Fundamentals of Business Travel Bangkok, 6 October 2008
description
Transcript of Fundamentals of Business Travel Bangkok, 6 October 2008
Fundamentals of Business Travel
Bangkok, 6 October 2008
Facilitators
David J LorimerManager Government Travel StrategyAmerican Express Business Travel
Karen DaviesRegional Director, NBTA Asia Pacific
Agenda• Section One: Components of Business
Travel• Section Two: Technology 101• Section Three: Trends & Forecasting• Section Four: Groups and Meetings• Section Five: Safety and Security
Agenda – Section One• Components of Business Travel
o Travel Procuremento The TMCo TMC Value Propositiono TMC Value Propositiono Key Travel Categorieso Distributiono Travel Program Management
Travel Program Best Practice• A well rounded travel management program
should have the following goals:
o Improved service to the traveller, recognising safety and security;
o Better control of travel expenses;o Cost effective purchasing of travel;o Practical procedures for implementing corporate goals;
ando Achievement of total quality management of all aspects
of the travel services program.
Travel Procurement• The Role of the Travel Manager
• The Role of the TMC – Travel Agency Relationshipso Partnershipo Commodity
• The Role of Technology
• Bringing Value to the Travel Program
• Travel Policy
Travel Procurement – Role of the Travel Manager• Multi-faceted function• Service …
Quality Control … Analysis …
Purchasing• Key skill concepts:
• develops• implements• oversees
Travel Procurement - Responsibilities• Creation and distribution of travel information
• Corporate travel website
• Traveler safety and security issues
• Counsel and advise travelers on matters relating to travel planning
• Manage supplier relationships
• Measure supplier performance
Travel Procurement - Responsibilities
• Establish and lead a company travel team
• Liaise with purchasing / procurement
• Develop and manage department budget
• Serve as corporate card administrator
• Develop and analyse travel management reports
• Develop and track key metrics
Travel Procurement - Responsibilities• Corporate culture insight
• Understanding of Travel Management Fundamentals
• Travel Management Foundational Elementso Travel Policyo Travel Management Companyo Technology
• Excellent Vendor Relationships
• Restate into Numbers
Travel Procurement- responsibilities must include … Focus on Customer Service
Identify Key Measures (less is more)
Measure and Report
Reassess
Communicate
Levers of Service, Savings and Control
The TMC – Travel Management Company• A decade + of mergers
and acquisitions has reduced the number of competitors
• Who fits your program?o Megao Regionalo Local agency
• The emergence of online booking tools and the ITMC – Internet based TMC
o GetThereo Concur (Cliqbook)o Travelocityo Expedia
The TMC - History• 1970’s – late 90’s
A travel agent remunerated by commission for booking
• Late 90’s to circa 2002A travel manager remunerated by fees (TF and MF)
• 2003 +Increasingly an integrated travel management business partner
The TMC – TMC Configuration Options• Full service agency
• On-site agency branch (implant)
• Regional Reservation Centre (call centre)
• Fulfillment center for online bookings
The TMC – Selecting the right TMC• Step one – be patient
• Step two – RFI / RFP process
• What are you looking for?o The right corporate culture fito Quality service for travelerso Levers of Service, Savings and Control
The TMC Value Prop – 3 Pillars- Service• Balance of Online / Offline
• Transaction fee remunerates TMC per touch, Management Fee remunerates on cost of travel – Which one suits you ?
• Level of Toucho VIP’so 24 houro Basic ‘out of country’ touch
The TMC Value Prop – 3 Pillars- Savings• Soft and Hard Savings
• Supplier Negotiation
• Online adoption
• Supplier Savingso Maximise buying power - consolidation of spendo Change in ATP (airlines)o Address internal booking workflow
The TMC Value Prop – 3 Pillars- Control
• Client Manager importance
• Accurate Data Criticalo Historical and live datao Manipulation of datao Market share monitoringo Supplier target monitoringo Supplier Shift !
Key Travel Categories
• Air
• Hotel
• Car
• TMC
Distribution – The Distribution Channel
• The process used for suppliers to get their products and services to the customer
• The distribution costs have had major effects on the airlines and GDS systems
Distribution – How do Travel Principles distribute their products?
Up to late 90’s• Traditionally Principles encouraged consumer to
go via agents – little or no direct distribution.
From late 90’s Principles focus on cost of distribution – move to direct distribution
Distribution – Direct Distribution
• Call Centres
• Direct Principle owned and run websites (www.qantas.com.au)
• Content Aggregated Website(www.wotif.com, www.asiabeds.com)
Distribution – Indirect Distribution
• GDS (CRS) – Global Distribution Systems
• The Supermarket!
o Air inventoryo Hotel inventoryo Car inventory
Travel Agentor OBT
Or traveler
Checking Availability
Individual Airline/Hotel/Car Vendor Inventory
Validating Availability
Checking Availability
Validating Availability
Current Hotel Channel Distribution Model Global Distribution
System (GDS)
GDS New Entrant (GNE)
Web Reseller (Expedia, Travelocity,
Orbitz, OneTravel, Opodo)
Hotel Chain andChain Website
Frequent Flyer/Stay Rewards
Affinity Card Rewards
Distribution
Distribution – Global Distribution Systems
• Sabre
• Galileo
• Worldspan
• Amadeus
Distribution – Distribution Today• Non GDS Direct Airline (and other Principle websites )
• Non GDS Content Aggregated Websites (www.asiabeds.com)
• ITMC (via GDS and direct link to principle)
• TMC (via GDS and direct link to principle
Distribution
• Distribution of airline inventory is a major point of discussion
• Will the traditional GDS survive?
• Airlines and Principles continue to push customers to their direct connections
Corporation
Travel Agency
CorporateCard
AirCarrier
CRS / GDS
Government
Transaction Fee
Commissions &Overrides
Charges
Rebates
Payment
Taxes
Segment Fees
Commissions &OverridesVolume
Incentives
Distribution
On-going Program Management – Bringing Value
• Quantifying the financial benefits of a well managed program
• Keeping management and travelers informed as to negotiated savings, new technologies like online booking systems and potential future savings
• Knowledge of Market Share Regulations and SOX requirements
• Cost containment
On-going Program Management – Travel Policy
• To be successful, a well thought out policy must be readily available to travelers in the form of an accessible manual.
• Travel policy should be:o Fair and equitableo Leave little to individual interpretationo Clear terminology (not necessarily travel terms)o Cost containment should be the principal purpose
On-going Program Management – Travel Policy
• Good travel policy is developed by a team from all appropriate departments (finance, HR, administration, sales & marketing)
• Rules unpalatable to the creators will be equally unpleasant to the traveler
• Keep the policy current to reflect low cost carriers, industry events and political issues
On-going Program Management – Travel Policy
Travel is not a PERK!Success of any travel management programs dependson:• Company Culture
o Company goals and objectiveso Management Support
• Communication Skills• Travel Industry Knowledge• … common sense
On-going Program Management – Dealing with Airlines• Airline ticket costs – up to 70% of your travel budget
• 1978 – deregulation in the United States
• 2003 – Simplified pricing
• 2006 – GDS Content Removal
• The impact of LCCs – low cost carrierso Will the growth of LCCs impact your business?
• Tiger Airways, Virgin Blue, Jetstar etc.
On-going Program Management – Dealing with Airlines
• Airline agreements / contracts take many forms:o Domestic vs. transborder vs. internationalo Back Endo Zone fareso % off discounto All are based on volume – market shareo What about travel amenities / soft dollars?
On-going Program Management – Controlling Hotel Costs Asia Pacific forecasts for 2008
• The landscape is changing with traditional low seasons shrinking and hotels forging ahead with new models.
Region Hotel Mid- Range Forecast
Hotel Upper- Range Forecast
Asia Pacific 18% – 22% 18% - 22%
Source: AMEX 2008 Global Travel Forecast
On-going Program Management – Asia Pacific Country Forecast Increases for 2008Region Hotel Mid- Range
ForecastHotel Upper- Range Forecast
Australia 9% - 14% 9% - 14%
China 11% - 16% 9% - 14%Hong Kong 12% - 16% 13% - 17%India 34% - 38% 38% - 41%Japan 7% - 10% 6% - 9%Singapore 27% - 29% 27% - 29%
Source: AMEX 2008 Global Travel Forecast
On-going Program Management – Controlling Hotel Costs
• Hotel pricing factorso The supply of available rooms
• Are new hotels being built? The cost of construction.
o The demand for rooms o The economy
• Global, national, localo Significant global events: 9-11, London bombingso Distribution costs
On-going Program Management – Controlling Hotel Costs
• Steps to Control Costso Lease rooms where traffic warrantso Preferred rate programso Negotiate rates net of commissionso Eliminate no-show chargeso Secure LRA room rateso Include amenities
• Breakfast, health club charges, high speed internet access, local and 800 phone calls, free shuttles
On-going Program Management – Your bargaining position
• Know your numbers and possible usage
o Number of room nights usedo Stay patterno Meals taken at the hotelo Use of concessionaireso Meeting and Group functions
On-going Program Management – Car Rental Costs• The least controlled travel service
• Car costs versus taxi / limo transfers
• What is negotiable?o Car size, insurance, refueling options, GPSo The “perks” – Hertz Gold, National Emerald Aisle
• WATCH for check-in counter offerso Upgrades, insurance waivers, satellite radio
Agenda – Section Two• Technology 101
o Assessing technology needso Travel spendo Technology tierso Front end technologyo Mid office technologyo Back office technology
Technology 101
It’s not about the software; it is the solution … what you want
to accomplish
Role of Technology
Role of Technology - Terminology
• Front end - profiles / pre-trip approval / reservations
• Mid office - quality control
• Back office - data collection & reporting / expense management
• GDS
• SBT / OBT
Role of Technology
POINTS TO CONSIDER:
o What kind of data do you need vs. want? o Why is data so important?
Role of Technology - 3 Key Data Streams• Booked data
o PNR data
• Billed data (or spend data)o Has the greatest value for negotiations
• Expensed datao Represents the REAL costs to the company and has
the greatest direct effect on the company
Role of Technology – Travel Technology Costs
Three primary areas of technology cost
o Online booking and fulfillment
o Data management
o Automated expense reporting
Role of Technology – Online Booking and Fulfillment• The phenomenon of visual guilt
• Touch or touchless fulfillment
• Direct connections
• Corporation booking system, TMC 3rd party system, ITMC
Role of Technology – SBT Differentiators• UI (User Interface)• Administrative Module / Configurability• Global Capabilities
o Languageso Currencieso Sources – GDS/GNE/Super PNR/Web
Fares/Trains
Role of Technology – SBT Differentiators• Operations Assistance
o Provisional itinerarieso Void / Cancel / Refund / Exchangeo Seat selectiono Profile Integration
• Integration with other related software• Pricing structure / Level
Expense Management Solutions• Travel is typically ranked as the 2nd or 3rd
most controllable expense
• Company culture plays a large role in what is allowed to be expensed (meals, movies, alcohol, etc)
Top Challenges for Effective T&E Management
0 10 20 30 40 50 60
Lack of access to sufficent T&E data
Enforcement of compliance to T&Epolicies
Controlling cost of T&E programoperations/ admin
Travel booking processes disconnectedfrom expense reporting processes
Insufficient accuracy of T&E data
Source: Aberdeen Group – T&E Expense Management Leveraging Data to Drive Performance April 2008
The travel expense drain• 4.6% of total T&E is workflow ! (1)
(1) AT Kearney/Amex Study April 2008
Expense Management Solutions
$5,000,000 Travel Spend$3,000,000 Entertainment Spend
= $8,000,000 Total
4.6% = $368,000 in process costIf you can reduce by half that’s $184,000 straight to the bottom line !
Expense Management Solutions
Expense Management Solutions – Automated Expense Reporting• Primary functions – track expenses, CC
reconciliation, reimbursement and vendor data
• Expense Claim Process Reduction – 52%• Finance responsibility and function• A Best in Class TMC will participate• A Best in Class TMC will already have a
partner
Expense Management Solutions – Automated Expense Reporting Differentiators• HR / ERP / Accounting system / Card feeds• Payment / Reimbursement• Data sources• User Friendly UI (User Interface)• Administrative Module / Configurability
o Business rule capabilities• Global capabilities
o Languages / Currencies / VAT Reclaim/Tax
Travel Agency
SBT Meeting Mgmt.
GDS/GNE
QC Back Office
Data Consolidation/Reporting
Itinerary View
Expense Management Solutions – Tying the Process Together
“TMC’s are now increasing focus on the real efficiencies gained by looking at the entire travel process – end to end.”
Guarantees policy compliance across the entire process
Expense Management Solutions
Payment Platforms – Corporate Charge Cards• The early issuers
o UATP – Universal Air Travel Plano Diners Club
• Then came o American Expresso VISA and MasterCardo AirPlus
Payment Platforms – Corporate Charge Cards• Billing options provide the means to track individual
expenditures, actual costs that are incurred, a greater control over managing costs, setting policy and negotiating with vendors
• Optionso Individual or corporate liabilityo Ghost cardso Meeting cardso P-cards
• Data Capture – true spend
Agenda – Section Three• Trends & Forecasting
o What are trends?
o Why forecast?
o The importance of benchmarking.
Trends, Forecasting and Benchmarking
• Trends Recent and current movement of practices from previous behavior
• Forecasting Setting expectations for future purchasing / spending based on general trends and corporate needs
• Benchmarking The act of comparing performance measurements with other organizations or internally
Trends, Forecasting and Benchmarking
• Tendencies shown through numbers & statistics
• Illustrates direction, not outcome
• Can be measured against each other
• Increases ability to predict pricing and improves negotiations
• Identifying specific industry trends that will make a difference to the travel program (important skill)
Trends, Forecasting and Benchmarking
• Examples of Internalo By Business Unito By Hotel Segmento By Air Segment
• Examples of Externalo By Spend Levelo By Travel Programo By Travel Policy
Agenda – Section Four• Safety and Security
o What is a risk management strategy?
o Managing duty of care • travel managers responsibilities• Management responsibilities• Traveller responsibilities
o Risk Management Process
The business travel environment Source: MasterIndex™ of Travel published by MasterCard
What are your biggest concerns when travelling to a foreign destination?
0% 10% 20% 30% 40% 50% 60%
Security and safety issues
Falling sick ( no proper medical expensives)
Language Barriers/ Communication problem
Not being able to get the right kind of food and drinking w ater
Losing ones w allet/pocket book
Don't know
Going through immigration/customs
Losing one's passport
Being Cheated
Getting lost
Losing one's credit card/bank cards
Fear of f lying
Losing one's baggage
Running out of cash
Other
New Zealand
Australia
Travellers from:
The business travel environmentSource: Control Risk - Business Travel Report - 2007
• Only 39% of firms in the UK have a travel security policy. This rises to 54% for US firms
• 40% of British and 35% of US employees believe that business travellers are becoming more attractive targets for extremists or terrorists than other travellers
• Terrorism and natural disaster highest concern to business travellers
• More than half of British business travellers have little confidence that their company would be able to give them reliable advice if an incident happened while they were travelling
• 90% of UK and 80% of USA travellers believe their employer has an obligation to advise and support them when abroad
The business travel environmentSource: KPMG 2007 Survey; Global Assignment Policies and Practices
o Only 15% of companies have an emergency response plan in place for each country where expats are located and/or where they travel
o High tech companies appear to be least prepared (only 7% have specific plans)
o ROI, Costs & Administration are rated as the 3 most important Global Mobility issues today – so disruption to an assignment is something to be avoided for duty of care and monetary reasons
Risk Management – A Contemporary Risk Management Strategy• What value and contribution does your TMC provide in
your Risk Management Strategy ?
• Is TMC a facilitator ?
• Is TMC a middle man ?
• Is TMC a crisis manager ?
• IS TMC solely responsible ?
Risk Management – A Contemporary Risk Management Strategy• Risk Management now a normal part of a modern
organisation
• Most large organisations would have a risk management strategy related to fire, power failure, transport failure, even flu epidemics…..
• Most organisations have a risk management function
• TMC should partner in Travel Risk Strategy planning alongside clients
TMC Risk Mitigation
Traveller Risk Assessment Traveller Incident advice (pre – travel) Management (during travel)
Risk Management – TMC View- 3 Core Elements
Risk Management – A Contemporary Risk Management Strategy• Pre – travel (booking stage)
o Risk Analysis – information is kingo Risk/Crisis Notification to traveller and
employer
• During Travelo Traveller safety en routeo Crisis awareness to employee/employero Situation responseo Situation management
Risk Management – During Travel - TMC Processes• Responsibilities
o Assist in traveller safety en routeo Conduit for crisis awareness to employee/employero Situation response managemento Contact with traveller and an organisation contact as
events unfoldo Question - At what point should the TMC contact (or
cease contact) with travellers & the organisation when an incident occurs ?
• Floods in Calcutta• Glasgow Airport Incident• Car bombs found in London• Bird Flu in Vietnam
Risk Management – During Travel - TMC Processes• Answer – logic applies.
Travellers are responsible for their own safety en route, TMC is there to assist travellers’ decision making capability
Risk Management – Key Boundaries
• TMC can never act as ‘the news source’ – can only re-transmit
• Organisation/traveller provides direction (though TMC can suggest)
• TMC can never advise of loss of life• TMC can only advise a pax ‘may’ have been on the flight
Risk Management – Duty of Care
• TMC - Sensible approach o Alternative routings suggestedo Traveller advised ‘non mainline carrier’o Notes of advice included in PNR remarks field
• Employer -Communicative approach o Boundaries of travel clear before booking o No coerciono Traveller fully cognisant of situation
• Where the traveller or employer not happy – no travel !
Agenda – Section Five• Groups and Meetings
o Strategic Meetings Management
o Meetings and Group Management
o Best Practices Flow
Strategic Meetings Management
• The AMEX 2008 Global Business Travel Forecast highlighted that:o The rationalisation of meeting spend continues
at pace, with North America leading the way.
o In recent years, companies have focused exclusively on driving costs out of meeting expenses with shift focusing on a more balanced approach of savings and satisfaction.
Strategic Meetings Management1% 10%
33%
9%
47%
Ground TransportAdditional HotelFood & BeverageOtherAccommodations
Strategic Meetings Management
• Whilst the cost of a meeting has increased, corporations aren’t necessarily spending more across all of their meetings.
• Cost reduction strategies include:o Consolidation of multiple smaller eventso Downgrading the venueo Selecting venues in second tier citieso Shortening event durationo Reducing the number of attendees
Best Practices Flow – Meetings and Groups Management• Approval • Meeting Registration• Sourcing• Supplier Identification/Selection• Negotiations• Contracting/ Risk Management• Planning• Acquisitions/Purchasing • Data Analysis and Reporting• Technology – an enabler to success
Thank you for your participation!
Any Questions / Discussion?