In theory, travel management works for everyone. What company wouldn't want to know where its employees are traveling; how much they are spending on hotels, car rental and flights; and whether it can negotiate better rates?
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 from providers like American Express Global Business Travel, BCD and CWT.
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."
Patrick Linnihan, president and CEO of TMC Gant Travel Management, cited the conventional wisdom that "north of 150 employees is where you see owners lose control of how everyone is working on a day-to-day basis" and whether "the company culture is percolating into business travel."
These days, Gant, which uses Concur and TripLink on the back end for travel management technology for clients, is "seeing travel management occur at companies that are way smaller than anything anybody would have expected to see 15 years ago," Linnihan said.
Monica Colligan, executive director of account management for TMC Travel and Transport, said her company doesn't set any floor in terms of which companies can benefit from its services. "We do consult with our customers as to what their needs are, what they are trying to accomplish and how best to manage their program. For example, it may not always be necessary to have an online booking tool or complex hierarchy," she said. "We find that SMEs understand there is a value in having a managed program for purposes of cost control, duty of care, etc. The savings aren't always as easy to come by as with a large account, but that's why partnering with the right TMC is important."
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.
Certify and Chrome River group CEO Bob Neveu said 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 in the world," he said, adding that companies accrue other savings, by partnering with TMCs, reduced fees and process costs through the use of online booking and expense tools.
Indeed, accessing discounted rates is only one aspect of travel management, which also encompasses duty of care functions; expense tracking and reporting; and booking and on-trip assistance for corporate travelers. Amex GBT, which long had focused its marketing efforts on large companies, has directed attention toward midmarket enterprises, a shift reinforced by its announcement in 2018 that it would partner exclusively with Lola, which offers "emerging" companies a simple travel management tool that integrates preferred rates on hotel and airfare, 24/7 online support, reporting, expense integration and the ability to establish travel policies based on current travel pricing trends. "We think it's one of the growth engines of our business, of our industry, and we want to be front and center," said marketing and product strategy VP Evan Konwiser. "As the leading TMC, we believe we have a value proposition that is superior to companies in the middle market zone. Lola's about expanding our reach into companies that are a bit smaller than we've had before, with an all-in-one user experience … for the buyer, for the manager, as well as for the travelers."
And like many suppliers, GBT is looking more closely at the nuances of SMEs to ensure they can pull the right levers and offer the right support for the category. "Increasingly, we've been trying to segment our middle market into more meaningful need-based segments where we can put in front of each client the right product—certainly the right technology offering but also the right client-management structure," said Konwiser. "We still anchor around travel spend as a starting point," he said, but to match packages to the needs of midmarket clients, GBT also considers factors like industry vertical and whether companies travel domestically or internationally.
Efficiency & Ease of Implementation
For products targeted to SMEs, getting started must be quick and easy for the client, said Konwiser. "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 us do that." Packer said TripActions users can be up and running in a matter of hours, no extensive training required.
Linnihan said efficiency is a huge part of the appeal of travel management systems like Concur, which can streamline the process not only of booking flights but also mundane tasks like filing expense reports. Sometimes, Gant's sales pitch to SMEs isn't even about travel management per se. "We know you're going to have to file expense reports regardless of whether you have managed travel, so what if we can cut your filing time by two-thirds?" he sometimes tells prospects.
"It's such low-hanging fruit when compared to unmanaged travel," he said. "I find it hard to believe that there's a company culture out there that wouldn't want you to spend less time on expense reports."
Tate said 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."
Scalability
Despite the inroads made by the mega TMCs, Tate said the market remains pretty segmented: Big companies pair with the legacy TMCs, while midsize enterprises gravitate to companies like Travel and Transport and travel agencies that utilize travel management tools like Certify or Concur. Smaller firms tend to explore travel management with TripActions or Rocketrip.
The scalability of TMC solutions remains a concern for smaller companies. Platforms like TripActions were designed with the SME market in mind; VP of product marketing DavePacker said TripActions' client roster ranges from a three-person doctor's office to businesses with 200,000 employees. Linnihan said Gant, an SME in its own right, launched Concur internally with fewer than 10 expense users per month. The number has grown, but the feasibility for a small group of users stands.
Konwiser intimated that Amex GBT's July 2018 acquisition of fellow mega TMC HRG gave GBT more buying power and, presumably, deeper supplier discounts even than the other megas. "We think this marketplace is wide open, and we want to make sure everybody knows and gets a chance to see our value proposition." If scalability is what an SME client is looking for, he posed, why not tap into the rates that the biggest buyer is able to supply? Indeed, GBT's Lola partnership passes these rates through to some of the smallest clients.
Keep in mind, however, that travel management isn't all about costs. Tate's point that small and midsize enterprises should get the right service and attention is a critical one.
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.