Many travel managers still are not satisfied with their companies' T&E management, meetings or traveler communications programs, and they reported lower compliance to travel policies, which are stricter than last year. These are some of the findings of BCD Travel's latest client survey, which also found that a greater number of respondents expect travel to increase in all geographic regions than those expecting a decrease.
Surveyed in April, 60 percent of 333 global, regional and national travel management clients said they have little if any influence over their companies' demand management, defined by BCD as "the ability to control the number of trips and facilitate intelligent travel avoidance."
"It will be interesting to see whether travel managers will become more of an enforcer and actually make the call: 'No, this trip is not justified. This meeting can be done virtual,' " said Mary Ellen George, general manager of BCD Travel's Advito consulting division. "Historically, travel managers have been educators and lightly influenced decisions."
Some degree of control over travel-decisionmaking would be part of what George described as the evolving role of travel management--which now sits "within the realm of procurement."
BCD said its survey shows that "buyers are becoming more advisory in a wider range of roles, getting involved at virtually every stage of travel program management from sourcing to settlement--yet they rarely own the entire process.
"The three areas for which most respondents indicate they have full responsibility--traveler safety and security, sustainability/corporate social responsibility and traveler satisfaction--also contain a significant percentage of respondents who say they have no influence in these matters," BCD continued. "This divergence may be attributable to varying perceptions of whether the role of the travel manager or buyer is limited to impacting the process or is expanded to include final accountability."
Meanwhile, 26 percent of respondents said they have full responsibility over policy review and design, with another 55 percent describing themselves as an advisor or influencer in that area. But despite stricter policies (59 percent of respondents said their policies are either "strict" or "moderate to strict," up from 36 percent in 2007), the number of companies reporting "high" compliance (greater than 70 percent) to air and hotel policies fell eight percentage points and seven percentage points, respectively, versus 2007. "Clients are upping the level of their policy enforcement but are running into major challenges trying to find the appropriate inventory available to book the preferred rate," according to Advito vice president Bob Brindley. "The preferred ends up spilling that business to nonpreferred suppliers."
Part of the policy compliance challenge also may relate to traveler communications efforts; 28 percent of respondents said effectiveness of that function is "poor" or "needs improvement."
"The companies that are the most successful in this area involve not only procurement, finance and travel departments but also some of their business project leadership and corporate communication staff," said BCD executive vice president Louise Miller. "By involving internal leaders in policy communication, a company can really catapult its program." George suggested that social networks and travel portals can help serve younger generations of corporate travelers who are "demanding communication on the fly through their PDAs."
Sourcing Challenges
BCD anticipates that corporate air travel costs will continue to increase, owing to more reduced capacity, passenger fees, fuel surcharges and airfare structure changes such as added Saturday-night stayrequirements.
The travel management company noted a trend toward tighter corporate discounts "as the high cost of fuel continues to force airlines to demand market performance on negotiated agreements. Buyers will need to reconsider the definition of 'savings' with regard to managed corporate air programs. Because of market price inflation, it is unrealistic to expect improved negotiations and program design to lead automatically to year-over-year reductions in average fares."
BCD noted that additional fees, such as for checked baggage, have become difficult for companies to manage because "these transactions are outside of the negotiated discounts and challenge effective data capture."
BCD also highlighted a range of hotel program difficulties. Seventeen percent of respondents said they face sourcing and compliance challenges "because of high demand for hotels and low capacity in key markets." Fourteen percent of respondents noted "the problem of suppliers declining to bid on business. To maintain high revenue per room night, some hotels bid for a smaller portion of the buyer's room nights in key business markets."
BCD expects average U.S. hotel rates for corporations next year to rise by up to 3 percent, and said "steady demand and sophisticated yield management mean that hotels will be reluctant to lower rates considerably for 2009."
Overall, 22 percent of respondents said their hotel programs need improvement.
On the car rental front, 2009 rates are expected to rise 2 percent to 6 percent amid higher fleet costs. Such "costs as in-car amenities like GPS, refueling options and loss damage waivers (LDW) often occur outside of the reservation process, when the traveler picks up the car," according to BCD. "These costs are consequently difficult to manage, as their identification only occurs 'downstream,' through supplier reporting or the expense reconciliation process."
Another challenge identified by the survey relates to meetings management. Sixty percent of respondents said they have some role in that area, but only 12 percent described their meetings program as very good or excellent. Difficulties include "contradictory allocation of responsibility and budget" and access to data.
Meanwhile, 41 percent of respondents said their company's T&E management is poor or needs improvement. More than 60 percent have full responsibility or some involvement in expense management.
In terms of outsourcing, the most common aspects of program management farmed out to third parties were data consolidation (49 percent), online transaction processing (36 percent), hotel sourcing (36 percent), travel risk management reporting (35 percent) and benchmarking (32 percent). The areas most likely to be outsourced during the next two years include carbon emissions, meetings logistics management and meetings sourcing.