In 2010, global business travel spending is expected to total $896 billion. That's up 6.2 percent from the recessionary low of $844 billion in 2009, according to a study published by the National Business Travel Association (NBTA), which represents more than 5,000 corporate travel managers and travel service providers.
In this economic climate, businesses are taking pains to manage expenses and travel is no exception. By implementing a managed travel program -- one that is "carefully conceived and consistently enforced" -- the NBTA says companies can reduce travel costs by at least 45 percent or more compared to those that don't.
"Managed travel is a set of long-established best practices that control the way employees purchase travel in order to create a good balance of comfort and convenience for them and, at the same time, the savings and the safety the employer needs," says Tom Wilkinson, president of TRW Travel & Expense Management, LLC., a consulting firm. "Travel is a unique commodity. Every trip is different, involving a different place, a different time, and different reasons for it. But you need to create rules to guide travelers to reasonable choices because there is a great disparity between the most economical and the most expensive choices."
The article below will detail the key components of a managed travel program, the benefits of managed travel to employees and employers, and how to enforce policies.
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The Benefits of Managed Travel
The most important step in managing travel is requiring all reservations be made through one or more travel agencies or travel management companies (TMCs). This is not always popular with employees. Many have frequent flyer or other loyalty programs. They like the flexibility, comfort, and points involved with choosing their favorite airlines, hotels and even car rental companies.
Despite some initial opposition, there are a number of compelling reasons for small and mid-sized businesses to start a managed travel program.
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The Elements of a Managed Travel Program
Managed travel can touch every aspect of a business' travel expenses, from chauffeured cars, hotels, airlines, charter companies, bus companies, conferences, meeting and events. "The more you can show them that your travel program is managed, the more they are often willing to provide you with a better partnership," Maguire says.
There are four fundamental components to implementing a managed travel program, according to Wilkinson.
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Enforcing Managed Travel Rules
To find out more about business travel policies, the NBTA, along with Egencia (Expedia's business travel arm), commissioned a study performed by TRW Travel & Expense Management. The online survey was distributed in April 2010 to more than 2,000 organizations in the U.S. and Canada, ranging from companies spending less than $1 million per year on travel to those spending more than $50 million per year or more.
The study found that while instituting travel policies is the most effective way to contain travel costs, there was a divide on how businesses enforced these policies. The divide is between whether these policies should be considered mandates or guidelines. According to the survey, 62 percent of respondents said that travel policy represents "guidelines that employees should observe but that allows for exceptions." Meanwhile, 35 percent said that their policy states "rules that employees are required to follow as a condition of employment." This is often referred to as a "mandate."
"In the real world, a mandated program would be best so that everybody is on the same page and everyone follows the same guidelines and the requirements are all the same," Maguire says. "In reality, while mandates are still probably the best, very often policies tend to have flexibility. For example, upper management in many cases won't be required to follow the same rules as the rest of the work force."
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