THE SKY'S THE LIMIT

Managing travel typically helps hit six corporate strategic goals, according to GoldSpring Consulting: cost management, sustainability, regulatory compliance, traveller satisfaction, duty of care, and process efficiency. The challenge for mid-sized travel programmes, said GoldSpring partner Will Tate, is that these strategic priorities are the same as for larger spenders but with one key difference: "the capacity to manage them is less."

The limitations are self-evident, including reduced spending leverage, lack of resource (often there is no full-time travel manager), lack of funds to invest in technology and in some cases lack of expertise.

"In many SMEs, the travel programme is managed ‘on the side’," said Tatjana Bursch, travel management and active sourcing specialist at IT service provider Spirit/21. "It is quite common for a part-time employee to take care of the travel programme and also handle travel bookings centrally. The travel policy, if it exists, is sometimes only rudimentarily formulated and there is little awareness of many issues in travel management and often a lack of knowledge. However, SMEs can often act more quickly and flexibly due to their structures. Decision-making paths are often shorter and processes more agile."

SMEs' flexibility is a point also highlighted by Christina Ridiger, travel management expert at UMS Consulting. Both Ridiger and Bursch sit on the SME committee of VDR, the association of German travel managers. "[SMEs] usually have less complex structures, often no central travel centre and less extensive approval processes," said Ridiger. The upshot is that "communication is more direct and decisions can be made more quickly."

Furthermore, "Travel policies are generally more adaptable. SMEs are also more able to respond to employees' individual preferences, whereas larger companies often have to implement standardised processes."

Despite the challenges of fewer resources, both Ridiger and Emma De Lange, travel manager for the Geneva-based non-profit educational foundation International Baccalaureate, insist small and mid-market travel programmes can be high-achieving and innovative. Size, they insist, is no barrier to negotiating discounts with suppliers, nor to adopting technology early.

"In certain industries such as consulting, where firms travel a lot, the volume can be comparable to larger companies and therefore they can achieve similar benefits," said Ridiger.

Strategic dividends

SMEs' have two further advantages: physical proximity and loyalty. "Employees are often more closely connected to their company and therefore more committed to acting in the interests of it," said Bursch. "At the very least, they are more willing to compromise."

De Lange, who previously managed travel for multinational behemoths, encapsulates the benefits of proximity to the rest of her organisation. "The office I sit in at IB is strategy," she said. "It’s been a wonderful change to focus on that. One of the things I really appreciate is relationships. I am frequently meeting with heads of department and all other levels in the organisation and I get to understand our business and its strategy quite well.

"It helps me plan ahead by knowing where we are going for the next five to seven years. If I know we are going to be working more with emerging markets, I can source a supplier we will need or speak to our current suppliers and say, ‘We are going to travel a lot more in India and China – how are you going to support us?’" said De Lange.

De Lange has also customised IB’s payments process. Around 85 per cent of the organisation’s travel is by non-employees, such as trainers, and therefore corporate cards are inappropriate. Instead, IB is a heavy user of virtual cards at hotel check-out. “It’s working well in most markets but we’re facing adoption issues in countries including Japan, China and Indonesia,” she said.

Following consultation with travel management company BCD Travel and virtual payment provider Conferma, a solution was devised: using pre-paid rates which are settled via Conferma in advance of the stay. "We engage well together and that’s when we’re able to make a better traveller experience because the programme is smaller," De Lange said.

It is an important advantage that she feels service providers do not always recognise. "Because we keep the same suppliers for many years, they are prepared to keep working differently with us," she said.

Benakis experiments with supplier relations as well. She has struck a deal with Uber and is starting what she terms a "soft trial" to persuade employees to use the ride app provider in preference not only to taxis but also to short-term, short-distance car rental, such as airport-to-hotel transfers.

Again, she is willing to fail fast. "It’s a roll of the dice whether travellers will stick to it," she said. "We’re going to give it a couple of months to see if it’s working." However, Benakis is confident, because her initiative is data driven. It was through spend analysis that she was able to break down the reasons employees rent cars into three categories and concluded one of those, short-distance rental, could be converted to Uber usage.

Benakis is adamant that midsize programme managers can identify improvements through their own data analysis, but they need to do so judiciously. "You don’t have the time or volume to cast a wide net, so you have to be very precise about what you’re looking to do," she said.

Leverage your real value

Being discriminating also means, contrary to popular belief, that it is possible to secure good discounts. "The key with the midmarket is that you need to be much more targeted in how you negotiate and go out to that request for proposals," said Benakis. "Look at the hubs your travellers are in and out of because it’s guaranteed they are not in every single metropolitan area. If you’re not traveling out of Dallas, then why negotiate Dallas? You can negotiate just the high traffic lanes or those top ten or 15 markets where you do have the volume." The same principle, she added, applies to negotiating meetings rates. 

Midsize buyers may naturally worry their spend is insufficient to interest suppliers in awarding discounts. Benakis believes such fears are misplaced. "We received a 98 per cent response rate to our last RFP," she said.

Mike Cameron, CEO of Salt Lake City-based TMC Christopherson Business Travel, concurs, observing that airlines, hotels and other suppliers are well aware it was small and midsize companies that resumed travel post-Covid much quicker than large corporations.  

SMEs can also tap into lower prices negotiated by their TMC, said Cameron, "but ultimately the better negotiated rates come from clients negotiating directly with vendors. And because of the SME market being so important now, vendors are paying attention to that. They are willing to talk to them and give discounts. Maybe not as much as the big guys but we see vendors willing to negotiate with the upper end of the midsize market.

"For one thing it spreads the risk. If you’re concentrated on a smaller number of large clients, and they cut their travel budgets or change suppliers, it’s a lot more risky than if you’ve got it spread over a lot of medium-sized companies," said Cameron.

It appears, therefore, that if someone in a midsize company is empowered to manage the travel programme actively, they will achieve results – so long as they take the initiative. "One of the biggest parts of my role is constantly being on it and looking for improvements: making sure we’re not overspending or that a new market hasn’t popped up suddenly. You need to look at the data," said De Lange.