Purchasing Professionals

Business Travel

General

Business travel can be a very costly item for any business. The industry has had a number of fruitful years where the prices belied the potential competitiveness of the market. The Market underwent a massive change with the events of 9/11. Airlines in particular can no longer afford to price their products and services for business at the traditional premium. For the moment at least it is a buyers’ market and shrewd buyers can cut costs significantly. Budget airlines are experiencing a boom. In the USA they have a 15% market share and in the UK it is as high as 20%. Easyjet say that business flyers account for half of their revenue. We can supply an independent analysis of your current travel arrangements and produce an unbiased report highlighting its strengths and weaknesses, together with recommendations for improvements. In the meantime, here are a few suggestions:

  • Reduced rates and fares can be achieved by consolidating travelling requirements through one supplier. Deals are based on volume repeat business. Online bookings for all modes of travel are often cheaper as the cost of administrating the booking is drastically reduced.

  • Encourage staff to fit meetings around travel not the other way round, that way you can often save money by travelling outside the peak times.

  • Buying travel in bulk is a jungle so it pays to have an experienced professional buyer do the deals and manage the business centrally. It is no longer a job for the inspired amateur such as the manager's secretary. However the rest of the process is best de-centralised with the arrangements and purchase orders being organised by the traveller - following policies and procedures of course. To avoid fraud thought must also be given to the segregation of duties required for travel authorisation and invoice approval.

  • One huge advantage of using a single source Business Travel Agent is that they will gather information and produce a database of travel patterns right across the entire organisation - something that your own systems may not be capable of doing.

  • Aim to negotiate a "never knowingly undersold" deal with your business travel agent, this will help you and them to counter any of your more experienced travellers claiming the can obtain a better price for a particular trip.

The Alternatives

  • Explore the many alternatives to business travel such as video and telephone conferencing. A good travel agent will provide a video conferencing service, or you may be able to do a deal with another business in your area who will let you use their facilities.

Travel Policies

  • It is impossible to buy business travel efficiently without having a wide ranging set of travel policies in place that will cover most eventualities. The policy must be approved and championed at board level with swingeing sanctions in place for non-compliance. Dependent on the size of the company and travel budget a good travel policy will guide travellers to use only company third party deals. It should also be used to instruct travellers on what the acceptable expense limitations are (hotels, train and airline class etc.) when travelling on company business. Companies should provide the Policy details to their nominated business travel agent listing all the approved specific deals it has with airlines, rail companies and hotels and authorise them to police the Policy on the company's behalf.

  • In most organisations business travel is such a political hot potato that an effective set of policies championed and lead by example at senior level is the only way for an organisation to control its travel budgets in a cost effective manner.

Entry to the USA

Software

  • The Internet has made it very easy for users to do their own thing and book direct, thereby avoiding Company policies and fragmenting the organisational spend. Help is at hand by using new software - a kind of travel Intranet. Linked to your agent it can save them a great deal of work, which should reduce their fees by up to 50%. It will also reduce ticket prices by around 15% because users feel compelled to use the cheapest option. Buyers can also force better deals because a cleverly designed system makes users book preferred airlines only.

Rail Travel

  • If you book rail through a travel agent they will receive a 9% commission discount. Travel agents will use this commission discount to fund your account, but obviously this knowledge can be a useful negotiating tool.

  • Online rail bookings can be bought cheaper than at the railway station as the booking reduces the administration cost for the rail company, however, the commission discount is not applicable.

  • Look at the alternatives. For instance in 2006 a peak time Virgin trains fare from London Euston to Birmingham was £92 whereas the same fare on Chiltern Railways from London Marylebone to Birmingham taking 20 minutes longer was a mere £22.70.

Useful websites – (please let us know of any more you find useful):

www.trainline.com

www.virgin.com No need to queue!! - Virgin has equipped a number of main city rail stations with e-ticket machines.

www.chilternrailways.co.uk

Hotels

  • A travel agent may be able to achieve better hotel rates than booking direct or you may do better by booking with a hotel chain central reservations than direct with the hotel or vice versa. It all depends on market conditions so check it out. Also look at the Internet hotel booking agencies.

  • A good negotiator will often obtain between 8 – 10% commission discounts per booking for ad-hoc requests

  • The business hotel industry has off peak periods in January and August when promotional rates may be offered and extra discounts negotiated.

  • Do a deal with frequently used hotels, for instance get them to throw in breakfast and VAT in their basic price.

  • The new budget hotels offer perfectly acceptable standards of comfort. So even the Managing Director, if he/she is arriving late and leaving early should be prepared to use one - unless he/she is a travel snob!

  • Look out for new hotels - they will often offer mouth-watering introductory rates.

  • Hotel loyalty schemes. Negotiate that the benefits are returned to the company not the individual in the form of bigger discounts.

  • Warn travellers about rip-off minibars and inflated phone charges in your Policy. Arm them with a phone card.

  • Some hotels think they will endear themselves for ever by leaving a single chocolate on your pillow. Either eat it or remove it or you may wake up in the middle of the night in a right old mess!

Airlines

  • The business class traveller is a shrinking breed as many organisations have realised the huge savings available from switching to economy or budget airlines.

  • Consolidate, as high volume repetitive business should be used to negotiate lower net fares with carriers.

  • However you can also "cherry pick" as bargains can be obtained from airlines who do not fly direct or are lesser well known. For instance a BA business class ticket from Heathrow to LA is around £6,100, whereas the Air New Zealand charge is around £2,800.

  • Low cost airlines are generally cheaper if the booking is made in advance bookings made nearer the date of travel will be more expensive

  • Most traditional airlines have reduced travel agent commission discounts from 7% to zero

  • Most of the traditional UK airlines will now offer lower fares for the UK and Europe as a direct response to the very successful low cost carrier marketplace

  • The International Air Transport Association has removed restrictions forbidding travel agents in one country from issuing tickets in another country. It could therefore now be cheaper to buy two single tickets in different countries than buy a return in the country of departure. Another blow to rip off Britain!!!

  • Reputable travel agents will have a ‘bucket shop’ that can build cheaper long-haul air itineraries, however, this may mean the traveller has to change airline mid journey

  • Where appropriate for long trips look at "round-the-world" tickets - they can sometimes be cheaper than say a London/New York return. And for several flights within a specific area of the world an airpass could prove beneficial. Open jaw tickets may also be beneficial when a traveller flies into one destination, makes their way to another city and returns from there. The open jaw fare is calculated by adding both the return fares and then halving them.

  • If frequent flyer economy travellers complain about not being able to use airline lounges buy them a Priority Pass which buys them world-wide lounge access for $99 per year plus $24 per visit. www.iapa.com

Currency Manipulation

  • If a traveller flies to a particular destination several times a year keep the return coupon for a later date and buy return tickets in the destination country. For instance - as the rand is so weak against the pound it is much cheaper to buy return tickets in South Africa producing savings of around £1,000. Or sometimes use the same technique buying two single tickets. Canada is a good example - buy a London/Montreal ticket in sterling and another Montreal/London ticket in Canadian dollars then converted to sterling. This works out far cheaper than a return ticket from the UK. Obviously it needs watching as currencies fluctuate all the time. Enquire also about back to back tickets, though they are becoming less beneficial as airlines remove restrictions such as ‘cheap tickets must include a weekend stay’.

Car hire, Driving and Taxis

  • Carefully time your car hire because they charge by 24hour "rental days" with usually only one hours grace being allowed. So careful timing can save an extra day's hire. If a car is to be hired only for a short time consider Europcar's innovative hourly rental scheme. www.europcar.co.uk
  • Airport parking charges can vary hugely so do a bulk discount deal with one of the least expensive companies for you home airport.
  • A taxi between the airport and the city is often a huge waste of time and money because new fast train links are so good. Some European airports where you should forget taxis are - Heathrow, Gatwick, Amsterdam, Milan Malpensa, Frankfurt, Geneva. Oslo, Paris CDG, Stockholm Arlanda and Zurich. Check out others world-wide on the Internet.

Incentive Schemes

Most airlines and hotel chains offer incentive schemes that reward the bookers and the travellers for loyalty to their brand – these rewards are sent to the individual direct. The rewards are usually free flights or free hotel stays. This is a controversial issue as some question the ethical acceptability of these inducements. Some organisation have solved the dilemma by insisting that incentive points gained on business travel can only be redeemed against business travel. It also has the advantage that the traveller is more likely to make arrangements to suit the company's interests rather than the collection of incentive points.