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10 Aug

Corporate Travel Management , Why Companies Need Them

By: Michael Schoenberger

There are millions of apps for travel which makes many managers wonder why companies still need a Corporate Travel Management provider.

Hidden Costs of Business Travel

Well it turns out that for most companies “travel & expenses” (T&E) costs represent the second highest controllable annual expense. Travel costs are not only limited to the obvious direct travel expenses, such as airlines, trains, hotels, and car rentals but include all costs incurred during travel such as staff & client meals, taxi fares, gratuities.

A company needs a Corporate Travel Management company because travel management is a specialized business function that balances employee needs with corporate goals, financial and otherwise. Travel management ensures cost tracking and control, facilitates adherence to corporate travel policies, realizes savings through negotiated discounts, and serves as a valuable information center for employees and managers in times when travel is not as smooth and carefree as it should be.

Managing Road Warriors

Left to their own devices, over time, employees will make travel arrangements that meet their needs first and the companies need second. An independent Corporate Travel Management company is the only way to make sure that both a company’s best interests AND its travel policy are properly taken care of.

Most companies have policies that specify who is entitled to upgraded travel, whether it is on an airline or at a hotel.

When an associate books travel for their supervisor, is it reasonable to assume that they will make their boss adhere to a company’s booking policy? I don’t think so (especially if a review is coming up), and I don’t think you think so. In addition, most employees are not aware of the benefits that may adhere to their company if they book through the company’s Corporate Travel Management firm. With some contracts, not only will employees accrue miles, but the company may also receive credits that can later be used for free hotel nights or airline tickets. If a company has negotiated special rates with airlines, hotels and car rentals then the company has certain revenue goals that need to be met in order to maintain those discounts.

Crisis Control

A final issue that needs to be taken into consideration is what happens in a crisis situation. The Global Business Travel Association (GBTA) says that “the corporate travel professional’s important role is never more visible than during the time of crisis. On September 11 2001, professionals at all levels realized the enormous non-monetary benefits of their corporate travel departments and the value of the human factor. Lessons learned from that day show that effective communications and tracking systems managed by the travel office are essential for locating travelers, speeding their return, comforting their families and keeping the normal flow of business in times of crisis.”

The Travel Management Answer

I think it is obvious from the preceding discussion that an outside Corporate Travel Management company is essential in making sure that a company’s T&E expenses do not just “happen”, but are managed in such a way as to ensure that the “best practices” for an individual company are in effect and in practice. I leave you with one final thought- research conducted by the GBTA found that “that $1.5 million in costs saved due to the control of travel means $23.5M less in product sales that a company would have to realize in order to make up the difference. This can be viewed as a return on investment of 17%, contributing substantially to shareholder value.”