co., said the company has yet to deploy a full-on travel policy and does not mandate supplier usage. Not to say the category is completely unmanaged. "We have elements of a policy, but it is mapped and wrapped around our expense management policy," he said. "Specifically, it addresses things like you can't stay in five-star hotels or fly first class."
Richerson has explored further management, eyeing relationships with travel management companies, but such initiatives have yet to advance, though they just might as spend grows. "As the real estate industry recovers, more will be spent on meals, conferences and events," he said. "When the volume increases, the business case for those things will become bigger, and people will start paying attention."
Getting Tools In Place
Several small-company respondents indicated that key initiatives this year involved getting the right tools and processes in place. One was in the midst of "designing and implementing a full-scale travel management program," while others indicated plans to launch an online booking tool, initiate a TMC relationship or deploy an automated expense-reporting system.
Walton described such actions as establishing a booking tool and engaging with a TMC as being "somewhat more tactical in nature," but as programs mature they take on a more strategic focus, with initiatives targeting procurement, multinational management, data consolidation and supplier relationships.
While not always the case, responses from midmarket companies to the BTN survey suggested a little more maturity than their smaller counterparts, as several discussed direct supplier negotiations, data capture and integrity, savings measurement initiatives, multinational travel programs and agency consolidation. While a few respondents in the small segment were just beginning to embark on online booking tool selection and implementation, more midmarket companies were touting growing rates of adoption and initiatives to take them higher.
"Once you have a strategic view of your travel program, your goals do change," said Walton. "You're looking at your business differently as it matures. And as you're looking for opportunities of continuous improvement, you are putting different practices in place that will allow you to achieve that level of improvement."
The More You Manage, The More You Manage
The idea of "continuous improvement" may sound familiar to midmarket telecommunications services firm Goodman Networks. Since 2011, the company has transformed a lightly managed travel program into an increasingly mature one. Within six months of joining the organization that year, director of corporate travel Karen Hatch led the bid, selection and implementation of a new travel management company; oversaw the rollout of an automated expense reporting system (and the linking of that system to a new booking tool); revised Goodman's travel policies; and streamlined its T&E payment processes. Those core components of the company's travel program contributed to savings and senior management support, but, as travel managers know well, the work is never done.
With a core program in place, the company, with its growing travel spend, is working to transition recent acquisitions to the managed travel fold and is refining data reporting and budgeting procedures to better steer travel dollars.
Hatch said the travel category has risen to "the executive level of exposure, and having that executive support is critical." To more wisely spend travel dollars, Hatch this year is examining budgeted versus actual spending on travel.
"Because we're able to look at budgeted cost of travel for each of the different organizations, I'm now tracking actuals that way," she said. "I get the reports from finance, then we look at what they planned and what actual costs are each month."
There is a strategic component to managing spending this way: "Rather than killing ourselves at the end of the year and cutting off travel—we still have to service our customers—my goal is to help people travel smarter year-round, to book in advance and all of those good things you can do to cut costs from the beginning of the year, not just waiting until October, when everybody has blown their budgets."
Other signs of maturity in Goodman's program include direct deals with suppliers, meetings management integration and travel management company consolidation.
Even With Structure, Challenges Persist
Even with such travel management fundamentals a travel policy, a TMC relationship and booking tool, multiple midmarket company respondents reported ongoing challenges with compliance. Among a few dozen open-ended responses, 10 specified as their "greatest travel management challenge today" some aspect of getting travelers to comply.
One respondent noted the largest challenge was getting travelers to "book all travel, including hotels, through our travel management firm." A few were challenged by travelers who, as one wrote, "continue to feel that they can locate better fares" outside of the program, and another sought to ramp up compliance "without mandates."
Other challenges cited by respondents in the midmarket segment ranged from multinational travel management and duty of care to hotel leakage.
A few small-company respondents similarly noted compliance as their greatest challenge, but—more than any other theme—buyers in this category generally cited the cost of travel as their biggest challenge. Yet, it was unclear what actions many were taking to combat price increases.
Multiple Hats
"At larger companies, you're dealing with a multitude of people that touch T&E," said DeFranco. "At one company alone, you could have a travel manager, a director of procurement, a director of purchasing, expense management, HR and a risk manager. Inherently, the SMEs simply do not have the same infrastructure, so to compensate for that, the travel management company account manager essentially becomes an extension of the customer."
One midmarket respondent highlighted the biggest travel management challenge as "achieving objectives with limited resources." It's a position in which many managers in the small and midsize segments find themselves.
According to BTN's 2013 Salary and Attitudes Survey, travel managers at larger companies dedicated more time to travel management and had larger teams than those from smaller companies, who often juggle roles outside of travel.
"In those scenarios, the travel management company plays a larger role in the program's success," said Walton. "We hear time and again from our clients how important our account management organization is, because of that very point. Resources are spread relatively thin so the people who are managing for small to midmarket clients do have multiple roles within their organization."
According to the BTN Salary and Attitudes Survey results, 75 percent of respondents representing companies with less than $2 million in U.S.-booked air volume devoted less than half of their working hours to travel management, compared with 6 percent of those at the biggest-spending organizations.
"The travel managers in these organizations really do juggle multiple priorities at the same time," said CWT's Wartgow. "Getting an opportunity to really invest the time to understand your travel program is a luxury they don't have. So giving them information that is consolidated, is simplified, is summarized in a way they can quickly access it, with some guidance on what the highlights are that they should focus on, is really valuable."
Methodology
The Business Travel News 2014 Small & Medium Enterprise Report includes a research component designed to elicit actual travel spending and data from qualified travel buyers. BTN from January to March 2014 conducted the online survey through SurveyMonkey. A direct link to the online survey was emailed to appropriate members of The BTN Group Advisory Board and Research Council, as well as qualified subscribers of BTN Group publications, including BTN and Travel Procurement magazine.
Responses to the survey were tabulated only if respondents indicated their organizations had 2013 U.S.-booked air volumes of between $500,000 and $12 million. In all, 101 respondents representing small and midsize enterprises answered at least some of the survey questions; of those respondents, 52 qualified as representing midsize organizations while 49 represented small enterprises. Not all respondents answered every question.
BTN tabulated responses from SurveyMonkey and selected specific topics to represent as benchmark charts shown here. The data points labeled "median" represent the precise median of all responses from all small and medium enterprise respondents. Those labeled "20 percent range" represent the middle 20 percent of all responses received for that question; that is, 40 percent of responses indicated a figure higher than the highest endpoint of the listed range, while another 40 percent reported a figure lower than the lowest range endpoint. Twenty percent of the respondents reported figures within the range.
BTN thanks all of those who participated in the making of this issue, including all survey respondents and those who participated in interviews for the following reports.
This report originally appeared in the April 14, 2014, edition of Business Travel News.