Like hemlines and haircuts, fashions in travel management change. As it increasingly became part of procurement rather than facilities or HR, the focus moved squarely on to strategic sourcing and collecting data to support supplier negotiations.
But changing circumstances forced companies to realise that travel cost control is about more than negotiating lower fares and room rates.
Indeed, the features in this issue on airline negotiations and car rental show buyers finding decreasing room for manoeuvre when striking deals with suppliers.
In a white paper on demand management, Carlson Wagonlit Travel says: “As costs for business travel continue to increase, companies realise that strategic sourcing and procurement may have limits.”
Demand management was born in the wake of the recent financial crisis. Companies – faced with pressure on cash-flow and a downturn in orders – looked for ways to cut costs quickly. So despite business travel’s importance for generating business, it became an easy target. Some companies introduced travel bans – after all, the easiest way of saving money is not to spend it. To manage the demand, in other words.
Everyone agrees that this is an important part of travel management, but there isn’t consensus on the definition. In a white paper on the subject, FCM says: “Demand management is the process of cutting cost by influencing the quantity and/or specification of the products and services you are procuring.” For some, such as American Express Business Travel director Sebastien Marchon, it is “monitoring the total number of trips made”.
Many companies initially took the straightforward approach of reducing the number of business trips. Improvements in technology and its growing use in day-to-day life undoubtedly made this approach easier to implement than it might have been a few years earlier.
Travel alternatives became the catch-all phrase for remote meetings via desktop solutions, such as Webex, videoconference options, such as telepresence, and straightforward conference calls. More significantly, companies started looking upon travel for client-facing meetings differently from that for internal meetings.
A number of companies introduced policies promoting the use of travel alternatives for internal meetings. Colleagues generally started having fewer face-to-face meetings. It was not unusual for colleagues in different global locations to go from, say, meeting every two months to doing so only once a year and using alternatives the rest of the time.
Face-to-face contact
The situation for client-facing meetings was different. Some recognised their importance and ring-fenced these from any travel ban; others put a stop to such trips, only to discover that the consequence was losing business to competitors.
Advertising campaigns such as United’s ‘It’s Time to Fly’ have emphasised the importance of face-to-face contact. But despite the best efforts of the copywriters, most modern business travellers don’t find slogging through airports with their security and immigration queues glamorous and would prefer to spend more time with their families. As Rohan Alce, a veteran airline executive, said at a recent UK travel industry conference: “When did business travel stop being fun?”
Home working
It’s not just that the business travel experience has deteriorated. People’s attitude to the working environment has changed dramatically in the last five years. Not so long ago, remote working was something directly negotiated by someone who wanted to live far away from the office or reserved for new parents who elected to work from home one day a week. A home office is no longer the exception and it’s not only the self-employed working from home. There are a large number of home workers who visit the office only once a week or fortnight, so conference calls and web conferencing have become much more mainstream and integral to the working day.
As Louise Kilgannon, travel buyer for a multinational pharmaceutical firm and a member of the Institute of Travel & Meetings board, says: “In the past I might have had two face-to-face meetings, but now maybe I will do one and then do the other as a videoconference. This has become a much more natural way of working.”
Those in work in 2014 are also likely to be working longer and harder, so are therefore very happy to opt for a phone call rather than a journey when it is appropriate for the purpose.
As Carlson Wagonlit Travel director Nigel Turner points out, how we ‘meet’ people is not as straightforward as it once was. He says: “The way we work has changed. Time has become precious to us so people are perhaps choosing not to travel to gain more efficiency. We use conference calls more than we used to, not because people tell us to but because you can get the same thing done with a call, so demand-management is self-regulating.
“We want to be efficient because we are more pressurised. Perhaps we don’t need a formalised system as much as we used to. We’re getting used to maybe not taking the trip.”
Influencing behavior
But demand management is about much more than travel avoidance. It is really about understanding and influencing the behaviour needed to deliver to the objective. Turner says: “Our role as a travel management company is to help our customers buy travel more effectively and travel more effectively, so they get better value out of every trip.”
Like Turner, Kilgannon thinks demand management is about something bigger – it’s about travel departments becoming aligned with their stakeholders’ travel strategies.
She says: “If I meet with a stakeholder I try to understand what their requirements are and how to deliver that within budget. For example, we might suggest taking fewer people on a trip so this is all built into our communications.
“Travel is back, but no way is there the tolerance for the same amount. You don’t see big teams on planes any longer. There’s a drive for a work-life balance. People have realised that they don’t want to be on the road every single week.”
Kilgannon and Turner both emphasise that demand management may reduce the total number of trips but allow companies and travellers to derive more value from those that they do take.
In the wake of the global economic downturn many companies re-introduced pre-trip approval – a process which had been popular in the 1990s but then fell out of favour. This was complemented and reinforced by demand management tools and messaging. For example, one online booking tool introduced a stage suggesting a videoconference to the booker/traveller if the purpose of the trip had been identified as an internal meeting.
Kilgannon says that, after the global downturn, “we had a virtual travel ban for non-client meetings – videoconference usage went up massively in that time”.
Making savings
The fact that the use of alternatives went up so sharply in 2009 and 2010 could explain why such behaviour became so standard. Some travel managers say that the year-on-year travel savings from using travel alternatives for meetings skyrocketed in this period. Those percentages would be hard to maintain so managers – always keen to be seen to be making improvements – began to take demand management for granted and turn elsewhere to demonstrate savings.
CWT’s Turner believes that pre-trip approval has again lost its sheen. He says: “There are fewer travel bookers. More and more the booker is the traveller, so we try to get the travellers to think about alternatives and, if they do choose to travel, to choose the right way to do so.
“To have each trip approved can be self-defeating. If you do [employ pre-trip approval], you might find you’re paying more money because we live in an instant world and that rate you initially found could have gone away. People are setting guidance now rather than an approval process and that saves more money at the end of the day.”
Travel managers, too, are less likely to rubber-stamp requests to travel. Travel buyer Kilgannon says: “Travel managers are actively managing the demand for travel. People may be reducing the number of trips they take but, if you do have to travel, there is an emphasis on doing it the right way. It’s not just about savings, it’s also about safety and security.
“We do look at the purpose of the trip rather than just what’s on the travel policy. For example, if you choose ‘internal meeting’ as reason for travel, you will get a message asking if you have considered videoconferencing with a link.”
The FCM white paper on demand management raises the importance of data to demand management, quoting the old maxim: “If you can’t measure it, you can’t manage it.”
The paper says: “If you have a broad picture of what’s happening across your different departments, you are better placed to align their travel needs where practical, streamline overall usage and eliminate unnecessary expense.”
Forward thinking
Kilgannon is a big advocate of understanding her stakeholders’ travel objectives. She says: “We also spend a lot of time looking ahead now rather than back so that we do more accurate sourcing. We go to different areas of the business and ask how much they are likely to travel in the next year and if there are any new projects, which can mean new routes.
“If there’s a project for one month, you might then approach an airline for a route deal for that month – that’s demand management.
“You find yourself looking back on data, but if you know in advance, it’s a lot better. You can’t control what you don’t know about. You should know what’s coming, understand the requirement and
how best to deliver it.”
Demand management is about understanding your stakeholders’ needs. And that never goes out of fashion.