With pressure on every business to keep budgets in check, what areas should travel buyers focus on to find savings? Colin Ellson reports
Like the engineers struggling to contain the spillage from BP's oil rig in the Gulf of Mexico, both public and private sector travel buyers are facing hitherto unknown haemorrhages of funds from their budgets.
Expand the simile and the worst disaster of its kind in US history equates to the most severe series of blows ever faced by the business travel community: from recession and the disruption caused by the Icelandic ash cloud, to the new government's threatened increases in taxes on flying. Given the coalition's need to raise money to pay off the UK's budget deficit, a rise in air passenger duty (APD) is likely to be one more expense business travel could do without.
All of which means travel managers and procurement departments have to make savings in their budgets wherever they can. It's a case of running the rule over expenditure on travel and looking at areas apart from air tickets and hotel accommodation - both traditionally responsive to savvy buying online - to cut costs. The range is extensive: are we paying too much, companies will ask, for services such as chauffeur-drive, car rental, rail tickets, and meetings and events, and can serviced apartments offer a better deal than hotels?
These are pertinent questions, according to Anne Godfrey, chief executive of the Guild of Travel Management Companies (GTMC). "Any company using a travel management company [TMC] will find it looks not just at air fares and hotels but at every aspect of a client's travel policy," she says. "The pressing need is to identify other areas where savings can be made."
A TMC, says Anne Godfrey, may suggest using rail instead of air travel, recommend the use of a private car rather than a hire vehicle, and look at whether the cost of a limo transfer can be justified. "Corporates should also be asking whether staff travel is always necessary," she adds.
Deciding whether or not staff need to hit the road is an issue regularly faced by Simon Robinson, facilities manager for Lloyd's-based insurer Beazley Plc, based in the City of London.
"One challenge is that more than two-thirds of our business derives from the US, involving an awful lot of international travel," he says. "But our TMC, Reed & Mackay, has a very good events division, offering varying solutions to help us manage our travel costs effectively, such as hosting external video-conferencing and events management."
Reed & Mackay has also assisted Robinson in pitching for air fares, resulting in significant discounts, and has helped in his attempts to instil staff compliance with travel policy.
"We are currently assessing other travel concepts introduced to us by Reed & Mackay, such as a rewards scheme for staff adhering to our policy or willing to downgrade from Business Class to Premium Economy," he adds. "This is where a traveller is awarded points which can be exchanged for goods in a catalogue similar to supermarket reward schemes."
Ensuring clients' travellers stick to the rules is also a priority at Eton Travel. Says account manager Nigel Cleur: "We study the reasons for travel, and use trip modelling beforehand. This involves looking at a similar journey taken the previous year and assessing the total cost, which is used as a benchmark for the proposed trip. We also work closely with Concur's travel and expense management system Cliqbook, which flags up customer expenditure."
If that sounds a bit Big Brother, so be it. Reducing unnecessary costs is key to a sustainable travel policy, as is individual responsibility for saving the company money.
"Our clients are looking at many different ways to cut back on their travel budgets," confirms Matt Selby, sales and marketing manager of Capita Business Travel. "Although in the past lip service has been paid by some to online booking technology, we certainly see them now investigating and mandating this area more strongly."
Where a small- to medium-size firm lacks the resources to employ a TMC, an alternative is a travel adviser. They range in size from the proverbial one man-and-a-phone to companies such as HRG Consulting, a subsidiary of one of the best-known corporate travel suppliers. And like a TMC, advisers will help a company optimise its travel budget, with claimed savings of 25 times their fee - or more - not unusual.
Those who have to arrange their own travel can call on a range of self-booking tools to achieve their objectives, while suppliers are aware of the problems business travellers are up against and are devising cost-cutting measures accordingly.
Eurostar, for example, has announced the launch on September 1 this year of Standard Premier, mirroring the airlines in offering a compromise between its full-service Business Premier Class and the basic Standard product.
Borrowing some of the benefits enjoyed by passengers paying the premium rate, the new class includes a range of flexible and non-flexible fares, 30-minute check-in, large seats with space to work, power sockets, and a tray meal-service at the seat.
For those willing to forego some of the goodies of Business Premier, Standard Premier fares are an eye-opener: a return ticket from London St Pancras to Paris or Brussels costs from £189, compared to £450 for the full works.
Also on the right track is Worldhotels, which on July 1 became the first collection of independent properties to introduce a dedicated programme for small- and medium -size enterprises via its new business programme, Travel Select. This gives buyers instant access to preferential rates and special offers at 450 upmarket hotels in over 250 destinations worldwide, using a designated booking engine.
Finding the right conference venue at the right price within a budget is another headache. Responding to requests from clients asking for advice on how to organise an appropriate event, Simon Thompson, founder of Conferences-UK, has launched Conferences Group, the new umbrella brand for his online conferencing businesses. Adding event management, team building and audio-visual services to its repertoire, the new service caters for the whole process, from concept and planning to delivering the event on the day.
"We do not charge the client a fee or commission so we can offer the best rates," says Thompson. "Instead, we take our commission from the venue and then share it with the client."
Car rental companies, too, are driving down costs. A recent initiative is Avis Flex, where one of the world's leading companies has introduced a pay-monthly agreement. This allows customers to enjoy flexible car hire for between one month and one year without incurring any charges or penalties or being tied to a contract.
Underlining that prudent buyers are ferreting out such cost-cutting measures, Brendan Walsh, American Express Europe's senior vice-president for commercial cards, says: "A positive side effect of the downturn is that firms have been forced to improve efficiencies and dramatically reduce costs."
He adds that the focus is now on putting more of their spending on company cards - another proven method of cutting expenditure and maintaining the health of travel budgets under threat from the contagion of spiraling costs.