By Esther Franken, Sesilia Kalss and Susane Wilson
Business travel is complex to manage. Because the industry is ever-growing and evolving, it is difficult for a company that does not specialize in travel to keep up with all the new technologies, distribution channels and digital devices that penetrate the market and impact end-user behavior. As a result, organizations increasingly have been outsourcing some or all of their travel management tasks to a travel management firm.
Outsourcing value-adding activities can be a viable option, enabling a company to focus on its own core competencies instead of trying to devise tailor-made solutions suited for a diverse and constantly changing demand. The task may be small, from a simple sourcing project, while other companies may outsource their entire travel management or procurement services. We recommend starting with an assessment to analyze your current program that will identify opportunities that can deliver a greater return on investment.
While some clients may see the costs as the biggest hurdle, outsourcing actually can generate cost efficiency and is a part of many companies’ growth plans. To present a strong business case for outsourcing, show the potential savings and other benefits, like process improvements, innovative solutions, better quality for lower labor costs and access to best-in-class supplier programs.
Clients also may see the loss of control over certain processes or projects as a possible disadvantage. However, it need not be that way. Experienced business travel consultants using leading technologies, benchmarking data and best practices can provide regular updates that enable prompt decision-making.
The key for success is that the client is ready to support any changes that need to be made that may cause a short-term disruption but ultimately will benefit the company’s larger goals. For a smooth transition, it is also very important for there to be clear, ongoing communication to create awareness throughout all levels and that feedback on the progress of the project is shared to support a change in traveler behavior and to achieve the required goal.
To give a clearer picture how travel management outsourcing works, here are some case examples:
The situation: Client A (medical technology) wanted to cut down on labor cost and focus on core activities. Consequently, its travel management was sourced out entirely. An outsourced travel manager was put in place to focus on stakeholder and supplier management, sourcing, optimization, increasing compliance and online adoption.
The result: Savings in various areas, including hotel and ground sourcing; creation of more streamlined processes as well as increased compliance and online adoption.
The situation: Client B (chemical industry) decided to outsource global and regional travel procurement services. This included sourcing, program management and supplier relationship management to centralize and strengthen negotiation power and to cut down labor costs. The outsourced category managers (air, hotel and ground) constantly monitored travel behavior on KPI-based reporting, conducted regular tenders and met key suppliers to discuss service quality and contract performance.
The result: Positive and constructive communication with all information shared and discussed with the clients’ internal travel management department in order to make potential changes and action plans to improve traveler experience and service quality; the client was able to take advantage of short- and long-term savings opportunities.
The situation: Client C noticed that there was no good hotel program in place and there was a lack of resources and tools to conduct a professional tender, so the company decided to engage on a project basis a skilled hotel buyer to negotiate and optimize their hotel program.
The result: The company was able to deliver an improved traveler experience while also meeting its financial targets.
Considering outsourcing a portion or all of your travel management program? Global Business Consulting from American Express Global Business Travel is here to help you. Our global consulting services have tailor-made solutions for outsourcing. Please contact us at [email protected] to schedule a complimentary consultation with one of our subject-matter experts.