Travel program management typically constitutes between 2 percent and 5 percent of travel and entertainment costs, but when properly organized and executed, it's capable of saving plenty more. At their most basic, travel programs are designed to provide services that get travelers from point A to B or a place to sleep, which means bookings. Choices between offline and online, or call center and onsite, can have a dramatic impact on traveler service and achievable cost savings. Specific outcomes, though, vary widely by company travel patterns and cultures.
The most significant change to the reservations infrastructure in recent years is the dramatic movement to online traveler self-booking. In a 2006 report, PhoCusWright ( 1) estimated that online booking would approach 50 percent of the U.S. corporate travel market by 2008.
"Online booking tools have reached a maturity level within travel programs in U.S. corporations, with 26 percent reporting mandated [use of] online booking tools, while 52 percent have online booking tools in use but not mandated," according to National Business Travel Association research. "An additional 15 percent of respondents expect to implement online booking tools in 2008, which would bring the percentage of managed travel programs with these tools in place to over 90 percent." ( 2)
Cost savings is a major driver. PhoCusWright ( 3) estimated a self-service booking without manual intervention runs between $4 and $8, while a call center phone reservation can be between $15 and $65.
Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers |
A 2007 ProMedia.travel Content Solutions survey found that online booking saved money for 84 percent of companies responding. Not surprisingly, the technology offers larger organizations greater economies of scale than smaller ones. Online booking saved "significant" dollars for 44 percent of companies with more than $30 million in air spend, 26 percent of those between $5 million and $30 million, and 19 percent for those with less than $5 milllion. ( 4)
An American Express/A.T. Kearney study of 38 multinational and large European companies ( 5) found indirect T&E management costs comprised 4.6 percent of total T&E. More than half of these process costs cover expense claims, but booking and planning constituted 48 percent. Fully automating travel planning (including requests) and booking saves "best practice" companies 55 percent and 70 percent, respectively, off these expenses.
A late 2006 survey of 424 travel managers by the Association of Corporate Travel Executives ( 6) found that self-booking tools save companies an average of 26 percent off travel management company costs and a further 9 percent on airline ticket spend. Sometimes pegged even higher, the airline ticket savings is generally said to result from travelers accepting more responsibility for their fare choices than for those sourced through an agent.
Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers |
Despite these advantages of automation, successful travel management programs also optimize human support. This goes beyond the obvious telephone exchange to also include many online-originating transactions. "State Of The Practice" research found that among the 317 respondents whose organizations had a designated traveler tool, 48 percent said more than 60 percent of their overall bookings were initiated by travelers as opposed to agents. A smaller share, 38 percent, said more than 60 percent of bookings were completed with no agent assistance at all.
Meanwhile, travel management companies often are the buyer's key partner in implementing online tools. "TMCs play a crucial role in both counseling and assistance for the implementation, and manage the deployment of the tool for 84 percent of respondents," according to an American Express European study. ( 7)
A 2007 NBTA survey ( 8) found that 58 percent of U.S.-based travel buyers used one of the "mega" travel management companies, 26 percent used a "regional" TMC and 8 percent were accredited by the Airlines Reporting Corp. as Corporate Travel Departments. Slightly more than 7 percent used an "Internet TMC." Being a CTD doesn't necessarily mean a TMC of some kind is not in the picture. Also, the survey did not allow respondents to indicate that they use TMCs from more than one category, which some do.
The challenges to such polling help illustrate the variety of levels on which agency cooperation rests, as BCD Travel found ( 9) when it asked about preferred service configurations: Among North America clients, 44 percent used national reservation centers; 17 percent used a mix of res centers and onsites; 19 percent had an onsite with the TMC's staff; 11 percent used virtual service centers; 6 percent had an onsite with company staff; and 4 percent used a multi-country call center.