Many buyers of business travel fall into it by accident and, recently, this has included an increasing number of executive secretaries who have found themselves suddenly responsible for this complex purchasing function. If you are one of many new to buying business travel and don’t quite know where to start, this guide will explain what a business travel programme should look like and how to shape one from scratch, highlighting the essentials of travel buying as well as common pitfalls.
A managed travel programme is when a business takes a strategic approach to managing travel, as it would with any other controllable expense, and this benefits you with cost savings, transparency, compliance, process improvements and traveller safety and security.
The five phases
Buying and managing travel can be broken down into five key phases:
1. Discovery
2. Engagement
3. Purchasing
4. Implementation
5. Monitoring
PHASE 1: DISCOVERY
The discovery phase involves a full review of your current solution to identify what is in place, what works well, and where improvements can be made. It should focus on identifying spend/volume, incumbent suppliers, contractual commitments and stakeholders. A key output should be a benefits analysis, which should be used to obtain executive buy-in. But first, there are seven steps to work through.
Step 1 – Create a Statement of Goals
It’s essential to understand your programme goals and define critical success factors. Goals can include compliance, savings, online bookings and traveller tracking. Critical success factors can include timing, cost reduction, process improvement or employee satisfaction.
Step 2 – Identify the Business Drivers
Prime drivers are usually cost or service but may include comfort, fit for purpose, status, organisational culture or automation of processes.
Step 3 – Identify Executive Sponsor
An executive sponsor is usually a senior executive within your business who will lend their support to the initiative.
Step 4 – Data Analysis
Collating data determines what is being spent and where. Sources can include incumbent agent(s) and suppliers, corporate charge cards, general ledger and expense management tools, the latter of which is usually the richest, most comprehensive source.
Step 5 – Process Review
The following areas should be reviewed to ensure they are adding value and supporting your goals:
• Travel budget process
• Travel policy
• Booking process
• Approvals process
• Payment process
• Financial reporting
• Management reporting
Also consider if your business would benefit from implementing a self booking tool or booking online.
Step 6 – Understanding Costs
At this point, it’s important to understand the different costs associated with booking travel.
Agency Costs – the main two cost models are transaction fees and management fees, which can be collected at the time of booking or billed on a monthly/quarterly basis. Costs should be 3% – 5%, but can rise to 7% for some high touch solutions.
Payment Options
Options for payment are generally categorised credit account, lodge card or individual corporate charge card.
Merchant Fees
Using a charge card to pay for travel can incur additional fees levied by the card issuer, which will be passed back to you.
Unbundling
This is when you pay for individual elements of your booking, for example, extra baggage and speedy boarding on flights, Wi-Fi and breakfast in hotels.
Step 7 – Create Executive Summary
Once you have identified your goals, quantified spend and understood the processes you need to create a one page executive summary to present to your executive sponsor.
PHASE 2: ENGAGEMENT
It’s time to engage with the necessary functions and people within your business that are involved/interested in, or have responsibility for, travel. Doing this early on makes it easier to achieve their buy in. Including stakeholders in a working party, which has a hand in making decisions, will help cross functional implementation in Phase 4.
Step 1 – Identify the stakeholders: e.g. travellers, executives/the board, the purchasing department, human resources, finance, IT, risk management, corporate security, the VAT and TAX manager, corporate communications, CSR manager.
Step 2 – Creating a working party
Step 3 – Engaging with incumbent suppliers: it’s likely that, initially, your incumbent suppliers know more about your programme than you do.
PHASE 3: PURCHASING – THE RFP PROCESS
This is when you identify potential suppliers, share your requirements and determine the costs you will pay and the service you will receive.
Step 1 – Creating the RFP (request for proposal)
Phases 1 and 2 will lay the foundations for the RFP, which must clearly set out your goals and expectations. The more information you can provide to potential suppliers the easier it will be to quantify who best meets your requirements.
Keep it simple. Use closed questions where possible. Include clear guidelines detailing – as a minimum:
• Response Format
• Dates for:
– RFP Issue
– Intent to tender returned
– Clarification questions received
– Clarifications questions answered
– RFP response due
– RFP response evaluation
– Shortlist notifications
– Supplier Presentations
– Best and Final Offers
– Site Visits
– Existing and Past customer references
– Contract Award
– Contract Start date
Step 2 – Identifying potential suppliers
Prior to issuing your RFP create qualifying criteria and research potential suppliers. If possible, obtain references.
Step 3 – Issuing the RFP
The RFP should be issued to suppliers simultaneously with documentation attached and, ideally, electronically.
Step 4 – Scoring the RFP
Structure the RFP so that suppliers can be scored easily and fairly. Group questions in to 6 to 8 sections that you can apply weighting to. Identify who in the working party will score the RFP and the scoring criteria.
Step 5 – Supplier presentations
Short listed suppliers should be questioned thoroughly on areas where they received low scores. Ask ‘can I work with them?’ and consider visiting them in their own environments.
Step 6 – Best and final offer (BAFO)
Asking for a BAFO is your last opportunity to obtain extra value or reduce costs prior to awarding the contract.
Step 7 – Award and contracting
Notify the successful bidder (subject to agreeing contractual terms) as soon as the decision is made.
Step 8 – Supplier de-brief
It is costly and time consuming for suppliers to respond to tenders so it’s only fair you offer suppliers feedback.
PHASE 3 – PURCHASING COMMODITIES
It is important to maximise savings opportunities and this can be achieved by purchasing commodity type elements, e.g., negotiated discounts on core routes within your air programme, or a group/chain discount within your hotel programme. Also consider loyalty programmes, which can add value for your travellers, such as room and flight upgrades, free Wi-Fi and lounge access.
PHASE 4: IMPLEMENTATION
Once you have identified the best suppliers to book and manage your travel, or the best commodity providers, you need to launch this to the business. Your implementation plan must be formed using the skills and resources of the supplier’s implementation manager, you and your stakeholders. Realistic timelines for implementation need to be set with your suppliers and agreed with your internal stakeholders.
Supplier visibility is also very important. This can be readily achieved by holding on site supplier road shows or by taking key bookers to the supplier’s offices. The insight gained and relationship building this achieves is invaluable.
PHASE 5: MONITORING
And, finally, one your programme is in place, you need to monitor it:
• Programme management: The ongoing review of performance against service level measures and your stated goals or critical success factors. Your requirements will change, volumes will increase or decrease and your contracts will expire. You will be required to manage this on a daily basis.
• Performance management: A systematic review of how your suppliers are performing and the building of long term partnerships with them.
• MI (management information): Data from your suppliers will give a clear picture of spend, savings opportunities and costs. It is important to monitor and measure the correct areas, so revisit your stated business goals. MI can be turned into KPIs and distributed back to your stakeholders, focusing on compliance, savings and supplier management.
