Do companies need to be convinced of the value of travel and, if so, is there a vital new role for the travel buyer? Stanley Slaughter reports
There have been many debates over the years as to how to measure the value of business travel. A few years back, the then NBTA (now the GBTA) launched a massive investigation into how to calculate this value. From memory this floundered amid a sea of statistics. American Express did a similar - though less ambitious - survey which found that for every dollar spent on travel, a company’s revenue could increase by $20.
The subject came to the fore again at the autumn forum of ACTE/Management Solutions UK held in London this week. Two more surveys were called up to back the belief in the essential value of business travel. The first by Oxford Economics in 2009 found that for every dollar spent, $12.50 would be generated in revenue while the more recent study in 2011 by the World Travel and Tourism Council said that the for every unit spent on business travel, the return was ten units.
In his keynote speech, Marcos Isaac, from hotel booking specialist HRS, recalled examples of companies which cut profits and saw their sales fall through the floor amid complaints by the sales team that deals could not be sealed or relationships built without face-to-face meetings. The real object, he said, was not to cut costs but to manage them as well as linking spend to the departments which bring in revenue.
And it was here that Susan Hopley, managing director of The Data Exchange, spoke not of travel buyers but of a developing trend of travel directors, people who would be on a similar level to HR or sales and marketing directors.
As long as the debate on the value of travel has been waged, so has the complaint been aired that too many senior executives do not “get” what the travel is for. Back in the far off days when commissions were rife and travel costs could be covered, this did not matter too much. When travel became a cost centre, it started to matter. But with travel being labelled a cost, the debate over the value of travel began on the wrong premise.
As Paul Wait, Virgin Atlantic’s general manager for global and UK sales, said that for the past 18 months, the “constant theme” from corporates was about cutting costs. “I really do think we should start promoting travel as an investment, not a cost.”
But attempts to do this, to convince CFOs and CEOs that travel is an investment have not enjoyed as much success as they deserve. One reason is that the ROI (return on investment) on travel is notoriously difficult to calculate. It is easy when a salesperson comes back from a trip costing £3,000 brandishing a contract worth millions. But how many trips did he/she make without a tangible return, building up the relationship to eventually land this big deal? Don’t they count as well? Travel has never reached the happy position of an R&D department which costs money but always seems to be regarded as an investment.
Hopley suggested at the packed forum that now was a great opportunity for travel managers to promote travel as a way to grow a company.
But as the theme of the role of travel managers continued into the next two sessions, it was clear the forum was divided. One travel manager described himself as the “buffer in the middle” between the sales and marketing manager who wanted more travel and the CFO whose eye was on costs. His problem was made worse as the two were unwilling to meet and discuss the matter.
Another said he did not think it was his job to promote travel in the company but to act as a facilitator. This view has two valid points in its favour: first in becoming a travel director, a travel manager, already doing a complex and demanding job, would be taking on the new and extra role of advocate. Secondly, travel involves risk. This is not just in terms of accidents or things going wrong - although these things happen - but more to do with the fact that not all trips end in commercial success. Some will fail and these could be seen as a wasted journey by the CFO for which there would be no thanks for its promoter.
But one travel manager told the forum that she already saw internal marketing and communications about travel as her “biggest responsibility.”
This is clearly a difficult area for travel managers. If they move up as promoters of travel, they take on not only more work but extra responsibility which may backfire. If they stay as facilitator, they risk further budget cuts which if they reduce face-to-face meetings with clients can damage a firm’s bottom line. It is a fascinating dilemma.