SME Travel Buyers: Who They Are, What They Manage & How

2016 SME Survey

3Jump in Agency-Booking Mandates

There was a considerable jump since 2015 in companies mandating use of a preferred travel agency. Last year, 56 percent of companies had such a policy in place at the start of the year and 11 percent intended to mandate the agency channel during the year for a total of 67 percent. With 2015 in the rearview mirror, the numbers show a larger mandate; 70 percent of SMEs require booking through the agency channel and 10 percent more plan to do so this year.

2016 SME Survey

5Only 9 Percent Have No OBT Plans

Adoption of corporate online booking tools has reached 80 percent of the market if you include those companies that were implementing at the time of the survey. Less than 10 percent had no plans to introduce a booking tool. The increased availability of technology scaled to the needs of the small and midmarket has been key.

2016 SME Survey

6Most Use Online Expense Tools

Seventy-one percent of SMEs use or are implementing third-party online expense systems. Long-term cost savings associated with automating the booking and expense processes provide a strategic advantage. These kinds of adoption numbers, however, imply that online booking and expense tools have become a traveler expectation regardless of the size of the program.

Business Travel News' annual Small & Midsize Enterprise Travel Management Report examines travel programs with up to $12 million in annual United States-originating air volume. In rough terms, this equates to $1 million to $24 million in total business travel volume, including hotel, car, meals and other ancillary travel spend.

Travel managers heading these programs face different challenges than their large-market counterparts. For the smallest among them—in BTN's terms, that's annual U.S.-originating air volume of less than $2 million—they can face challenges as basic as getting on the supplier radar for discounts and benefits. For the largest SMEs—those with $10 million to $12 million in annual U.S.-based air volume—they may be looking to take next steps into program globalization or innovating with emerging travel management technologies.

Time for Managing Travel

Sometimes the challenge of managing travel in the SME market comes down to the amount of time available to perform the task. Forty-four percent spent less than half their time managing travel. Yet, the vast majority assumed significant responsibilities: 82 percent set travel policy, 84 percent managed transient travel and/or meetings costs and 76 percent negotiated transient rates.

It stands to reason that the depth of responsibility, particularly with rate negotiations, would align with each travel program's spend level, but BTN data showed no relationship there. Many survey respondents with total travel spend—including air, hotel, car, meal and other ancillaries—of less than $2 million reported that rate negotiations were central to their travel management responsibilities. Others, even with spend levels much higher, took a pass on preferred-rate agreements.

How travel was positioned within the company was more telling. For respondents who reported through procurement, 93 percent took on rate negotiations with suppliers. That compared with 77 percent of SME travel buyers who reported through finance and just 63 percent who reported through all other channels.

Travel Policy Strategies

Survey data suggested that travel buyers were spending a fair amount of time rethinking travel policy in 2015 and 2016, particularly in terms of driving compliance to the booking channel.

BTN's respondent set changes every year, but still there was a considerable jump since 2015 in companies mandating use of a preferred travel agency. Last year, 56 percent of companies had such a policy in place at the start of the year and 11 percent intended to mandate the agency channel during the year for a total of 67 percent. With 2015 in the rearview mirror, the numbers show a larger mandate; 70 percent of SME travel programs require booking through the agency channel and 10 percent more plan to do so this year.

The focus on driving travelers through the travel management company correlates with a prominent trend in open-ended responses regarding goals for 2015 and 2016: travel risk management. "We are placing more focus on duty of care and travel policy-compliant booking through our TMC," noted one survey respondent. "We now receive travel alerts in real time from our agency, [and] our travelers receive country-specific information for international travel," wrote another. While few buyers implemented third-party security partners, many SMEs relied on their TMCs to support travel risk management.

SME travel buyers had additional reasons to revisit policies. Several cited "complete rewrites" to expand, clarify and ensure that travel policy "is more in line with what the traveler is experiencing." Case in point: A number of buyers were grappling with policy for the sharing economy. Given that 87 percent of SME programs are reimbursing travelers for Uber and Lyft and 43 percent for Airbnb, it may be hard to retreat substantially as they formalize policies.

Several other buyers reported they want to broaden the scope of their policies and get more strategic in corporate globalization efforts or incorporating company acquisitions into their programs.

Cost Control vs. Program Expansion

The SME market is growing its travel programs. This year's survey respondents averaged $4 million in United States-originating air volume in 2014 and $4.1 million in 2015. They projected it to pass $4.2 million in 2016. But averages can be deceiving. More than 60 percent expected air spend to grow in 2016. Among expanding programs, the average growth rate was 10 percent for those under $2 million in air spend and 12 percent for midsize programs, between $2 million and $12 million in air spend.

Asked about goals for their travel programs over the last 12 months, SME travel buyers in programs of all sizes cited the perennial search for cost savings. Strategy details differed. Efforts ranged from "going full Airbnb and Uber" to driving more compliance to preferred suppliers. The No. 1 strategy, however, was a good old-fashioned focus on supplier negotiations.

After multiyear growth spurts, companies that did go after negotiated-rate programs reported more aggressive efforts for 2016, particularly with airlines. One of the fastest-growing programs in the survey reported success renegotiating "all airline contracts and adding three additional carriers." Yet a much smaller program with $1.6 million in U.S. air volume renegotiated its air contracts, as well, after pegging 21 percent growth in air volume over two years. A buyer with $3.5 million in 2015 air volume saved "$400,000 with agreements and waivers."

This differs from their large-market counterparts, many of which have reached equilibrium in their agreements, thanks to mature procurement efforts The midmarket still has room to make its procurement efforts more mature. Coming to the table with data that shows a growing program is a good way to start.

Tools for Managing Travel

This year, SME travel managers reported higher travel technology usage than ever. Adoption of corporate online booking tools has reached more than three-quarters of the market if you include those companies that were implementing at the time of the survey. Less than 10 percent of respondents had no plans to introduce a booking tool. Expense tool adoption showed a similar trajectory, with 71 percent of respondent companies currently using or implementing a third-party online expense system.

The increased availability of technology scaled to the needs of the small and midmarket has been key to OBT and expense tool adoption. Long-term cost savings associated with automating the booking and expense processes provide a strategic advantage. These kinds of adoption numbers, however, imply that online booking and expense tools have become a traveler expectation regardless of the size of the program.

That's good news for travel managers who ultimately need to leverage data from these systems as the backbone of supplier negotiations and, often, of traveler behavior management. Advancement here can help drive changes that will benefit the program overall.

The Bottom Line

Small and midsize travel buyers are unlikely to realize the deep supplier discounts that their large-market counterparts enjoy, but managing traveler behaviors and effectively leveraging the purchasing power they do have can make a big difference to their organizations—and to their travelers.

One survey respondent wrapped up possibilities in the SME market overall, citing accomplishments in 2015: "We changed TMCs, had a smooth transition, lowered average ticket cost for both domestic and international flights, conducted … online booking tool training for over 400 travelers, met our airline contract goals and generally had a great year managing our travel!"

SME Travel Buyers: Who They Are, What They Manage & How

2016 SME Survey

2016 SME Survey

2016 SME Survey

2016 SME Survey

2016 SME Survey

2016 SME Survey

Methodology