Cost Savings Today: How would you define travel management (subcategories, main elements, etc)?
Alfredo Longo: Travel Management is an important cost category for business, made of several subcategories: flights, rail, hotel, rented cars and travel agencies. In case of high level expenditure we can consider also Events and Limo services. Costs such as restaurant, taxi, tolls, parking and generally all minimum trip expenses are not taken into account. When managing a project involving travel costs, we also analyse the company’s travel policy and our contribution is determinant for that: not in terms of reduction of service level but mostly in terms of empowerment of travel cost controlling.
CST: What does the category represent for businesses and organisations?
AL: According to the Annual Global Report and Forecast published by the Global Business Travel Association, the global spending on business trips went up overall over the past few years, especially in China. American and European spending is up as well, though at a slower growth rate. Reasons are an increase in investments abroad, the opening of new foreign markets for cheaper cost of labour.
In Italy the category has been very important, the first in terms of revenue in the past two years. This is because of two big clients who had big budgets and achieved savings that were even higher than estimated. Generally speaking, we succeed in finding almost always at least 20% savings.
CST: How big is usually the expenditure in this category for SMEs?
AL: To be considered interesting, the minimum budget is 150k€ but it depends on how the budget is composed. If intercontinental flights are really predominant, the budget could be also reduced. Otherwise if is composed basically of national flights, then it is the contrary.
CST: What are there the main issues – And why can’t these issues be resolved by in-house purchase or department managers?
AL: The way the company books the trips is important: we privilege analysis when there is a travel agency that could provide detailed data. Otherwise, in case of direct booking, our analysis is made more difficult.
Companies may have strict internal policies requiring for instance that people only travel economy class and preferably with low costs airlines, with a limit to the cost of hotel stays. There are also new actors in the travel sector such as Airbnb or Uber that may or may not be used for business purposes.
CST: Who is in charge of travel management within businesses?
AL: Usually this category stands under the HR department, because is the one that manages the Travel policy. In smaller organisations there is not a real responsibility and it is just under the Finance department. If there is a travel arranger (e.g. a secretary who makes the bookings), they are usually working under the CEO or the company owner. In other cases, the company may outsource all operations by using one or several travel agencies for all types of business travel. The last option is to have a mixed use i.e. to use travel agencies for certain types of travel (e.g. flights) and self-book for other types.
CST: Where/how can potential savings be found?
AL: If orders are taken at the last moment, businesses are likely to pay a premium price or not to have any economy seats still available. This happens often with railway prices, but also with airline tariffs, especially on intercontinental flights.
Another issue can be that flights that are really cheap may take the traveller to distant airports which mean that you need to add transfer costs to the destination; in this case it may be interesting to pay more for the flight and land closer to the end destination. Savings can most often be found on intercontinental flights, agreements with airlines, rail or rental car companies as well as hotels; negotiations with travel agencies are also important, as is the review of the company travel policy with regards to unification of bookings.
CST: What is the outlook for 2017?
AL: According to the GBTA report, the geopolitical and economical uncertainties (financial markets, emerging markets, political risks and Brexit among others) will force travel managers to be more flexible and adaptable. Travel managers and travellers will need to plan ahead and take the instability into account.
Alfredo Longo has a wealth of experience in Strategic Planning and Management Control expert in Sales and Marketing, in international FMCG businesses such as Caffè Kimbo or Johnson & Johnson. He then became a consultant for 11 years at Accenture, where he specialised in project management in the automotive sector for all major players on the market. Alfredo has led projects both within companies and within the dealers’ networks, becoming one of the Italian leaders in the field.
Within Expense Reduction Analysts, Alfredo concentrates mainly on business development and client management and is an expert in the cost category of travel management (flight, train and hotel expenses). Alfredo has a degree in Economics and a Masters in Total Quality and Management Processes.