Should You Hire a Travel Management Company?

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You’ve been debating whether or not to hire a travel management company (TMC) to help with your corporate travel booking. At what point is a TMC a worthwhile investment in your travel program?

First, let’s review what a corporate travel management company can offer:

  • Cost savings
  •  Duty of care fulfillment
  • Travel policy enforcement and compliance
  • 24/7 customer care
  • Travel program strategy optimization

Let’s review those one by one:

Cost Savings for Corporate Travel Management

A good TMC can create substantial corporate travel cost savings in two ways. First, a TMC will negotiate with airlines, hotel companies, and car rental agencies to get your team discounted services on these travel costs. They can do this by buying in bulk from these companies, which gives the TMC substantial leverage when it comes to pricing.  A study by Gartner shows that “booking tools can help save nearly 10% of the air ticket cost.”

Second, a TMC can reduce your hidden expenses, like the productivity loss of making employees fill out expense reports. A travel management company can help you digitize, streamline, and even automate expense reporting—saving your travelers valuable time.

Duty of Care Fulfillment for Business Travel

Tort law for business travelers is strong in the United States and extremely strong in Europe. What this means is that as an employer, if your employee is injured while traveling for work, you can be held liable—unless you adequately heed your Duty of Care to your employees, and can show you took steps to proactively manage their risks. 

A corporate travel management solution will help you with risk management practices to discharge your moral and legal obligation to your employees’ safety. This can include everything from not traveling to countries that are witnessing terrorist attacks, to more mundane risk-management like paying for an early-morning Uber if your employee was up all night on a red-eye flight. This is especially valuable if your employees engage in a lot of global travel.

Travel Policy Enforcement and Compliance 

In larger companies, travel policy compliance is a huge concern. As a travel manager, you can set the best policies in the world, but it’s all for nothing if your employees don’t follow them—which is common in this industry. When the Association of Corporate Travel Executives (ACTE) surveyed over 350 corporate travel managers and buyers, they found that 72% of travel managers haven’t achieved their goal travel policy compliance rate.

Lack of compliance can result in your company bleeding money: one report found that “fraudulent and non-compliant spending costs organizations hundreds of thousands of dollars each year.” As 30 Seconds to Fly explains, “This report analyzed over $1 billion in travel expenses and found that roughly 5% of those expenses were non-compliant with company travel policy.”

A good corporate travel management company can help you ensure compliance and rein in costs. One way that many TMCs do this is by using a booking tool where compliance is baked in; this travel technology ensures that employees can’t book travel that’s out-of-policy.

24/7 Customer Care for Corporate Booking

When your employees are traveling, stuff happens. Flights get delayed, gates get changed last-minute, your salesperson can miss a connecting flight and be left stranded. A good TMC will have 24/7 support in multiple languages, to quickly troubleshoot the issue and get your employees where they need to be. This leads to happier, less stressed employees.

According to a study by the World Bank, almost ¾ of staff reported high levels of stress around business travel. The right TMC can help alleviate this stress by having your employees’ backs when something goes wrong.

This commitment to customer care also takes the weight off your shoulders as a travel manager, because you know that your employees are well taken care of.

Charting a Strategy for Your Travel Program

As a travel manager, you probably have a strategy for your travel program—whether it’s to save the company money, improve your employees’ travel experience, or something else. But a good TMC has seen and implemented dozens or hundreds of travel programs. That means they’ll have valuable 3rd-party insight into your travel program. If your goal is to cut costs, are you doing enough to reduce ‘hidden costs’ like a cumbersome expensing process? If your strategy includes using a great travel experience as a perk to prevent top employees from leaving, that’s great; but if everyone flies First Class, that could leave your organization bleeding money.

A TMC that understands these issues can help you sharpen and clarify your business travel strategy.

So, Do You Need a Travel Management Company?

It depends on your unique situation and, more than anything, how much travel your team does. If you meet the following criteria, then you probably don’t need a corporate travel management company:

1) Small Size

If your business is small enough, then you can reasonably expect 100% travel policy compliance.  For instance, maybe you book all business travel yourself. Or maybe you can oversee anyone who’s booking a corporate flight and track their expenses, and resolve individual cases of noncompliance easily.

If this is the case, then you probably don’t need a corporate travel management company because compliance is already taken care of.

2) Not Much Travel

If your team doesn’t travel much, then a TMC might not be able to generate enough cost savings to justify their fee. For example, if you only book a couple of dozen flights per year, then it’s unlikely that the lower fares the TMC can negotiate will offset the cost of retaining them.

3) Travel to Safe Regions

If your team isn’t traveling anywhere dangerous or new, then the comprehensive risk management that a TMC can offer may be overkill. Bear in mind that some dangers are hidden, though. For instance, the United Kingdom isn’t perceived as dangerous—but what if your employee is low on sleep and has never driven on the opposite side of the road before?

At What Point Do You Need a TMC?

Here’s a good rule of thumb. If you have a team of 15-20 employees who fly regularly, then that can add up to hundreds of flights per year. For example, if your team of 17 salespeople each travels once per month on average to meet with big prospective clients, then that adds up to 204 flights per year.

That’s about the level where you should consider hiring a TMC with a track record of success to keep track of everything, increase travel policy compliance, and help you to cut costs.

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