Public and private travel management needs can vary greatly, but the two sectors can learn a lot from one another. Betty Low reports
In January the Government Procurement Service (GPS) will begin sharing the details of the next central government travel management services framework tender.
Government purchasing is done through a series of framework contracts for different categories. These are created via European Union-compliant bids which identify suppliers that departments and agencies can use without having to repeat the costly tender process themselves.
The existing travel framework was divided into two lots. In the autumn of 2011 the GPS awarded Lot 1, which was for government departments with large international requirements, plus UK travel and accommodation, to HRG. Lot 2, which was for departments with mostly UK travel and accommodation, was awarded to Redfern Travel.
No one was surprised by the award to HRG. The global travel management company (TMC) was already the agent of record for both the Foreign Office and Ministry of Defence (MOD). The appointment of Redfern, however, raised a few eyebrows. A hitherto relatively unknown Yorkshire agency was awarded a contract set to double, even triple its annual turnover. The principle of risk management had collided with the government’s commitment to award public contracts to small- to medium-sized enterprises (SMEs).
Creating Efficiency
The aim of both the three-year contracts was straightforward enough. Top Shop boss Philip Green had produced a report in 2010 which recommended government consolidate suppliers to drive cost savings. In what had traditionally been a devolved, non-mandatory culture, the decision was made to mandate the use of TMCs for all government to reduce transaction fees, create process efficiencies and begin to deliver the consolidated data which for so long has been lacking in the public sector.
The bigger picture
But that is central government’s travel management story, and it is important to remember that there is more to the UK public sector. Public sector organisations are those that either get a predominant proportion of their revenue from the state, or are regulated by government in how they do receive income (think BBC licence fee or university tuition fees).
The organisations vary – from small agencies in the Outer Hebrides to local government departments with large travel budgets – but they do have some common characteristics, such as political and social considerations, the need for higher visibility, sustainability reporting and low ceilings on hotel rates. These can lead to some common challenges.
The recent tender for travel services for this wider public sector was not split into lots on the basis of travel profile, as per central government, but on the basis of the service offered. The three lots of the framework were: online hotel and rail; online for hotel, rail and air, plus offline help, support and booking; and the services in the first two lots, plus the ability to call upon a full travel management service.
Click Travel was appointed in all three lots, and Capita Travel and Events in the third category. Their four-year contracts will run until November 2017.
Diverse needs
Central government departments and agencies may have different travel requirements, but those become even more varied when you introduce the wider public sector into the mix.
Capita Travel and Events’ acquisitions of Lonsdale, BSI and Expotel means it has a longstanding legacy of public sector clients. “Our clients are different – the Met Office will have a different requirement from the NHS in the Orkneys,” says Capita director Steve Banks.
He believes the gap between how the public and private sectors purchase travel has narrowed. “In recent years there has been a lot more attention to compliance and maximising cost-savings opportunities, and a lot more making sure that policy is fit for purpose,” he says.
Another sign of modernisation, according to Banks, is a move to looking at total trip costs. “There are hidden costs such as travel to the station or the airport [which need to be taken into account so] we can compare total costs and total time,” he says. “We recognise that in the public sector there is a lot of visibility of what and how they’re spending.”
Banks sees the adoption of online booking as important to cost savings. “There is still a good opportunity to increase online adoption,” he says. “A lot of people in the public sector still like that personal touch and interaction.”
Online advantages
Online booking has advantages that those charged with university travel management also recognise. Andy Speller is managing director of Key Travel, which has 70 university clients and is the top-ranked supplier on the SUPC (Southern Universities Purchasing Consortium) framework and the largest supplier on the London Universities Purchasing Consortium (LUPC) framework. “You get cost savings through online booking itself and by making sure people have the comparative costs visible,” says Speller, who adds that having travellers connected also makes it easier to deliver other obligations, such as duty of care and sustainability reporting.
He concedes, however, that online will not work for all. He says: “For some, online booking will never take off, so we focus on making processes efficient or providing better content.”
But universities have needs beyond ticketing at a good price. “Universities such as the Liverpool School of Tropical Medicine and SOAS have people that fly to unusual places in Africa and Asia, so duty of care is important,” says Speller.
Although the GPS mandated the use of the TMCs appointed to the central government framework, the same is not true for the wider public sector framework, or for the LUPC or SUPC frameworks. Eligible organisations are not compelled to use those TMCs, but instead might be encouraged to do so by the benefit of saving time and money ensuing from the fact that suppliers on the framework are Official Journal of the European Union-compliant, so are ‘approved’ and ready to use.
Speller points out that this means that another sales push by the TMCs is needed to win university contracts. Moreover, because of the autonomous nature of academics, who are often travelling for research or to lectures courtesy of a grant which they have secured themselves, there is more work to do to encourage fuller participation in the travel programme.
Nonetheless, in these days of lessened central government support and escalating student fees, universities need both to demonstrate and realise the benefits of financial prudence. Speller says that Key is increasingly using an ROI (return on investment) measuring for universities, as is commonly done for commercial organisations.
“If you don’t define objectives, no one knows if you have been successful in what you set out to do,” he says. “We might agree three things to accomplish in the first six months. One might be compliance – can we get 80 per cent on contract? The next target might be to get 30 per cent of eligible bookings online to save £10,000 in booking fees.
“It’s all about moving forward and helping people. Not everyone has a budget big enough to employ a team of travel experts. People need to feel they’re making progress in whatever environment.”
Reduced Budgets
The Ministry of Defence certainly has a big travel budget, although, like that of other government organisations, not as big as it once was. Mike Holmes, worldwide government services director for its TMC, HRG, could be described as poacher-turned-gamekeeper, as he was previously in charge of travel at the MOD. He says: “Demonstrating value for money is a big challenge. Extra volume doesn’t always guarantee discounts. It’s not like buying light bulbs – there is a fare that is the lowest that the carrier can go.”
However, says Holmes, HRG will maximise the value from these fares by adding benefits, such as greater baggage allowances. He believes that management information can be used “to identify poor practice such as hotel no-shows. If these are higher than expected, we work to address that,” says Holmes.
He emphasises that long-haul international travel often needs to be dealt with offline. “Unaccompanied minors, diplomatic mail, weapons carriage, escorted prisoners – these all have a legitimate requirement for offline bookings. You need to set realistic online targets.
“We do need more end-to-end, but a fully automated process might be a step too far.”
He thinks that the private sector could learn a lot about data security and contract management from the public sector. “The way we have to deliver is very prescriptive, but it is clear and precise about supplier performance and targets being met,” says Holmes.
On the other hand, he believes the public sector could learn from the private sector in the areas of innovation. “Once you’re awarded a contract, that’s great, but you can’t stand still. You have to look at reducing transaction fees and moving it forward.”
Holmes also thinks that government delivery would benefit from incorporating incentives into government contracts.
“The government should feel able to incentivise the TMC to be innovative in how they deliver the service. There has to be that balance between being prescriptive about what you have to do and deliver, while also being able to deliver savings that benefit both. If the client is saving money, the TMC should gain some revenue.
“I’m a firm believer in honesty. You should be able to say: ‘This is the cost base, this is what we have and if we deliver beyond that, it should be recognised and rewarded.’”
Let’s hope that turning around government thinking isn’t akin to turning round one of those battleships of the MOD for whom Holmes once worked.