Empowering Corporate Travel Buyers Since 1999

CFO/CPO Corner

Managing Travel "What every CFO/CPO should know"

Travel is a top 2 - 4 indirect expense category and a challenge for any company to properly manage. For example;

  • Travel is an emotional or political category with most employees viewing travel as a personal experience or perk, versus a corporate function, while also viewing themselves as travel experts;
  • Corporate travel policies and related processes will have an impact on a large number of key employees and departments with different or competing agendas;
  • There are hourly pricing fluctuations for identical Air, Hotel and other trip components making it difficult to budget, forecast and benchmark travel;
  • Travel is one of the few, if only corporate purchase, where employees can earn incentives or kickbacks from a corporate purchase (accrual of frequent flyer and travel points or benefits).

Inherent Procurement Challenges

Shorter Sourcing Cycles: Long term in the travel industry is six months.  The best commercial terms (Pricing, SLAs and other) negotiated today with your Air, Hotel, Car and TMC suppliers will quickly become outdated within a couple of months, requiring a continuous sourcing approach with each travel supplier category.

Standard RFP Processes:  The standard RFP systems, processes and practices used by your corporate procurement department for other indirect supplier categories do not apply for travel.  Requires custom sourcing processes led by professionals with deep travel category experience.

Volume Restraints:  Securing the best pricing and other commercial terms with all travel supplier categories requires spending a minimum of $20M annually on travel.

Hidden Revenue Streams:  While the traditional 10% commission payouts to corporate travel agencies or TMCs are history, there's still an active and increasing hidden revenue stream influencing the services and rates standardly offered or not offered by your TMC.  In fact, most TMC's third party commission revenue is 2X - 4X greater than the sum of the fees they assess you their client.

Ancillary Charges:  Airlines, Hotels and Car Rental companies are daily adding new cancellation or change fees and an endless list of separate add-on fees that are increasing historical base ticket or trip costs by 5%- 30%+(Baggage, Seating, Wifi, etc).  These charges allow a supplier to increase pricing at anytime.

It's Not Just About Negotiating Discounts or Reducing Costs

Employee/Travel Safety: Individual Traveler instances or threats are on the rise, requiring new layers of services and costs to protect your employees and company.

Personal & Corporate Data Liability:  Booking travel requires sharing and storing large volumes of personal and corporate data with third parties (TMC, Airline, Hotel, Car Rental and other travel websites).  Protecting and securing this information is a growing liability for any company.

Cyber Security Breaches:  Travel can involve employees logging onto to unsecured apps, websites and wifi's, all top tagets for hackers that increases your exposure to cyber security breaches.

Employee Capital:  Employee burnout is on the rise from travel and some corporate policies can be viewed as a barrier for employee recruitment or retention.

Regulatory Lapses:  An increase in regulatory lapses are on the rise as companies expand and travel to new countries, (Labor laws while traveling, insurances, tax and other regulatory lapses).  

Click here to download or view this full e-Publication, including the "Six Components of a Successful Managed Travel Program" and the "ROI from supporting a proper Managed Travel Program".

 

Related CTBR e-Publications

 

Role and ROI of TMC
Overview of what services you should and should not source from your TMC, with tips to benchmark and measure their ROI. Click here to download the full publication.

 

Why Outsourcing Travel Supplier Negotiations is the only Smart Play
Learn why companies spending $1M - $15M annually on travel can save $100K’s to $1M’s by outsourcing their travel supplier negotiations.  Click here to download the full publication.