What can SMEs learn from large companies’ Travel Management Programs
According to the Asia-Pacific Economic Corporation (APEC), small and medium enterprises (SMEs) account for more than 97% of all enterprises across APEC countries. The region also accounts for 40% of global business travel spend, making it the world’s largest business travel market.
Most travel management programs in Asia are designed for large corporations. So, in theory, SMEs are missing out. Or are they?
Take the use of a TMC for example. True, larger companies will have the volumes to negotiate discounted rates. However, TMCs also leverage their clients’ collective buying power to secure reduced rates for smaller clients who do not have the spend to do so in their own right.
Most TMCs don’t charge smaller businesses for access to their people, expertise and systems, so there’s a wealth of advice available, at no cost, to the smallest business.
Whether you use a TMC or not, the reality is that managing travel in-house can wind up costing more than outsourcing. Apart from the time and productivity sacrificed whilst searching for and booking flights or hotel rooms, there are the hidden booking fees and inflexible terms that can drive trip costs up.
For example, Online Travel Agents’ hotel rates may seem great value, but last-minute itinerary changes are a fact of business life, and most OTA bookings cannot be changed. Similarly, air ticket comparison sites can be misleading, adding booking fees and other costs that only become clear when the user reaches checkout. Not all airlines or hotel companies can be found on these third-party sites, so your choices can be limited to their preferred suppliers.
The first lesson SMEs should take from larger company travel programs is that a company travel policy is essential. This need not be complex but a series of rules that employees should follow when traveling on business.
The first step in creating such a policy is to quantify how much you are spending on air travel, accommodation and ground transport; in which cities and with which suppliers. Once you know that, you can start to negotiate a preferred supplier program based on concentrating your spend into those carriers and hotels willing to give you the best deals all year round. Businesses usually save around 15% on their travel spend by consolidating their travel program.
The next step is to make sure your choice of suppliers suits the needs of your travellers. Today’s millennial business traveller cares where they stay. They want to make their own choices, so your travel policy needs to offer them a wide range of choices so they can pick their own flight times, opt for an Airbnb instead of a hotel and ride Uber instead of a local taxi. So you’ll need to invest in an effective online booking platform if you’re not working with a TMC.
According to a study conducted by McKinsey, Asian business travellers are twice as likely to extend their business trips to include a weekend stay than their international counterparts. These ‘bleisure’ trips are easy for TMCs to handle because they have the sophisticated systems that can provide access to leisure products and rates whilst capturing the overall spend.
The reality is that business travel can eat up a lot of staff time if managed in house. The administrative workload alone accounts for why so many large companies outsource their travel management to a TMC. Although the volume of paperwork in an SME is much smaller, so too are the business’ profit margins. It’s all a matter of focus.
Leaving SME employees to handle their own business travel needs, or “unmanaged” travel, places extra work on them which impacts company productivity. Not channelling all travel bookings through a single point also reduces visibility on travel expenses, giving the finance team a real headache.
These are just some of the reasons more and more SME travel buyers have realized that working with a TMC is their best option. From generating savings to managing spend; understanding travel patterns and providing spend analysis. It just makes sense.
So what’s the difference in approach between larger and SME companies to business travel management? The answer lies in priorities. For the bigger players, traveller risk management and refining supplier agreements are big issues. Not so in SMEs, whose primary objectives are increasing cost-savings, traveller productivity, and spend visibility.
The solution to each of these challenges lies in a TMC. For SME business travellers, best value for their spend; deals that deliver the best products and services, and loyalty-based incentives are the priorities.
For the employer, booking travel across multiple websites and platforms is a quick way to exceed your travel budget. Consolidating bookings through one online booking tool ensures you know where your travellers are and creates the opportunity to leverage further discounts from suppliers.