Although the continued growth of remote work and digital tools has made conducting business more efficient and accessible than ever, in-person meetings remain one of the major building blocks in driving revenue growth. Recent business travel recovery stats make it clear: Face-to-face interactions foster strong connections and enable organizations to more easily convey key values, strategies, and products to their audiences.
Although the outlook ahead for travel is positive, businesses are faced with leveraging procurement in more targeted ways to meet the moment. A shaky economy combined with a major surge in travel demand has brought about significant limitations within contract negotiations.
Since some travel budgets may be undergoing changes or reductions as companies strive to do more with less, teams responsible for procuring travel-related services and selecting travel vendors should recalibrate their approach to match. With this in mind, we recommend reviewing the following procurement strategies to help you better manage sourcing, spend, and contract management.
Multi-Year Savings: When negotiating contracts with travel suppliers, consider multi-year options to identify what opportunities may be available for additional savings. We also recommend asking suppliers to show you a look forward to pinpoint continuous improvement plans that contribute to budget goals. These action steps can greatly affect your company’s bottom line.
Focus on volume pricing: Mergers and acquisition may not always impact your travel program in a positive way. For example, if your company is opening a new location, let your travel suppliers know in advance so you can work with them to determine a short-term change of volume, pricing, market share, and other items that could be affected.
Combine hospitality segments: One way travel managers can recoup the loss of negotiating power is through a robust short-term travel strategy. Often times, it’s best to move all categories into one RFP that includes meetings, groups, and extended bookings. This strategy is especially important since diverse work structures are changing how hospitality is purchased. Now more than ever, travel managers need to be creative in procurement across the board to increase savings and stay within budget.
As companies continually do more with less, members of leadership and those in charge of travel procurement face added responsibilities and challenges. This is an area with the tools and services of a travel management company (TMC) can aid in the process. At Direct Travel, we recommend the following to help you keep savings in check:
- Deal consistently with real-time data: Make sure bookings and payments occur through a centralized software system. A consolidated book and pay feature within your online booking tool (OBT) reduces risk and provides transparency.
- Utilize pre-trip approval: When you pre-approve spend, you can avoid out-of-policy costs that strain budgets. Trip approval also supports traveler wellness and confidence which remains a hot topic at the travel round table.
- Efficient invoice management: Make sure that invoices can be easily accessed through your technical platforms. Efficiently reviewing spend data will help you to easily identify careless spending and prevent unapproved spending before it happens.
- Improve technology interface for end users: When evaluating innovative technologies and reviewing demos, make sure that you acquire an interface that is simplified for all users. An efficient and user-friendly experience within your travel stack for employees and management alike is a major contributor to program success. For example, a customized OBT should deliver the best rates and simplify bookings. The best OBT solution for your business should have a user-friendly interface that matches the size and scope of your organization while adhering to specific individual and group travel needs.
Supplier contract exclusions: Where possible, ensure that your contract terms apply across the board. In the travel industry, there are core alliances and franchise-based business models. Ask your travel suppliers for exclusion lists and then evaluate how many transactions will occur in select locations. It’s also important to ask how the contract will be honored throughout the relationship.
Business advancement plan: When you meet with your TMC for a program review, take a look at performance over the past several years and ask about program improvements going forward. For instance, if you have a specific cost driver that you want to evaluate, ask your TMC to show its current position, compare it to the industry benchmarks, provide several recommendations, determine the impact, and estimate the cost of change and potential disruption to travel stakeholders.
Bleisure & Remote Work Policies
Bleisure contributes to healthier revenues for the airline, hospitality, and transportation sectors. The continued surge in popularity of the hybrid work model presents the opportunity for an increase in combined leisure and business travel, making bleisure an increasingly popular option for both travelers and organizations.
With this in mind, it’s a good time to evaluate how the bleisure segment is affected by policy. The first step is to determine how many employees are extending their business trips and how often. Here are a few questions to help gauge how bleisure impacts your travel program:
- What expenses are covered?
- How are employees indicating their business expenses vs. leisure expenses?
- How can employees use your negotiated programs for leisure?
- Can this help contribute to your overall volume for future negotiations?
Monitor Cost Savings with a Trusted TMC
Engaging in financially viable procurement strategies is one of the best ways to ensure a successful travel program. Reviewing and evaluating travel policy with a Direct Travel expert advisor allows you access to the most impactful reports that provide valuable insights into your travel program performance. Early on, we deliver productive options on how you can measure cost-savings against cost avoidance and continue to provide high-touch consultancy every step of the way. It is always our goal to help you leverage contracts so you can get the most out of supplier relationships.