Biz Travel Programs Are Failing in 3 Key Areas

Does your CFO know that the whole world of travel management just got turned upside down? Data from the Global Business Travel Association found that unmanaged travel costs less than managed travel. One-third less.

That’s strike one against managed travel.

And while they are spending significantly less than travelers required to follow strict mandates or travel policy guidelines, unmanaged travelers spend an extra half-day on the road with every trip.

That’s strike two.

Unmanaged travelers are also more satisfied with their travel experience than managed travelers.

That’s strike three.

By almost any measure, road warriors who travel under guidelines are less expensive and more satisfied than colleagues who are required to follow strict guidelines, according to Global Business Travel 2012, a new study from the Global Business Travel Association. The study, sponsored by Concur, was presented at the recent GBTA 2012 Convention.

Unhappy travelers
Managed travel continues to offer advantages in terms of employee tracking to meet duty of care obligations. But “travelers under policy mandates or guidelines are clearly not as happy as they could be,” said Gina Woodall, senior vice president for Rockbridge Associates, which conducted the study for GBTA.

“Unmanaged travelers also are finding cheaper flights and hotels on their own than companies’ own negotiated rates,” she noted.

Does that mean companies should abandon their managed travel programs? No, Woodall said. But companies should take a hard look at the way they manage travel.

Stop negotiating fixed rates
One immediate recommendation: forget about negotiating for fixed rates. Unmanaged travelers’ clear success in beating negotiated rates by a third even as they spend longer on the road says fixed rate strategies don’t work.

Instead, travel managers should aim for targets based on the best rate offered in any other channel. That guarantees price savings compared to the current spend, while leaving managers free to negotiate features such as service levels, upgrades and add-ons that that directly increase traveler satisfaction and productivity.

Why worry about traveler satisfaction? Because satisfied travelers are more productive, Woodall said. And unmanaged travelers are clearly more satisfied with their travel experience than travelers in either of the managed groups.

Traveler priorities: technology, safety
When asked what is important when they travel, all three groups of travelers put having the right technology and feeling safe at the top of the list.

Next on the list of importance was their own comfort and convenience, followed by budget compliance (for travelers with policy constraints).

When it comes to feeling safe, all three groups reported they were very successful, reporting a score of 5 on a five-point scale. The three groups were equally happy in terms of policy and budget compliance, reporting a score of 4 on a five-point scale.

The unmanaged advantage
But unmanaged travelers scored higher when it came to having the right technology, reporting 5 on a five-point scale. Travelers with guidelines reported a score of 4 and travelers with mandates reported a 3.

Unmanaged travelers also beat their managed colleagues on comfort and convenience, reporting 3 on a five-point scale, compared to 2 for the other two groups.

Getting the best price
Getting the best price was not at all important for travelers with policy mandates and only somewhat important for travelers with policy guidelines.

But unmanaged travelers said getting the best price was important.

And they got the best prices.

Unmanaged travelers reported a 4 for getting the best prices, while travelers with guidelines scored a 3 and travelers with mandates only a 2. The more freedom and flexibility travelers have in managing their own travel, the more satisfied they are and the less they spend.

None of the three groups said that earning points, using their preferred suppliers, minimizing their carbon footprint, or having interesting and enjoyable trips was important.

Perception counts
“Satisfaction is clearly based on traveler perception of their own experiences,” Woodall said.

“The savings we saw from unmanaged travelers may be perception as well, since we worked with traveler reports of their own spending, not actual expense data.

“But those traveler reports absolutely support the anecdotal reports we have from travel managers who complain that travelers find better rates on consumer websites and book out of policy to save money.”

Next time: Managing travel should be about managing budgets and results, not cutting costs.