Travel Manager - Saving Money with Travel Management

February 13, 2004
By JAY ELLENBY,
Special to the Daily Record

Travel is one of the top three controllable expenses for many businesses, and yet many executives still do not effectively manage their travel budgets.

Few business owners would encourage employees to buy their own office furniture, computer equipment, paper products or Internet service. Those purchases are centrally managed to maximize economies of scale and to keep tight controls on spending.

And yet, in many companies, individual employees are allowed to make their own travel arrangements with virtually no audit trail or management oversight.

The availability of online travel search engines makes it tempting, no doubt, to book flights, rental cars and hotel rooms from the comfort of one’s cubicle. And certainly many well-meaning employees truly believe they are saving their employer money when they seek the “lowest price available” from an online travel engine.

What they don’t know is the best way to save money on travel is to leverage volume to obtain discounts.
A travel management company, simply as a function of the volume of business it directs to airlines, hotel chains and rental car companies, has access to discounts and many other cost-saving opportunities.

Because of the relationships they maintain with these vendors, they are among the first to learn of fare cuts and other incentives to book business with them.

Because a travel management company sends millions of dollars worth of business to the airlines each year, it receives significant fare discounts and can negotiate additional overall savings, corporate benefits and perks for individuals.

A critical function of a travel management firm is to provide reports that track travel spending by individuals, departments, and the company as a whole. This audit trail allows firms to manage travel expenses on the micro and the macro levels and spot trends early.

The travel management firm also provides support to clients when flights are canceled or overbooked, rental cars fail to materialize, or other snafus arise. With an online booking engine such as Travelocity or Orbitz, you are on your own if such problems occur.

Another function of the travel management firm is to help the client company develop and reinforce travel policies. Guidelines such as what kinds of rental cars employees can request, appropriate meal allowances, and whether employees can fly coach or business class should be clearly stated and consistently enforced.

If an employee overspends on a trip, it will be detected more quickly than through normal expense reimbursement channels. Travel consultants help through identifying benchmarks, and they are able to apply best practices in ways that will ensure a successful travel policy.

The travel management firm also helps client companies control spending by tracking travel expenditures by individuals, within departments, and across the organization as a whole. Costly trends can be spotted and addressed before they cause too much damage to the bottom line.

In larger firms, the purchasing department does the travel buying. A travel management company need not necessarily absorb this function, if company management prefers to keep it in-house.

But the travel consultant can train and prepare purchasing staff to negotiate with vendors and to aggressively pursue cost-saving opportunities. For example, many hotels charge a fee for no-shows. At times, these fees can be waived through proper negotiation, but they are sometimes accepted as inevitable.

In the past, travel agencies provided their services to the customer for free, with commissions paid by the travel vendors. Financial stress and a desire to reclaim the distribution process within the major airlines generally eliminated commissions to travel agencies, meaning customers are charged a fee for service. This can be done through a retainer arrangement, a management fee program, or on a per-transaction basis.

While this change has brought about the need to educate consumers about the new fee system, it also results in a higher level of service for those customers. Since the travel management companies are being compensated by the actual users of the services, rather than by the providers of those services, there is even greater incentive to provide top-notch service.

The travel industry is experiencing tremendous volatility, weathering challenges such as global terrorism, bankrupt airlines and political strife among nations. And yet, as our economy becomes increasingly mobile and globally oriented, travel and travel management remain extremely important in conducting and expanding business.

Your travel consultant can be an invaluable guide through the turbulent and costly world of business travel. Why venture out alone?

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