Framing a Travel Strategy

If you've been to the supermarket or the drug store lately, you've likely learned the basic rule of purchasing: Frequent customers get the best prices and the best service. American Airlines first invented a frequent shopper's program when it launched AAdvantage to encourage travelers to bring all their business to one supplier.

Thirty years later, even small firms and their clients can save money and make taking to the road a little easier for their travelers by applying this basic rule of purchasing. This edition of Transit Authority will outline the nine components of a corporate travel program that small and midsize firms can institute for their own employees and partners or recommend to their clients. Our goal: finding the delicate balance that keeps travel costs down and road warriors happy.

At companies with larger travel spends (where the annual travel tabs run over $100 million), managing the travel program is a serious business handled by a dedicated staff. When traveling for the firm, their employees are urged -- or even ordered -- to book their trips through a designated travel agency or Internet travel site, using airlines and hotels with which the firm has negotiated discounts. Travelers charge their tickets to a single charge card, drive cars from the firm's designated car-rental company, bring their meetings to preferred hotels, file their expense reports online. The best practices of their corporate travel programs can be adapted on a smaller scale by companies and firms of every size.

Optimizing travel comes down to making decisions about nine things: the corporate travel policy; the manager of the program; the type of travel agency that will serve as your intermediary to suppliers; the airlines, hotels, car-rental, charge-card and online travel-booking companies with whom you will partner; and the system you will use for tracking and reporting spending data. We'll look at and offer best practices for each piece of the puzzle, with a focus on small and midsize companies and their business customers.

Start the Journey With a Map
Whether your employees are traveling on firm business or billing every charge back to a client, they are only human. Everyone likes to fly first class -- and will, unless someone sets clear limits. Every firm and company should have a travel policy outlining the basic rules, signed off on by top management and distributed to every employee who travels. Keep in mind, however, that buying travel is not like buying paper clips; flying far from home is a stressful and emotional business, and the time of executives is a valuable commodity not to be wasted. A bus may be the cheapest option for getting from Chicago to New York, but odds are good that Southwest Airlines will be the better value in terms of time and effort saved.

While travel policy should come from the top, be sure to include a broad contingency in the discussion, including at least one of the most frequent travelers and the assistants who will make the actual reservations. Many firms also consider a two-tier policy, one for road warriors, senior partners, and executives, and a second for those who travel only to an occasional conference. Keep the policy concise and clear, covering the basic goals and guidelines for each of the nine major components.

Building a Framework
Companies have two options for selecting the framework for the travel management function: whether to handle it internally or to outsource it to a travel agency. Unless your annual travel budget is over $1 million and your office is open 24/7, the best practice usually is to contract with a professional travel agency. Keep in mind, though, that while you can outsource the tasks involved in making reservations, providing customer service, collecting spending data and negotiating contracts with suppliers, you cannot outsource management functions. It's imperative, therefore, to designate an employee of your own to oversee the program, manage the relationship with the travel agency, insure best practices in pricing and execution, and negotiate some deals of your own.

Consolidating all travel through a single travel agency is the best way to collect data, provide 24-hour service to travelers on the road, and rarely cause for objection by travelers themselves. In the not-so-distant past many firms had travel agents physically sit in their buildings, but rising personnel costs make that unfeasible today, and technology makes it unnecessary; travel agency call centers provide excellent service to small firms and companies at a fair price.