February 28, 2008 - Travel management continues to evolve, but organizations, in many cases, are not adopting certain practices that could reduce cost, improve efficiency and generally improve travel programs, according to AirPlus International. Results from AirPlus's recent survey also found that travel management professionals in the United States and Europe generally expect corporate travel volumes and spend levels to increase during 2008.
Though progress has been made in such areas as oversight for meetings and negotiating with hotels, more organizations should employ full-time travel management professionals, enact and enforce travel policies, use specialized analysis tools and switch to electronic invoices, according to AirPlus.
"Quite simply, organizations are not devoting enough time to travel management," the company concluded. "Given the complexity of travel, thanks to the multitude of suppliers and rapid transformations in pricing, not to mention increasingly sophisticated analytical tools and the emotive nature of this spending category, there is much work to be done."
The third annual AirPlus International Travel Management Study included responses from at least 100 travel management professionals in each of nine European countries and the United States. Issued this week, the U.S. version of the report provided comparisons on travel management practices between U.S. and European organizations, and between small and large companies.
The field of travel management
Across the entire survey base, one in eight respondents devote their full time to travel management, while 60 percent spend less than 25 percent of their time on it. Meanwhile, "for the first time," more than half (51 percent) of all respondents said they expect the role of procurement within travel management to increase. Sixty-three percent said they expected a greater role for finance departments.
In terms of travel policy adoption, two-thirds of all respondents said their organizations have policies covering "all areas" of travel, with another 14 percent saying policies cover only certain areas. "These figures are almost identical to 2007 and 2006," according to AirPlus, suggesting the industry may have "hit an invisible ceiling."
Eleven percent of companies with "stand-alone" travel departments have no policy. For organizations in which purchasing departments oversee travel, 9 percent have no travel policy. Where sales and marketing departments are responsible, 36 percent have no policy.
For those with policies in place, 42 percent of respondents said they expect tighter rules and 5 percent expected less strict rules, figures that were "almost identical to last year when the prediction of tighter policy largely came true," AirPlus claimed.
"If buyers are good to their word by making policy harsher, it will be interesting to see how they reconcile this intention with the increasing emphasis they are also putting on providing the best possible support for travelers," AirPlus continued. "Is it reasonable, for example, to expect employees who fly long-haul twice a month or more to travel in economy class; or to push accommodation standards any lower than three-star? The data suggests buyers may start to arrive at these boundaries in the near future."
In another finding, 14 percent of respondents said they receive "all" supplier invoices electronically, with 33 percent receiving a mix of paper and electronic, figures similar to last year. Though 37 percent of respondents said they want to go all electronic, AirPlus concluded that "the shift to electronic invoicing and expense analysis has faltered."
Meanwhile, behind cost reductions, traveler support was a task top of mind for the survey base. Optimization of internal travel processes also was seen as a task of leading importance, "as more businesses are appreciating the considerable savings [that] can be achieved through greater travel process efficiency, such as introducing corporate cards and automated expense management programs," according to AirPlus.
In the bigger picture, sixty-eight percent said their travel programs already are centralized, down from 74 percent. "There are critics who believe the benefits [of centralization] are less significant than is sometimes suggested," AirPlus explained, "or that, for instance, consolidated data can be achieved by introducing a data warehouse without having to use the same travel management company."
Large and small
Unsurprisingly, survey results showed different perspectives between those at large enterprises (with travel volume above $10 million), medium-size companies ($625,000 to $10 million) and small businesses (under $625,000). For example, 39 percent of respondents from large companies spend their full time on travel management, compared with 13 percent of respondents from medium-size companies and 4 percent from smaller companies. More than half of respondents from smaller companies are assistants or secretaries, whereas 11 percent of those from large companies hold that position. Instead, respondents from larger firms are more likely to work from within the travel management department (33 percent) or the purchasing department (27 percent).
"The obvious assumption that travel management, especially in small and medium-sized companies, is something that is done more or less alongside another job, was confirmed," according to the report.
Meanwhile, 5 percent of big companies have no travel policy while that's true of 31 percent of smaller ones.
Respondents from the largest companies also were more likely to use electronic invoices and predict bigger T&E cost increases (despite "superior buying power") and travel volume growth in 2008.
However, AirPlus was surprised to find that corporate card usage varies "very little" between big and small spenders. It also was surprised to learn that program centralization dropped most among the biggest companies, to 70 percent from 82 percent. "It suggests some large global companies are concluding each region of the world is so different that centralization is not always appropriate," AirPlus wrote.
U.S. more mature
AirPlus also highlighted areas in which U.S. travel management leads the world. For example, 26 percent of represented U.S. companies use only electronic invoices, the highest ratio of any of the 10 countries covered by the survey. At the same time, 36 percent use only paper invoices, one of the lower ratios reported in the survey. Meanwhile, nine in 10 U.S. respondents said they analyze business travel expenses, with 41 percent using "specialized analysis tools," compared with the 30 percent average across the entire survey base.
The United States also had the highest ratio of respondents (28 percent) devoting at least three-quarters or their time to travel management, more than double the 10-country average. "Since average spend in the United States, even for smaller companies, is higher than for other countries in the study, this is not surprising," AirPlus concluded.
Other U.S. survey findings:
• Seventy percent of respondents expected higher hotel costs, "most likely reflecting fears about exchange rates at overseas properties and also steep rises in key domestic cities, such as New York."
• Expectations for savings opportunities fell across all categories versus a year earlier. "It could be that buyers believe they have taken their programs almost as far as they can go and are therefore running out of options for making dramatic additional savings," AirPlus explained.
• The United States ranked first in expecting procurement to increase its influence (69 percent) and second in expecting finance to increase its influence (71 percent).
• Though higher than average, the number of U.S. respondents who said their firms centralize travel management dropped to 71 percent, from 78 percent. AirPlus said the decline "suggests some buyers in the United States are having second thoughts about whether the benefits of travel program consolidation actually outweigh the disadvantages."
• Though down from last year, 76 percent of U.S. respondents were "fearful" that travel costs would increase this year--the highest ratio for any country.
