BTN Europe presents an overview of business travel and MICE predictions for this year
Virtual Event - 1 October 2020
ExCeL London - 22-23 June 2021
It was one of the most attended sessions at the ACTE global education conference in Munich. The room was packed, with dozens of people standing in the aisles. Ironically the subject which interested the 200 or so travel executives in the room was 'How to cut travel.'
But the session on Demand Management was a not a case of turkeys voting for Christmas. The real draw was how significant savings can be made if people travelled less and used alternatives like video-conferencing more.
The consultants AT Kearney, who are leaders in this field, define Demand Management as "a proven mechanism to take the costs out of an organisation without further reducing its capacity to execute. With Demand Management, organisations address their underlying drivers of external spending, align their purchases and their business needs and eliminate unnecessary consumption."
Well, yes. More simply it means, in the case of the travel industry, cutting costs by cutting trips.
This is not a new idea. It has been around for many years. But judging from the attendance, it is becoming more relevant to the travel manager.
Tony D'Astolfo, vp travel services for Rearden Commerce, who moderated the session, gave compelling reasons why this might so.
With oil approaching $100 a barrel and hotels unable to meet current demand, the prospect of good deals or even savings will be hard to come by from these major supply sectors. So costs need to be controlled in another way.
Mr D'Astolfo said Demand Management was not about driving down costs "but about whether you really needed to get on that plane. Basically it is driving home to users whether the demand is necessary. 'Do I have to spend that company dollar?'" he said.
But he warned that Demand Management needed to be part of a "very structured programme" or its impact would be reduced. AT Kearney, he said, recommended a "rigorous application if you want to reap rewards."
But companies pursuing Demand Management were getting rewards which were both "significant and rapid."
On the panel were three travel managers who had all successfully introduced Demand Management.
Jykri Haavisto, global programme manager for HP Travel and Meetings, said he had used it for five to six years and there had been significant savings. The motivation to adopt it was that HP's travel costs were "spiralling out of control."
Philippe Darson, director corporate travel service EMEA and APAC for Bristol-Myers Squibb, said his objective in adopting it three to four years ago was "to reduce spend and probably also change people's behaviour."
Tracey Williamson, global commercial manager for Vodafone, said: "There was a need to justify spend. 'Why could employees not do some of their meetings through video-conferencing.?'"Ms Williamson said there as also a "green" element with the work life balance "absolutely" behind the thinking. "If people spend less time travelling and more time on video-conferencing, they are going to be more productive and less exhausted."
She said that the environment had come into the equation in the last six months but had not been an "initial driver."
Mr Darson said Demand Management had produced a change in behaviour. In 2005 his company's employees had flown 374m air miles, a rise of 23% on 2004. This had emitted 66,000 metric tons of CO2.
In a programme to reduce these figures, the company had installed video-conferencing equipment in 23 centres and encouraged their use. "Our employees have willingly embraced both the initiative and the technology. This has led to a reduction of several million miles flown as well as an additional reduction on auto miles," Mr Darson said.
Allied to a travel policy requiring advanced bookings of two or more weeks before the trip and the use of three-star rather than five-star hotels, he said savings had reached around 25%.
Ms Williamson presented similar figures. Her company had installed 200 video-conferencing units, including six lounges. These were now used 85% of business hours.
The result was that trip between larger cities had been cut by 100% and the return on investment in the video equipment came within two months. Vodafone is now planning more lounges.
All three travel managers stressed that any changes had to be fully and actively backed by senior management, that communication with the travellers was key and that the technology of the video-conferencing must be right.
But there were still objections. Mr Darson said his colleagues had pointed out that travelling was part of their business. "It was very difficult for them to understand why we wanted to reduce their travel," he said.
Some employees at HP, Mr Haavisto said, were "very happy but others would say 'This is how I do my business and don't tell me how I should do my business.'"
Ms Williamson said the change was challenged "only by a minority." But she added that at the same time, video-conferencing minutes had trebled.