IN THE FINAL QUARTER OF 2014, according to the GTMC’s transaction survey, the number of ground bookings (rail and car) made through travel management companies (TMCs) in the UK was up around 25 per cent year-on-year. Transactions in the air and hotel space for the same period either flatlined or increased modestly.
It’s slightly outdated to say that ground transportation costs receive more travel buyer attention these days because there’s not much more they can do with their air and hotel programmes, which generally account for the largest areas of spend: while there’s still an element of truth in this, the real drivers nowadays are the prevalence of choice and sophistication of technology.
Car rental firms, chauffeur service companies, ride-share schemes and train operating companies are all investing in smartphone apps and application programme interfaces (APIs) to get their content in front of travellers and travel bookers.
The challenge for buyers and managers, therefore, is more complex than simple cost control. With so much choice, and so many new competitors, how do you build an appropriate policy and programme?
CLAIRE MARSDEN, senior supply chain manager, Sodexo
GROUND TRANSPORTATION is such a fragmented area. It can fall into different areas of responsibility: taxis and short-term hires in one camp; with long-term hire, company cars and grey fleet in another. The starting point is to break it down into manageable and related chunks.
How best to deal with ground transport will vary by company. Many split travel and fleet both from a supply chain management and a budgetary perspective, so it may be necessary to align with other buyers and departments.
To manage anything, you have to be able to measure data – with it, you can identify trends and frequent activity. The better the data visibility, the greater the likelihood of creating efficiencies and reducing costs. Data comes from various sources, and one point to consider is that it will tend to flow from other travel – for example, if a flight has been taken, the likelihood is that the traveller will then need some element of ground transportation to get to the final journey destination. Thinking of these flows can help a buyer to deal with spend and process.
Suppliers need to be aligned to the organisation’s requirements, including the policy strength and maturity, data, technology and resources available. Some companies have strict risk management and duty-of-care procedures – for example, disallowing the likes of Uber or hailing a cab on the street. Others need, and allow, a more flexible approach. It’s important to think of the internal processes required by finance and other departments. Efficiencies can come from areas such as electronic and consolidated invoices, as well as potential VAT reclaims – not just negotiated rates and prices.
SANDY MORING, director, Institute of Travel & Meetings (ITM)
MANAGING LAND-LINKED SPEND can be just as important as air, hotel and TMC costs, whatever the size of your spend – even if only from the perspective of supporting your duty-of-care policy.
With the increasing number of operators providing business services for rail, taxi, car hire, meet and greet, and airport car services – all of which are often closely scrutinised when evaluating your environmental footprint – it makes sense to bring this category spend into your managed travel programme sooner, rather than later. That could also include ‘sharing economies’ providers.
With the opportunities to increase access to these services via online and mobile apps, in addition to the traditional offline booking process, spend in these categories can be better managed. The functionality of each booking process will be influenced by the hosting platform, and the established connectivity of your providers will determine the cost to host (if any) structure.
Being able to link providers to your usual online self-booking tool will also allow you the flexibility to change providers as required, which can be more beneficial for this sector of the travel programme, as suppliers may change more often according to your needs.
By bringing this spend, often from multiple suppliers, into your managed programme, you will have better sight of the patterns of spend of individuals and divisions, via data capture at point of booking – which is cleaner and smarter than relying on gathering financial information via expenses – to enrich your consolidated data reporting and support future deal opportunities.
CRAIG CHAMBERS, managing director, TBR Global
WHILE MANY TRAVEL BUYERS and managers sign preferred agreements with airlines and hotels, some do not consider a similar deal for ground transportation.
Spend on ground transportation can amount to a very significant figure throughout the year, so having visibility
and control is important. If organisations do not have a policy in place, there could be high levels of leakage. It also leads to a lack of control over the type of ground transportation being used, and means employees are probably spending more than they would if rates were negotiated. Consolidating allows companies to negotiate better rates against larger volumes.
Business is a global environment, yet some companies only focus on negotiating within their local market. Saving a few pounds on a Heathrow airport transfer could be great value, but if other locations do not receive adequate attention, then it may well be a false economy.
In today’s world, employees want a better and more varied choice than ever before. Offering limited or no options will lead to travellers falling outside policy, leading to more leakage.
As well as focusing on the cost-saving element and compliance, travel buyers and managers also need to consider service quality and duty-of-care. Buyer must ask if a supplier is properly licensed and what the repercussions would be if something was to go wrong.
Organisations know when travellers have checked in at an airport or hotel, but may not have a clear understanding of how employees arrived there in the first place.