Everyone has a plan until they get punched in the mouth,” the renowned American philosopher (and occasional boxer) Mike Tyson once observed. For many small and medium enterprises (SMEs) that punch landed this year with the coronavirus outbreak, leaving them struggling to care for employees on the move.
Up to that point the plan many SMEs had for managing travel risk was not to have a plan. The travel management company/booking tool hybrid TravelPerk says 75 per cent of its customers, most of whom spend €250,000-€5 million annually, had no TMC before signing up to its platform.
With SMEs also tending to lack a formal security programme or risk department, according to Steve Hartwell, CEO of GlobalStar Travel Management, chaos ensued when Covid-19 hit.
“It was definitely a scramble,” says James McIlvenna, head of account management for Corporate Traveller, a TMC specialising in SME customers. “Larger companies generally have rigorous duty of care and crisis management processes but it seemed as if 50 per cent of SMEs were working on the fly when coronavirus hit. Travel is normally handled by someone wearing multiple hats, so there was no one person to handle a situation like this.”
McIlvenna argues that the continuing duty of care requirements posed by Covid-19 now makes totally unmanaged travel untenable for smaller companies as well as large ones. “You won’t be able to jump on a flight to Asia,” he says. “There will have to be more meticulous planning. Policy will become tighter too. SMEs are sometimes not as strict as bigger companies. Gone will be the days of letting employees book travel through multiple sources and expensing it back.”
Smaller companies also have some advantages. Jo-Anne Lloyd, partner with the consultancy Nina & Pinta, believes SMEs could resume travel faster because they are “more agile,” she says. “They can make decisions quicker. If you’re engaging with a traveller community of 5,000-10,000, it’s much harder to take a temperature check.”
The medical diagnostics company Accelerate Diagnostics exemplifies Lloyd’s observation. It has only 40 employees in EMEA, but 80 per cent of them travel at an annual cost of €1.2 million. “We are more flexible. It is easier to align with our employees,” says Barcelona-based EMEA head of finance and operations Carlos Faro.
Normally, Accelerate trusts travellers to make their own decisions on whether a trip, and the cost of it, is justified. That spirit continues but now the office that travellers are based in, the office that they are visiting and the travellers themselves must mutually agree travel is appropriate and review the cost if above €500.
LEADING BY EXAMPLE
Lloyd believes the best programmes to be found anywhere in travel management are often in medium-sized companies which are small enough to retain agility but large enough to employ a dedicated travel manager. For all too many SMEs, however, that is an elusive luxury.
Michael McSperrin, Krakow-based global head of facilities and support services for the recruitment company Alexander Mann Solutions, spends a quarter of his time managing a seven-figure travel spend. “To manage travel well when you have other priorities to balance them with can be a challenge,” he says. “There are so many opportunities to manage travel better because you can always improve a programme.”
Chris Pouney of GoldSpring Consulting argues that the case for active management of travel programmes has grown. “It used to be that unless you were spending £10 million annually, managing it didn’t make sense. That threshold has moved down. It makes more sense now for reasons like greater price volatility.”
Another reason observed by both Pouney and TravelPerk chief commercial officer J-C Taunay-Bucalo is that SMEs are increasingly automating internal processes such as expense reporting. “They more and more want to consider their travel management platform as part of a stack in the same way as their HR and accounting platforms,” says Taunay-Bucalo.
Where SME travel is actively managed, the major trend is taking programmes global. “One of the most common misconceptions is that consolidating travel across borders is only for the big boys but we’ve seen increasing numbers of smaller companies do exactly that,” says Hartwell. “We carried out a survey with Nina & Pinta which showed that 96 per cent of SMEs believe they have benefitted.” The survey highlighted risk mitigation, compliance and savings, in that order, as key advantages.
International development consultancy IMC recently took its travel programme multinational. “Our objectives are to look at regions, traveller bookings, local requirements and cost analysis to maximise our overall travel programme,” says director of security and duty of care Shane Moore. “The mainstay of our organisation is our people, assets and brand, so security and duty of care are also major objectives.”
Moore says IMC’s key step towards programme globalisation was to appoint a multinational TMC, in this case Corporate Traveller.
TMCs also play a vital role in harnessing the buying power smaller companies lack when acting alone. McSperrin negotiates deals with a few hotels where Alexander Mann Solutions spends heavily, but “to get any discounts of real value, you’re looking at a minimum of 200-400 room nights per year, depending on location,” he says. “It very much helps having a TMC for cities where we have weak leverage, bringing us significant savings versus published rates.”
Direct relationships with suppliers can drive further savings. “You can access the SME programmes run by suppliers that offer discounts or loyalty points without being tied by contractual commitments. I always recommend that’s where SMEs start,” says Lloyd.
But there are more advantages to having a TMC than access to lower prices, according to Faro, a customer of TravelPerk. One is a simpler process for changing bookings, which can be tricky via consumer websites. Another is improved cashflow by paying centrally on account instead of reimbursing travellers immediately after they book flight or hotels themselves.
All these savings are extremely welcome at a time when Covid-19 is hitting businesses with unprecedented financial brutality. But beware that the additional personal attention travellers need to plan trips in a coronavirus-afflicted world can make TMC fees higher than normal.
“We had to bring back more staff from furlough than we anticipated because of a shift to offline bookings,” observes McIlvenna. “Offline fees are higher than online, so there is that to factor in, but our clients save 15 per cent on their overall travel spend by consolidating with us.”
On top of that, McIlvenna adds, are the soft savings that result from booking travel offline – busy executives will spend less time wrestling with the complexities of travel, with all the work instead done for them by the TMC’s consultants.
TravelPerk’s Taunay-Bucalo takes a slightly different, more contentious, position on this issue. “I agree with the underlying assumption that coronavirus will move more SMEs from unmanaged to managed,” he says. “The leap of faith I don’t agree with is that it will move to offline. You only move to offline if you aren’t providing the right level of information online.
“Having said that, the human aspect is a really important part of it. People are contacting us online to make the booking and then offline to see if it is okay. They need comfort even though in reality the information was available to them. But once they have done two or three trips they get the hang of it and go back to doing it by themselves.”
SMEs, however, are unlikely to go back to doing it all by themselves. At least some degree of active travel management used to be a nicety for this sector. Today, it has become a necessity.
Five steps for SMEs to globalise their travel programmes
Step 1: Evaluate
Should I take my travel programme multinational?
• Map out the benefits
• Make sure you’re ready, willing and able
• Figure out how global you go
• Consult locally
Step 2: Prepare
Lay the groundwork internally
• Put the right team together
• Find a leader
• Find an executive sponsor
• Work with procurement
• Source your information
• Create a travel policy
Step 3: Team up
Find the right service partner
• Find the right TMC - decide between global, regional or local
• Find the right booking tool
• Find the right payment process
Step 4: Source
Negotiate your supplier agreements
• Leverage your consolidated spend
• But be aware your TMC’s prices may still be better
Step 5: Launch
Make your multinational programme live
• Make sure you have sufficient internal resources
• Secure cross-departmental co-operation • Phase your roll-out
• Communicate constantly Source: GlobalStar/Nina & Pinta