Smaller companies can run up big bills unless travel is carefully managed as part of their expansion
The UK was once a nation of shopkeepers; now it’s more a nation of startups. Despite the Brexit psychodrama, a dizzying 663,272 businesses were hatched in 2018, according to the Centre for Entrepreneurs. This reinforces the idea that we are a country dominated by small to medium-sized enterprises, many of which buy business travel on a daily basis.
This is still the largest unmanaged segment of the corporate travel market. Add up all the SMEs in the UK and we’re talking 5.6 million businesses employing more than 16 million people. It’s a segment worth £2 trillion and accounts for just over half of all private sector turnover, according to the Federation of Small Businesses.
“We define this sector as those that have a travel spend under £500,000 a year. It’s vibrant and active,” explains Mervyn Williamson, the UK managing director of Travel and Transport Statesman. Yet this kind of spend can make or break a company. After wages and premises, travel is the third biggest ticket item to burn a hole in the profit-and-loss spreadsheet.
“Small businesses with low spend and volume represent a cost to manage and a challenge to service for traditional business travel providers,” says Neil Ruth, co-founder of TapTrip, a self-service travel solution.
There’s no doubt this sector needs more such solutions. For instance, the number of SME companies exporting abroad rose by 6.6 per cent to 232,000 late last year, according to the Office for National Statistics.
Businesses are too preoccupied with getting new business, paying staff, boosting turnover and keeping the company afloat to worry about a flight ticket here, a rail booking there. They’re resource poor and their specialist knowledge of the dark arts of business travel management is limited.
“There are rarely travel category specialists in smaller companies. It can be the owner or a senior manager that’ll be looking after travel, alongside many other things,” explains Antoine Boatwright, global innovation director at Reed & Mackay.
In fact, there’s a rainbow of people out there booking trips from office managers, executive and personal assistants to finance and operations staff. What’s changed is that people have a lot more experience when it comes to booking travel today, spurred on by the holiday market.
“I think that most corporates believe they can do it themselves,” states Ken McLeod, director for industry affairs, Advantage Travel Partnership. “There has been many a PA who has been protective of their role as a travel manager in their organisation, as they also see it as a perk of their job.”
There’s also a rainbow of experiences out there – some use leisure websites, others use travel agents, an even smaller segment use a TMC. “Most SMEs do need some sort of help. The big challenge comes when their travellers complain that the service they get is more ‘clunky’ than when they book their own holiday. This then becomes a trade-off which few TMCs explain when pitching,” says Adam Knights, UK managing director of ATPI.
That trade-off comes in the form of other benefits, particularly cost savings with access to corporate rates and transparency on expenses; both of these top the list for SMEs. Then there’s the issue of tackling dynamic pricing and consolidating spending – yet some feel that by outsourcing travel they’re giving up control.
“There is also a perception among smaller businesses that it’s too expensive to work with TMCs, so it’s important for us and others to educate them about the value of working together,” adds Shelley Mathews, vice-president, European sales and client services at CTM.
“There is actually an opportunity cost of booking travel DIY. If someone in senior management is booking travel, then they’re not running the company or bringing in new business. Is that really time well spent?”
Step by step
In recent years, travel management has become more flexible in what it offers SMEs. Smaller companies can buy in modules, whether it’s air, hotel or rail. Costs rise only as service levels increase. In many ways it’s about finding the right level of service. The larger a company is, the more cost savings it can show. Yet with small organisations it’s more about the benefits that managed travel brings to the picture.
“We all appreciate travel is a significant cost to manage, so we make sure we’re aligned in how much time we take up and what areas we need to work on with our TMC,” says David Oliver, procurement manager at Red Bull.
“You also have to do the work to ensure you find a good fit for your programme and the TMC’s services. We don’t need a massive back office of experts in international travel as most of ours is UK or basic European trips. We’ve now found the right balance, but five years ago we were with the wrong kind of TMC for our needs, so costs were consumed by services we didn’t require.”
[learn_more caption="How to manage SME travel"] • Creating a travel programme and policy that can grow with your business over time is crucial and one that allows flexibility and agility is also imperative.
• Putting in place best practice from the start will make sure that when the budget and programme increase, you have the best systems in place for expenses and their visibility.
• Getting buy-in from senior management from the start allows you to justify travel spend and also travel ROI over time. Keep those communication channels open.
• Duty-of-care is a huge issue when it comes to business trips. It’s something that’s hard to deliver on your own. This is where managed travel comes into its own.
• Creating or being part of a network of travel buyers or managers allows you to have a sounding board for both ideas, queries, comparisons and best practice. You’re not alone.[/learn_more]
Another thing that smaller companies do want is something personal and personalised, not being pushed out to a big call centre, so working with someone you can trust is a big part of this picture too. “Our job is to demystify all that travel jargon for people, simplify the process and make all that travel content, say from 18 different channels, easy to understand,” says Andy Hegley, UK general manager at Corporate Traveller.
One of the biggest gripes from some SMEs is that they are small fry and are sometimes put with less senior account handlers for services. Ariel Crohn, a travel manager for an insurance company (see box below), says smaller companies may be less visible.
Kevin Harrison, managing director at Good Travel Management, agrees. “Smaller businesses’ expectations are often the same as larger multinational companies. Yet their needs can be lost within a larger TMC which is focused on supporting and retaining the business of much larger companies,” he says.
[learn_more caption="Coverys: Duty-of-care crucial for insurance professionals"] Coverys is a medium-sized company specialising in medical professional liability insurance. It has around 700 employees and sends some 270 insurance executives out of the office between one and three times a month. Since the company is in the insurance profession, duty-of-care is a big issue. It has brought in a managed travel programme over time, but its policy is flexible.
“The key to success is to rely on a great network of travel professionals I’ve built up over the years since I am on my own,“ explains Ariel Crohn, travel manager at Coverys. “If I want to get a neutral perspective on a contract, an airline or a booking tool, I know who to call. It’s crucial and that’s why I am also active with the GBTA as well.”
Because the company isn’t big, Crohn works closely with the chief executive and chief operations officer in order to make the programme work. “Having a direct line to the C-suite is imperative. All managers need a stakeholder internally to work with, so they get buy-in from management,” she explains.
Coverys has a high adoption rate for the travel policy it has introduced. Crohn puts this down to the fact that she’s hands on and gets on the case of anyone who books out of policy. The company uses a TMC, Travel and Transport Statesman, but it’s not a big account. “We still expect personal service, though. Because we’re risk averse, it’s good to use a TMC, because it deals with the duty-of-care issues for executive travellers better than I can on my own,“ states Crohn.[/learn_more]
Start young
However, the sage advice from buyers and TMCs alike is that for a small company it’s worth getting some form of structured travel management in place early on. It’s only when the company grows and travel costs escalate that problems appear.
“As the company grows our consultants will need to travel more. More travel means more expenditure, so having a solid travel policy in place, alongside a way of booking that ensures we get the best value for money is important,” notes Lina Dineikiene, financial controller at Brand Finance.
Duty-of-care is also a hot topic that’s filtering down, even to those that have small budgets and infrequent travel. This is something that SMEs struggle to deal with on their own without sizeable investment. “Small businesses increasingly want clear visibility of their travellers, to ensure they are safe no matter where they are travelling,” points out Chris Vince, director of operations at Click Travel.
New frontiers
Meanwhile, there are a number of trends in SME travel. A straw poll suggests the segment doesn’t conform to the standard destinations and tickets purchased by many bigger companies. This is because SME business interests and ties are diverse.
“Fundamentally, business travel is one of the greatest enablers to growth whether it’s travelling to Buenos Aires, or from Middlesbrough to Carlisle,” says Steve Roberts, vice-president of sales, UK SMB at SAP Concur. “In a post-Brexit Britain, travel is going to be fundamental to creating new partnerships in new regions.”
Earlier this year, British Airways revealed its fastest-growing business travel routes for this segment included non-traditional destinations across South America, Africa and Europe. Destinations Chile, Iceland, Poland and Nigeria topped the list.
“SMEs tend to be the first entrants and specialists into a new sector or market and therefore travel is vital. We’re seeing an increase in demand for trips, specifically beyond Europe, and this indicates that customers are already looking to the future,” explains Neil Armorgie, global product director at Advantage Travel Partnership and chief executive of Win Global Travel Network.
Start-ups and millennial-driven companies are also beginning to think about whether there are better ways to manage business travel and expenses. “We find companies that are searching for solutions that don’t follow the typical TMC norm. It’s why so many travel tech start-ups have raised such large figures in investment, including Lolo Travel, TripActions and ourselves at TapTrip. There’s still a significant market that needs problem-solving,” explains TapTrip’s Ruth.
[learn_more caption="What’s new in the SME space?"] • Millennium Hotels is focusing on smaller businesses with the revamp of its loyalty programme. This involves a new corporate booking tool. It has reporting functionality and allows members to earn rewards and book team travel. This comes after InterContinental Hotel Group and Hyatt launched programmes specifically to target SMEs in mid to late 2018, offering data, content and “best rates”.
• Earlier this year Qatar Airways launched a rewards programme, too, aimed at the SME sector. It allows smaller corporate bookers to earn so-called Qrewards, which accrue to the company and can be spent on flights and other perks.
• Oman Air is looking to focus on the SME market in the UK with the appointment of Darren McCormick, a former head of aviation at Travel Counsellors, to the new position of corporate account manager.
• Amber Road has launched mobile app TRAQ, which allows bookers to drill down to the best available prices. It also offers travel compensation via Railguard, a Disrupt Award finalist at this year’s Business Travel Show.
• Air France KLM has relaunched its corporate loyalty programme, Bluebiz. It is used by Air France, KLM and airline partners Virgin Atlantic, Delta Air Lines, China Eastern, China Southern and Kenya Airways. Members earn more blue credits the higher the value of their ticket, with ancillaries, such as seats and luggage, available to purchase online.[/learn_more]