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AMEX Offers Seven Ways to Tame Travel Budgets

September 30, 2011 By: George Dooley Travel Agent

Effective use of travel agents are among American Express Global Business Travel's (AEGBT) seven basic steps recommended to help companies offset the external pressures that are driving up travel fares and rates. Working with travel agency partners to integrate solutions into a strategic managed travel program helps corporations maximize their impact and results, AEGBT said.

Business travel has seen a rebound this year as executives seek growth and bolster their company’s top-line, AEGBT says, citing research with the World Travel and Tourism Council (WTTC), that three quarters of executives believe that business travel is “extremely” or “very” important to increasing profits (74 percent) and increasing sales (75 percent).
Achieving top-line growth is being challenged as prices also make a rebound across travel categories.  According to the most recent American Express Business Travel Monitor, in Q2 2011 the average domestic airfare paid increased eight percent year-over-year for trips originating in North America, while the average domestic hotel rate paid increased three percent year-over-year. Internationally, the average airfare paid increased nine percent for trips originating in North America, while the average international hotel rate paid increase 11 percent year-over-year.
“Businesses and travel management professionals in particular have to balance the need of using travel as a means to grow business with the stark reality that budgets are not growing in tandem,” said Hervé Sedky, senior vice president and general manager, American Express Global Business Travel.  “They are being asked to identify areas of savings while also being charged with the need to allow for more trips. We are working with clients to deploy internal measures that can be taken to stave off increases that are not within their control.”
AEGBT's Seven Steps include:
Book All Travel Through Agency Partners:
Companies that book all their travel arrangements through their agency partners are not only maximizing their negotiated rates and costs savings but are also adding an additional security benefit.  When employees book outside approved channels for business trips it can not only cost the company more money in the long run but also impact how they can help their travelers if they are in an emergency situation.  Travelers who book their plans, especially hotels, through the correct channels are enabling their company to easily locate them and help them in times of disruption.
Mind Unused Tickets:
Many companies fail to apply unused plane tickets towards future travel despite having negotiated that ability in their supplier contracts, in effect losing money whenever travelers cancel or alter travel plans. As most contracts allow for unused tickets to be applied towards future travel or sometimes even refunded, having a solution to track these tickets and their associated costs is essential to accurately capturing complete travel spend and thus identifying savings opportunities.
Get the Most Value from Complex International Itineraries:
In today’s global marketplace, complex multi-country trips are a prominent component of nearly every corporate travel program.  However, savings and profits are more often than not tangled in currency fluctuations, pricing structures and stopover restrictions. AEGBT's international rate desk provides clients with access to a team of experts who can spot these opportunities for savings is crucial for those seeking to optimize travel spending.
Know Where You Travel:
Price increases are expected to continue. Companies should be aware that even a modest average increase can have a significant impact on travel budgets as they may mask larger, regional increases based on city-pairs and class of service. Understanding where employees are traveling for business can allow for additional policy refinement and can help to maximize the allocated budget. By understanding that information, companies can negotiate fares based on routes and volumes which can help drive additional cost savings.
Audit Rate Loading:
Discrepancies between hotel rates loaded in the reservation system and negotiated corporate rates represent another opportunity for companies to drive savings. It is estimated that nearly 35 percent of hotel rates are loaded incorrectly into the reservation system. These rate differences often go unnoticed and unchanged, resulting in higher costs for rooms and, at times, the failure to include negotiated amenities such as Wi-Fi and meals. On average, companies may be losing out seven dollars on each room night, which rapidly amounts to a large sum. We provide a patented solution, Hotel Rate Trax which helps companies audit and fix discrepancies, AEGBT says.
Track Your Spending:
Having an ability to understand where you are spending is the first step towards maximizing where budget is spent. Business travel can be a driver of business growth and to be competitive, companies need to not only budget appropriately for their growth targets but also benchmark their spend against previous years, peers and competitors. Business intelligence solutions help supply companies with the data they need for answers to billed versus booked spend and providing insight into spending across all categories. The next generation of program optimization is coming from demand and change management: even globalized travel programs can benefit from and often need multiple data feeds to monitor their spend and identify any leakage and opportunities for savings.
Enforce Compliance:
With continual rises in prices, a key driver of savings is encouraging employees to make smart business decisions with the company’s budget – i.e. driving compliance within travel policy and leveraging preferred suppliers. Despite this, companies often fail to seize this clear opportunity for meaningful savings.

In 2010, a year when compliance was top of mind for businesses, an evaluation of travel booking data showed that the percentage of out of policy transactions grew from 26 percent to 33 percent year over year. Shockingly, the evaluation also revealed that 97 percent of these out of policy bookings were approved by managers. Pre-Trip Auditor offers companies a variety of ways to enforce traveler compliance through methods such as automatically sending notifications to travelers when they have booked out of policy and flagging itineraries to management before trips are ticketed. In a fluid and dynamic supplier pricing environment where company policies are occasionally at odds with personal preferences, a pre trip compliance solution will assist a company in achieving adherence to corporate policy and negotiated rates, contributing to savings that otherwise would have been lost. It also provides companies with a variety of ways to enforce traveler compliance through methods such as automatically sending notifications to travelers when they have booked out of policy and flagging itineraries to management before trips are ticketed.
“Savvy companies know that implementing any of the above solutions can help a program, but that is only part of the process. Working with travel agency partners to properly integrate these solutions into a strategic managed travel program will maximize their impact and results,” continued Sedky. “The goal is to drive new behaviors within the company.  Communication of policy and business goals is key to helping travelers make smart decisions on behalf of the company so that business travel can be used strategically and as a competitive advantage.”


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About the Author

George Dooley
George Dooley, Travel Agent’s senior contributing editor covering retail and technology, has a long-standing reputation as one of the top travel industry journalists. He notes...

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By George Dooley | September 30, 2011
By working with travel agency partners, corporations get an advantage in cost controls.
Filed under : back-office