Savings is not the only driving factor for companies that are exploring travel program process improvements. Global consolidation can produce enhanced traveler safety and security, increase transparency, decrease program difficulty, better compliance with a regulated travel policy, increase productivity with globally consistent procedures, and allow a corporation’s travel management company (TMC) to provide greater service.
There are substantial benefits of global consolidation and savings is the main driver for corporations to make the switch. Possible savings from a consolidation differ, based on a programs complexity and objectives. However, corporations without a regional or global program with a single or decreased number of TMCs, no existing global policy, or organized supplier program, can save up to 25% on total travel spend.
The following key savings advantages can be achieved from global travel program consolidation:
1. Consolidating air. Skilled sourcing, bearing in mind leading carriers in local markets and competitors trying to gain market share, can assist companies to achieve significant savings on air spend. Normal increased savings potentials for global air programs vary from 1.5%-4% of total air spend and stem from planning and negotiating improved agreements. The key benefit for combining to a specific preferred airlines group is the capability to negotiate greater volume and share-based discounts. Crucial drivers of possible discounts include elevated first class and intercontinental, as well as the amount of airline competition in the company’s highest markets.
2. Consolidating hotels. Companies can reduce from 8-12% off average booked rates by consolidating to a regional or global hotel program, provided they do not have prior discounts. This considerable savings can be achieved from numerous sources including consolidated data leveraging negotiations, better traveler compliance, and simplicity of program control. For companies with an existing hotel program, the objective is to beat market average. Negotiated rates can contain extra amenities; (e.g. WiFi, breakfast, and parking) that can drive considerable savings to the entire cost of stay. Companies and/or their TMC should observe bookings and use of properties at the preferred rate.
3. Consolidating a travel policy. Having one global policy that includes best practices through benchmarking along with competitors can influence how much companies spend on business travel and expenses. Organizations that switch from an open program with no rules to a solid policy that is supported by a mandate can reduce overall total spend by 10%, though supplier consolidation would be a factor. It is unpractical for corporations to transform policies immediately, and if an umbrella policy is employed, the expected savings will be 5-10% of total travel spend.
4. Consolidating a card program. Consolidating spend into one global card has double advantages. Firstly, utilizing one global supplier allows a company to obtain reliable data, comprising all travel and related expenses. Additionally, the capability to negotiate financial terms with a card supplier. If it were not feasible to utilize a single card globally, switching to one card supplier in each region would produce valuable data and financial advantages.
5. Consolidating meetings. Meetings consolidation occurs in two types. First, increasing discernibility of regional and global spend. A crucial phase of consolidation is senior management buy-in, as company departments can be defensive of their meetings transactions. The other advantage stems from merging transient and meetings spend, since these usually dissimilar parts can shift a company into a segment that vendors are eager to provide larger savings.
6. Consolidating car rentals. Reducing to one or two global vendors can save a company 6-8% on total car spend. The scope of savings is contingent on each supplier’s market share and for companies employing a primary and secondary supplier; the savings will be greatly reduced. Companies can encourage completion amongst vendors to increase savings opportunities. This process can push compliance and shift business that will result in improved rates and benefits. Additional chances for sedan and limo savings can occur, mainly during negotiations with global networks. Rail consolidation can increase savings, though this area can be challenging.
7. TMC fees. Through consolidation, companies can increase leverage with their TMC on transaction fees, though savings are probable to be moderate when matched to other aspects of consolidation. Generally, increased transactions will result in a reduced unit cost. Combining to one or a few TMCs produces additional advantages. Supplying savings from the aforementioned segments is simplified with a great TMC partner. If one TMC is handling a considerable amount of total spend, the TMC functions as a better partner with tactical goals that are synchronized more thoroughly with the company. Lastly, regulated procedures will cause decreased booking times for the company and TMC, providing extra savings. The savings that can be attained is contingent on the quantity of countries consolidated, spend volume, and the reservation types; e.g. the ratio touchless bookings to offline bookings, and the touch occurrences.
Streamline Service
A consolidated program can aid in producing superior service. Using a single or reduced amount of TMCs can assist with providing unified service and eases communication with travelers. Incorporating travel services over numerous areas is challenging and expensive; however combining these components aids in delivering a strong service experience. Moreover, consolidation permits a corporation to think about implementing mutual global service agreements. Many corporations understand that regions are varied and anticipate TMCs will be adaptable and provide a global or regional program that is consistent and efficient, however, permit cultural disparities.
Enhanced Traveler Safety and Security
Travel risk management is a crucial part of consolidation, as safety and security matters are simpler to handle with a combined policy. A TMC can organize traveler profiles and booking data. The highest successful security programs have a solid mandate to use preferred TMCs and/or an online booking tool for all reservations including changes. Combining to a single or reduced amount of TMCs, rather than numerous tools and processes, can consequently aid in providing first-class travel risk management.
Increased Transparency
Improved and more unified data signifies that the pertinent information is stored in a single location and in a regular format. Regulated procedures are clearer than a group of methods that are executed by various TMCs and vendors. Full service travel and expense management tools are not going to be consistent globally. Travel management expenditures become clear and allow for the return on investment of each trip to be more noticeable.
Decreased Program Difficulty
For large corporations with a previously multifaceted program, working with numerous TMCs, cards, data sources, and different vendors generates increased difficulty. This process raises costs and reduces the corporation’s capability to deliver savings through managing compliance. Consolidation can offer a resolution by considerably decreasing program intricacy. Through a shared policy, decreased vendors, and mutual service agreement, corporations will require less staff to manage the program. Additionally, a decreased amount of TMCs lets any required travel program modifications to be implemented quickly and successfully.
Next Steps
Understanding the possible advantages of consolidation is not adequate and a program’s success should be cautiously envisioned. We have planned a guidebook to accomplish a first-class consolidation. Click the link below to download our white paper on the Blueprint for a Successful Global Consolidation.
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