Is Any Company Too Small for Travel Management?

Conventional wisdom, however, holds that instituting a travel management program begins to make practical and economic sense only for companies with significant travel-related expenditures: $1 million in air spend is a figure often cited as the floor for contracting with a travel management company.

Now, a host of tools and programs is challenging that thinking. TMCs may no longer be the be-all and end-all of travel management. Yet even TMCs that traditionally have targeted large enterprises are looking to broaden their appeal to small and midsize companies. So choices are expanding.

Rick Wakida, global travel manager for enterprise cloud data management firm Informatica, said $1 million in air spend became the floor for travel management primarily because it was seen as the level at which companies could begin negotiating significant discounts on airfares. It also was seen as the level where the potential cost savings could provide the ROI for investing resources in managing travel and paying for travel management tools.

But Wakida said companies don’t have to wait until they get that big before managing their travel. “Ideally, it should be as early as possible, but the reality is that you have to have a certain amount of volume,” he said. “You do have to have someone to administer it, and often there’s too much other stuff going on,” especially at pre-IPO startups that may have more money than time to spend.

“For the most part, we seem to get interest starting at about $500,000 in air,” said Goldspring Consulting partner Will Tate, whose company, among other services, helps clients source TMCs. “When the business owner can’t be looking at every ticket, that’s when they start looking at managed travel.”

We are starting to see travel management occur at companies that are way smaller than anything anybody would have expected to see 15 years ago.

InterContinental Hotels Group SVP of global sales Derek DeCross said, “Any company that has frequent travelers should consider implementing some components of a travel management program.”

Full-Time Travel Manager?

Wakida said $4 million in air spend has been considered the baseline for hiring a full-time travel manager. But it’s a misconception that small and midsize enterprises need to hire full-time travel managers in order to manage their travel, he said, noting that many people with “travel manager” in their titles actually spend only a portion of their time on travel, even at larger companies. Wakida, for example, also manages meetings and card.

“You can put some things in place with a part-time travel manager,” he said, especially when they employ the newer travel management tools at which pricing is attuned to small and midsize companies and especially now that incentive programs from many hotels and airlines don’t require high minimum spends to qualify. United Airlines and American Airlines, for example, both have prepaid programs that offer discounts for spending as little as $100,000 in air, said Wakida, and IHG’s Business Edge program offers guaranteed room discounts with no fees and no minimum spend requirements.

Companies also can begin to manage travel without a travel manager at all. Linnihan noted that for an SME, TMC agents can serve as the “de facto travel manager.” Plus, new TMCs are cropping up to meld corporate travel policy with a booking experience closer to that of leisure travel.

What’s the ROI?

Early investment in travel management “may not pay for itself,” Wakida acknowledged, “but as you grow, you’ll want to have these systems in place and have these relationships in place when you can get larger discounts.”

Linnihan contended that even relatively marginal savings that companies garner from managing travel, such as recouping unused tickets and earning frequent-flier miles, can provide the ROI that SMEs are looking for in managed travel.

There’s a difference between the arguably primitive form of travel management of a dollar cap on airfare spending and the more productive system that ensures employees are in compliance and are finding and booking the best available fares. Having that type of technology at the time of booking makes all the difference. Companies accrue other savings, by partnering with TMCs, reduced fees and process costs through the use of online booking and expense tools.

Efficiency & Ease of Implementation

For products targeted to SMEs, getting started must be quick and easy for the client. They don’t need to do a robust multicountry implementation. They want to be up and running in either a few weeks, potentially even a few days. And having a standardized offer helps to do that.

Furthermore, the benefits of reporting are a major time saving plus. It is hard to believe that there’s a company culture out there that wouldn’t want to spend less time on expense reports.

User experience is a critical factor when getting travel management tools in the hands of SMEs, which are especially vulnerable to losing key employees and thus should focus on making the travel grind as painless as possible. Trip disruption, whether that means missing a meeting or not getting home in time for a child’s birthday party, is a big source of stress. Having someone to take care of problems experienced on the road is a huge employee retention benefit.

The Human Touch

“I don’t see tools or technology replacing people,” Wakida said, even as technology makes travel management easier for both travel managers and travelers and as fewer companies employ full-time travel managers. “You still need to have someone to oversee everything.” Even technology companies like TripActions view the availability of human support for travelers as critical to their success. It’s a function not easily replaced even with artificial intelligence and machine learning.

And old-fashioned relationship building still can yield big dividends for SMEs, said Wakida. Take a small company that provides a large volume of business to a hotel near its headquarters. The travel manager sometimes can negotiate discounts there on par with those achieved by much bigger companies. Likewise, a smaller company that flies a particular city pair frequently, such as its headquarters city and the location of a key supplier, also may be able “punch above its weight” to negotiate volume-based discounts on that route. “If you focus on concentrating your volume, you can get better rates than a larger company that doesn’t focus as much,” Wakida said.