Reducing travel costs for smaller businesses

Travel is a pretty complicated supply chain. There are lots of fees, commissions, incentives and mark-ups sloshing around. Where and how you book will make a big difference to your total costs. I have been managing travel tenders for corporates since 1998, and these are my tips for getting the main things right.

Use a TMC

That stands for Travel Management Company; the name used for corporate travel agencies. 99 per cent of larger companies use one, for a reason. They provide many services, processes and systems of real value that will lower your costs, improve your travelling experience and reduce risk.

Which TMC? It matters less which one you choose than how you choose them. Be careful of very low fees since this can mean hidden mark-ups. Be careful of large menus of fees, since it’s the secondary charges that can get you. Compare a few and assess their systems and services carefully, since this is where your travel outcomes are really decided.

Use an OBT

That stands for Online Booking Tool. These are the self-booking systems with many features designed for corporate travel. Every TMC offers one or more type of OBT integrated into their other systems. They are good. They lower costs. But they’re really only for use with domestic travel, and maybe some simple international bookings. If you haven’t seen one before you’ll be impressed by what they can do.

Make use of the TMC’s management reporting. It should be online and easy to use, with dashboards and drilldowns that enable you to efficiently monitor and manage things.

Have a travel policy

It doesn’t need to be complicated but it does need to be applied to your bookings. TMCs load your policy into their booking systems for automated application. You can choose how forcefully you want your travel rules to be applied.

Don’t expect large negotiated discounts from airlines

Airline deals are quite formulaic, and discounts are modest for SMEs. Certainly avail yourself of the deals on offer. But you’ll find that airlines are difficult to impress with spend under several million. But do try to get a few extras, like discounted lounge memberships.

There are two best ways to reduce your air travel costs. Firstly, always book as early as you can. Usually ten to fifteen days in advance is enough to get good lower pricing. Secondly, book the restricted cheaper fare types. Yes, you might lose a whole fare occasionally and need to book another. But overall you will be way ahead. Airlines make a lot of money from business people buying unnecessary flexibility.

Try to consolidate your hotel room nights per location into the one property, and use these to negotiate a good direct rate. Otherwise, the TMC’s own discounted hotel rates will likely be your best bet. Ditto for rental cars.

One thing that a good TMC will always do is offer you the lowest fare or rate available anywhere at the time. It could be your negotiated fare or rate, or their own one, or a spot market special, or one that is only available on the web. That’s their job.

I hope this is useful advice. Happy travels.

Tony O’Connor, Managing Director, Butler Caroye Asia Pacific

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