In a world where cost savings are seen as the ultimate goal for financial managers, business travel is often seen as a non-essential cost for a company. However should this really be the case? Egencia UK managing director Graham Kingsmill thinks not.
The travel industry has seen a race to the bottom on prices. In the Internet era, budget airlines and price aggregators have empowered customers, travelling for business or leisure, to perform basic and straightforward searches to identify the cheapest possible package. Certainly in the business environment as cost reduction has been such a prominent feature in recent years, continuing to choose the option with the lowest cost for all business travel remains a tempting proposition.
Many organisations still have expense budgets approved by financial controllers whose very job it is to save every penny that they can, which naturally leads to a preference for the cheap. For a long weekend or a family holiday, money saved on travelling can be invested into the holiday. For businesses, however, going cheap might not really be saving that much money in the long term.
Cost vs. Investment
On holiday, once you have arrived in your chosen destination, unless you’re the type of person who enjoys creating a holiday itinerary, your time is your own and can be wasted as you wish. When travelling for business, theoretically the traveller should be utilising their time to the best of their ability to succeed in their job. But does choosing the cheapest option really help them do this?
Consider the scenario where a sales team is being flown abroad to perform a pitch to a new business prospect. To keep the costs down, the sales team is placed on an early morning flight which gets the team to its destination just over an hour before the pitch.
The team, tired from the early morning rise and drained from the journey, completes the pitch but sadly is unable to win the business as some of the group are not firing on all cylinders. As such they fly back to the UK later that evening having not earned any new revenues for their company.
Now consider if the team is sent out the night before the meeting, put up in a hotel with breakfast and Wi-Fi services and has the time before the pitch to undertake final preparations. The team, well rested and with each individual assured of their role within the presentation, completely wows the business prospect and wins a new contract for retained services.
It may well be that the cost of sending the team out the day before including hotel costs means that the overall cost of the trip is perhaps three times more expensive than the first scenario. However given the team is successful, the expenses incurred from the travel can actually be seen as an investment rather than costs. By successfully winning the new business, not only has the team covered the cost of the trip, but it has converted the investment into a new revenue stream for the business. Compare this to the first scenario, the travel has done nothing but drain resources, both financial and human.
Investing in productivity
The example illustrated above is clear on how a shift in mentality around business travel can reap instant quantifiable benefits, this on condition that the investment made in business travel is focused on traveller productivity through improving the traveller experience.
This is where travel management specialists really come into their own. By integrating their experience of managing travel and ability to leverage the relationships they have in the industry, a travel management company (TMC) can develop services and technology solutions to help employees travel in the best conditions possible. They should also be able to advise a business on how to develop a travel policy that enables productivity, but also reinforces cost-effective booking behaviour, such as booking in advance for lower fares.
By creating this environment, TMC’s are providing optimal circumstances to allow employees to get on with their job with a minimal amount of disruption.
The modern TMC offers the perfect combination of streamlined digital services and travel expertise and experience. If in the long run, the travel that they are arranging for your staff is bringing in new business and allowing existing business relationships to be properly serviced, can you really still believe that good business travel is a cost and not an investment?