Shifting travel program priorities

The strategic direction for corporate travel programs is shifting.

The pandemic and climate change has businesses grappling with more issues than ever before… employee retention and attraction, health and wellness, remote working, carbon reduction, supply chain fragility and more recently, rising travel prices.

 

According to FCM Consulting’s Q2 2022 global report, economy class airfares on many of the high demand global routes were up significantly compared to the same period in 2019. The report indicates price surges during Q2 2022 due to high demand and constrained supply is leading to economy fare price increases including …

  • London to Singapore route +46%
  • Los Angeles to Sydney +51%
  • Auckland to Sydney +42%
  • Delhi to London +79%

Throw into the mix strengthening hotel rates across most Australian capital cities in Q2 2022 and cost containment is squarely back on the agenda for travel program and procurement managers.

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Despite prices heading northwards, demand for domestic and international travel is skyrocketing. Businesses and employees are relishing being able to travel again, reconnect and re-establish relations with their people and customers.

Rather than stopping travel to reduce costs, procurement is focused on cost avoidance and cost containment strategies, amongst the many other post-pandemic issues impacting business travel. While some are taking a more conservative approach to the travel category others are implementing measures throughout the sourcing and buying cycle to minimise price increases. Particularly in markets where hotel, car and air prices are on the rise.

The focus on smarter sourcing has put accommodation in the spotlight, according to Felicity Burke, APAC General Manager for FCM Consulting.

“For companies with large or global hotel programs we have taken a few different approaches to deal with the current market challenges,” Felicity said.

According to FCM Consulting cost avoidance strategies for hotel programs include -:

  • Changing up hotel options in high demand locations to reduce accommodation costs
  • Using a ‘continual sourcing’ approach to ensure rates for companies in industries such as construction and building where projects and teams are regularly on the move, remain competitive
  • Reviewing rates in cities when new hotel properties come online or where supply is steadily increasing
  • Consideration of the total cost of trip and reviewing value-adds through rate inclusions such as breakfast, parking, food and beverage discounts, early check-in or late check-out
  • Working with hotels to come up with flexible hotel pricing strategies and extending traveller coverage in line with Accor’s new global chain discounts for corporate clients

Felicity added that cost avoidance strategies could be factored into the entire travel buying cycle not just accommodation.

“Despite the added pressure the travel industry and travel budgets are facing right now, business travel has returned with a vengeance and for many category or program managers it’s about recreating or redesigning programs to suit new conditions,” Felicity said.

10 cost avoidance strategies your business can consider

  1. Implement hotel rate caps in cities where accommodation rates are on the rise
  2. Have an automated pre-trip approval process in place
  3. Review your rates and fares to see where it makes more sense to buy restricted rather than flexible rates or fares
  4. Review your food and beverage or daily allowance for travellers
  5. Plan ahead to support advance booking strategies and let your TMC know what you have coming up in your travel pipeline
  6. Know your preferred suppliers’ change and cancellation policies
  7. Ensure your OBT is effectively managing all your air credits on hold
  8. Know what the difference is cost wise for your business when it comes to multiple people using Ubers and taxis versus taking trains, or renting a car for a day or asking your staff to drive and park at the airport 
  9. If offline bookings cost your business more – focus on re-training your travellers to increase your OBT usage.
  10. For car rentals of more than a few days, consider asking travellers to pick up their cars from an off-airport or city location rather than an airport location to avoid paying location fees.
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