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Differences in travel management programs across small and
medium enterprises are easier to find than similarities, but there are a few
characteristics emblematic of the segments: SMEs rarely employ a dedicated
full-time travel manager, for instance. They typically develop travel policies
but eschew mandates. And though they find very different ways of doing so, they
often explore new avenues for reducing travel cost. On the other hand, there is
little commonality at these companies in the location of the travel management
function, the use of third parties, deployment of travel-related technology and
relationships with travel suppliers.
[Please click here to view the digital edition of the 2012 Small and Medium Enterprise Report,
featuring all charted data, downloadable as a pdf.]
Business Travel News'
2012 Small and Medium Enterprise Report, as in past surveys, defines the small
market as those organizations that in the most recent full year spent $2
million or less on U.S.-booked airline tickets, and characterizes the large
market as those companies with more than $12 million in such spending. In
between lies the midmarket. It's a blunt metric that to an extent reflects
companies' travel activity but not the nuances of individual management
strategies, which some travel management company executives said is maturing
throughout the segment.
Yes, Travel Managers Maybe
"I don't care if you're small or large, travel and
entertainment is typically a big percentage of your expenses," said David
Holyoke, president of Travel Leaders Corporate. "Even in the small segment
you're seeing maybe not a defined travel manager or procurement individual, but
gone are the days that it was an admin. I remember selling a lot to admins,
human resources execs and office administrators who were looking at it from a
straight service standpoint. And even though it's not with a dedicated travel
manager or procurement person, it has the same general framework as a heavily
managed or larger program."
Ovation Corporate Travel chairman and CEO Paul Metselaar
noted that he "can count on one hand the number of our hundreds of clients"—typically
law and professional services firms—that have hired a full-time travel manager.
While the advance of SME travel management rarely includes such dedicated,
internal staffers, it has drawn the attention of C-level executives and
procurement and financial managers, who in fact may directly handle certain
travel managing and buying.
The organizational department that holds responsibility for
travel management at SMEs may vary (see story, page 8), as can senior executive
oversight. SME senior executives "can be overwhelmingly involved to not
involved in the slightest," said Casto Travel vice president and COO Marc
Casto. Such oversight or lack thereof is one of the biggest defining
characteristics of travel programs in the segment, he said.
Cost Control Is King
At those organizations, the goals of travel management can
intertwine closely with cost control. Of 214 BTN survey respondents, 82 percent cited "cost control"
and 77 percent cited "cost savings" as benefits of managing travel,
outpacing every other listed advantage.
Several dozen respondents volunteered "cost savings"
in response to open-ended questions about the accomplishments of their travel
program in 2011 and their goals for the program in 2012. "Saved money by
sending several employees together," wrote one respondent of 2011 travel
management accomplishments. "Researched less expensive hotel options in
areas of trade shows and took advantage of those lower costs," wrote
another. A third listed as a 2012 goal "spend money like it's Momma's."
Among SME companies, travel management is "mainly about
control and cost savings," said Adtrav Travel Management owner Roger Hale.
"We articulate to them how much they're losing by having an unmanaged
program: Unused tickets? No one is keeping up with your unused tickets, and
airlines are making tons of money on that."
When Service Trumps
Still, most SMEs, especially midmarket companies, don't
approach travel management with eyes exclusively on the bottom line. "Although
everyone focuses on cost and service is treated as a given, service is still
the reason a lot of them go out to bid and look for another vendor: 'You can
save me $10,000 on my travel this month but if you screwed up the president
twice, you're out,' " Hale said.
"Cost is the priority that everyone listens to, but
value builds compliance over the long term," said Cynthia Gillen, a buyer
for midmarket BDO USA. "We're putting in more effort to sell the value of
the travel management program internally based on the value to the company.
Over time there will be more emphasis on value as opposed to cost."
Survey respondents also cited travel management value not
directly tied to cost savings. About 65 percent of all respondents indicated
travel tracking was a benefit of managing travel, with 63 percent citing
financial reporting and 51 percent indicating traveler service/productivity.
When looking only at the small market, though, the percentage of respondents
who found benefits in those three categories all were lower—53 percent, 56
percent and 40 percent, respectively.
"We don't see a big difference between a $2 million, $3
million or $4 million air account and a $10 million account," said
Ultramar Travel Management chairman and CEO Peter Klebanow. "We have $2
million accounts that are as needy as a $10 million account. They have the same
expectations, processes and complexities as the larger [company]. I do think
there's a distinction under $500,000. When people cross that line, that's when
they need the account management to have some sample policies and understand
what's fair, smart and effective."
While far more survey respondents noted cost savings as a
2011 accomplishment and/or a 2012 goal, several volunteered service-related
aspects. One secured "improved services from our travel management partner";
others cited traveler tracking.
"We have found a tremendous appetite from
micro-companies that want the benefits of a managed travel program," said
Orbitz for Business president Frank Petito. "They want to keep fees low
but they like duty of care, reporting, access to hotels—they like to track what
their folks are doing."
Boosting Volume In
Whatever the goals of SMEs' managed travel programs, and no
matter how focused on cost savings they may be, travel management company
executives agreed that those companies are traveling more in 2012.
"We survey as many clients as we can, and the largest
majority last year said travel would be up 4 percent to 5 percent this year,
and we're seeing that," said Atlas Travel president Elaine Osgood. "Travel
per customer is definitely up throughout industries."
"Maybe we're an anomaly, but during 2008 and 2009 our
smaller accounts dropped travel as much as 20 percent to 25 percent, and
large—our top 15—dropped only 5 percent to 10 percent," said Travel and
Transport president and CEO Bill Tech. "But in the better years, 2010 and
2011, our small accounts not only came back to the level they were, but they
grew at a quicker percentage. They went up 15 percent to 20 percent, and the
big accounts were up 5 percent to 10 percent."
DEMOGRAPHICS AND METHODOLOGY
All represented companies in Business Travel News' 2012 Small And Medium Enterprise Report had
2011 U.S.-booked air volumes between $500,000 and $12 million. Slightly more
than half of respondent companies were under $2 million with an overall mean
near $3 million.
Respondents' 2011 U.S.-booked hotel expenditures (including
taxes and fees) ranged from $100,000 to more than $3 million, with 60 percent
of respondents indicating less than $1 million. The overall mean was about $1.1
million. The mean number of annual hotel room nights among surveyed
organizations was about 6,700.
The average air volume among represented organizations for
U.S. meetings and conferences (including taxes and fees but net of commissions
and refunds) in 2011 was about $565,000, down from a $578,000 average
calculated for 2010. For 2012, the trend is expected to reverse, increasing to
an average around $598,000.
In terms of total U.S. travel and entertainment, represented
companies on average spent $3.7 million in 2011. That was up from a 2010 mean
of $2.5 million. Respondents on average indicated a decline for this year, down
to an estimated $3.6 million. U.S. T&E includes airline tickets, hotel
stays, ground transportation costs, such ancillary items as meals and parking
and associated travel taxes and fees, but factors out any commissions or
Respondents represented organizations from various industry
sectors with no one sector accounting for more than 23 percent of the total
sample. Heavy and light manufacturing (23 percent), technology (14 percent) and
consulting/accounting (11 percent) were most represented.
Nearly all respondents to BTN's survey said they managed business travel or meetings costs
and more than half said they were responsible for setting corporate travel
policies and/or negotiating rates for transient business travelers. Those
representing organizations with more than $2 million in U.S.-booked air volume
were more likely than those from smaller spenders to negotiate transient travel
rates (74 percent to 40 percent) and set travel policies (69 percent to 50
percent). Those working for travel departments that report to finance were more
likely than the rest to be responsible for negotiating rates (67 percent).
Those reporting to procurement, purchasing or shared services were more likely
than the rest to set corporate travel policies (66 percent combined) and manage
business travel and/or meetings costs (97 percent).
Travel departments at represented organizations themselves
resided in various departments and were fairly evenly spread. General
administration claimed the largest share, indicated by about a quarter of all
respondents. That ratio increases slightly among organizations spending $2
million or less on U.S. booked air volume. Executive offices claimed the
fewest, 7 percent of the total and 4 percent among those spending more than $2
million on U.S.-booked airline tickets. The bigger spenders also were more
likely than their smaller-spending counterparts to operate a dedicated travel
department (23 percent versus 15 percent).
Looked at a little differently, a plurality of all
respondents (29 percent) said travel within their organizations reports up to
the finance department. That was followed by general administration (21
percent), the executive suite (18 percent) and procurement, purchasing or
shared services (13 percent combined). Smaller spenders were more likely to
align travel beneath finance (29 percent) and the executive suite (24 percent)
than other departments, while the larger spenders also favored not only finance
(29 percent) but also procurement/purchasing/shared services and general
administration (both 21 percent). Larger disparities are observed when
comparing those spending $1 million or less on U.S.-booked air tickets and
those spending more than $5 million: 25 percent of the smallest had travel
reporting to the executive suite (versus just 2 percent for the largest), while
26 percent of the biggest spenders placed travel underneath
procurement/purchasing/shared services (versus 7 percent among those with the
most modest spending).
The BTN Group and research firm Equation Research conducted
online surveys from January to March 2012. Invitations to participate were sent
to subscribers of several publications of The BTN Group (Business Travel News, Travel
Management, Travel Procurement
and The Transnational), members of
The BTN Group Research Council and members of an Equation research panel.
A total of 227 respondents qualified as travel managers or
buyers by indicating that they either manage business travel or meetings costs,
set corporate travel policies and/or negotiate rates for transient business
travelers. Each represented an organization that spends between $500,000 and
$12 million annually on U.S.-booked airline tickets. Equation tabulated all
Unless otherwise noted, data displayed in this report have
been rounded to the nearest whole number and in some cases may not total 100
Data derived from questions that asked respondents to select
all applicable answers are marked as such.
augmented quantitative research with interviews with several travel buyers,
more than a dozen travel management company executives and The BTN Group
originally appeared in the April 16, 2012, edition of Business Travel News.