American Express Cites Strategies and Technology Solutions to Keep Rising Corporate Costs at Bay
American Express Global Business Travel says seven basic steps can help companies offset the external pressures that are driving up travel fares and rates. Business travel has seen a rebound this year as executives seek to increase revenue. According to research issued in conjunction with the World Travel and Tourism Council (WTTC), three quarters of executives believe that business travel is “extremely” or “very” important to increasing profits (74%) and increasing sales (75%).
Achieving revenue growth is being challenged as prices also make a rebound across travel categories. According to the most recent American Express Business Travel Monitor, in Q2 2011 the average domestic airfare increased 12 percent in the second quarter in Australia. Overall, published airfares increased 11% year-on-year.
“Businesses and travel management professionals in particular have to balance the need for using travel as a means to grow business with the stark reality that travel costs are rising said Trena Blair,” VP and GM for American Express Global Business Travel. “They are being asked to identify areas of savings while also being charged with increasing the number of trips booked. We are working with clients to deploy measures that can be taken to stave off increases that are not within their control.”
SEVEN STEPS FOR TAMING EXTERNAL TRAVEL BUDGET PRESSURE:
Book All Travel Through Agency Partners:
Companies that book all their travel arrangements through their agency partners are not only maximising their negotiated rates and costs savings but are also adding an additional security benefit. When employees book outside approved channels for business trips it can not only cost the company more money in the long run but also impact how they can help their travellers if they are in an emergency situation. Travellers who book their plans, especially hotels, through the correct channels are enabling their company to easily locate them and help them in times of disruption.
Mind Unused Tickets:
Many companies fail to apply unused plane tickets towards future travel despite having negotiated that ability in their supplier contracts, in effect losing money whenever travellers cancel or alter travel plans. Having a plan to track unused tickets and their associated costs is essential to accurately capturing complete travel spending and thus identifying savings opportunities.
Get the Most Value from Complex International Itineraries:
In today’s global marketplace, complex multi-country trips are a prominent component of nearly every corporate travel program. However, savings and profits are more often than not tangled in currency fluctuations, pricing structures and stopover restrictions. Our international rate desk provides clients with access to a team of experts who can spot these opportunities for savings – which is crucial for those seeking to optimise travel spending.
Know Where You Travel:
Price increases are expected to continue. Companies should be aware that even modest increases can have a significant effect on travel budgets as they may mask larger, regional increases based on city pairs and class of service. Understanding where employees are travelling for business can allow for additional policy refinement and can help to maximise the allocated budget. By understanding that information, companies can negotiate fares based on routes and volumes which can help drive additional cost savings.
Audit Rate Loading:
Discrepancies between hotel rates loaded in the reservation system and negotiated corporate rates represent another opportunity for companies to drive savings. It is estimated that nearly 35 percent of hotel rates are loaded incorrectly into the reservation system. These rate differences often go unnoticed and unchanged, resulting in higher costs for rooms and, at times, the failure to include negotiated amenities such as wi-fi and meals. On average, companies may be losing out seven dollars on each room per night, which rapidly amounts to a large sum. Our patented program, Hotel Rate Trax, helps companies audit and fix these discrepancies.
Track Your Spending:
Being able to understand where you are spending is the first step towards getting the most out of your travel budget. Business travel can be a driver of business growth, and to be competitive companies need to not only budget appropriately for their growth targets but also benchmark their spending against previous years, their peers, and competitors. Demand and change management is driving the next generation of program optimisation - even globalised travel programs can benefit from and often need multiple data feeds to monitor their spending and identify any opportunities for savings.
With continual rises in prices, a key driver of savings is encouraging employees to make smart business decisions with the company’s budget – i.e. driving compliance within travel policies and using preferred suppliers. Despite this, companies often fail to seize this clear opportunity for meaningful savings. In 2010, a year when compliance was top of mind for businesses, an evaluation of travel booking data showed that the percentage of out- of- policy transactions grew from 26% to 33% year on year. Shockingly, the evaluation also revealed that 97% of these out- of- policy bookings were approved by managers. American Express Pre-Trip Auditor offers companies a variety of ways to enforce traveler compliance through methods such as automatically sending notifications to travelers when they have booked out- of- policy and flagging itineraries to management before trips are ticketed. In a fluid and dynamic supplier pricing environment where company policies are occasionally at odds with personal preferences, a pre- trip compliance solution will assist a company in achieving adherence to corporate policy and negotiated rates, contributing to saving what otherwise would have been lost. It also provides companies with a variety of ways to enforce traveller compliance through methods such as automatically sending notifications to travellers when they have booked out- of-policy and flagging itineraries to management before trips are ticketed.
“Savvy companies know that taking any of these measures can help a program, but that is only part of the process. Working with travel agency partners to properly integrate these tactics into a strategic, managed travel program will maximise their efficacy,” continued Blair. “The goal is to drive new behaviours within the company. Communication of policy and business goals is essential to helping travellers make smart decisions on behalf of the company so that business travel can be used strategically and as a competitive advantage.”