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Structuring a travel management program.

Article Excerpt
An effective corporate travel management program drives savings, establishes controls and standardizes procedures and service. Shifts in airfare pricing and rising hotel rates have made a well-structured program even more important this year as travel managers continue to implement the same disciplined approach to policy they adopted during the economic downturn.

Even as budgets increase and corporate travel picks up, travel managers have remained vigilant in controlling costs and have tightened company policies for greater oversight of travelers. Senior management also has begun to take more notice of corporate travel--often the second-largest controllable expense for a company--and purchasing departments have been taking a greater role in strategic sourcing.

There is no one-size-fits-all approach to policy, but there are common components that create best practices in all aspects of structuring a travel management program. Data aggregation is a key factor for improved supplier negotiations and for internal compliance management and benchmarking. Adopting a consolidated approach, and leveraging spend through a standardized payment platform and supported by senior management, can reduce risks and costs.

The growing role of procurement departments in corporate travel management during the past five years has fueled concerns among some travel managers that the service-based industry is being commoditized. However, managers can adopt a proactive strategy of showing value in preferred supplier relationships and find a balance of price and service. Procurement strategies can help push compliance and drive data consolidation. Travel managers increasingly have become skilled at framing their programs in terms with which senior management and procurement departments are familiar.

Even in a non-mandated environment, technology can be used to funnel corporate travelers through an approved process. Travelers can be guided into choosing preferred airlines and hotels through online booking tools and corporate travel policy can be communicated over the company intranet. Pre-trip approval controls and spending limits can also be built into the online booking system. As online travel agencies--such as Expedia Corporate Travel, Orbitz For Business and Travelocity Business--continue to expand their services, travel managers have even more reason to reexamine and enhance their current travel programs.

The following overview provides suggestions for assessing the best way for your company to set up a travel management program:

I. SCOPE AND REACH

A. A business travel management program, requiring vision and specific goals, can be initiated by a decision at corporate headquarters, with support from regional headquarters or within a branch of a company. A corporate governance board also can be useful to garner travel program support.

Fundamental components of the most successful travel management programs include a written policy, written agreement(s) with travel agent(s) or written operations standards for an ARC-accredited corporate travel department (CTD), negotiations with suppliers, and implementation of a travel arrangements system, management information system and payment and reimbursement system. For all components, paybacks in both service and savings benefits must be measured, reviewed and communicated throughout the company. Data aggregation, applicable metrics, internal partnerships with other departments and an effective communications process are essential. Internally, compare/contrast spending levels and policy compliance and structure a holistic approach to travel management. Externally, measure supplier performance against requirements as defined by the contract.

B. Implementation strategy

1. Identify individuals who will be responsible for various tasks involved in the implementation process. Develop procedures and systems to support any long-term expansion plans. Flexibility and scalability are key to any program, from CTD to fully outsourced agency services.

2. Draw up a timeline that spells out completion dates for the various steps.

3. Many corporations concentrate their initial travel management efforts at headquarters or within a core group of operating units already linked by established lines of authority, communication and shared policies. A manager typically directs the program from corporate headquarters, often with the help of a travel committee or council (depending on the size of the company) comprised of representatives from the participating operating units that are part of the initiative.

A council of cross-functional representatives can help to broaden support, as its decisions are seen as supporting company goals, not just those of specific departments. Another option may be a three-tiered committee, with one group composed of senior managers from various geographic and/or functional areas, a second tier of lower-level employees to implement the program and a third group comprised of procurement personnel.

For global programs, it is important to...

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