Travel management, as a business function works to balance needs of the employees with their business goals. It helps you track all your costs and control them. It provides you insights about corporate policies for travel, keeps you aligned to the policies, and identifies how negotiated discounts can help in savings. It also works as one valuable information portal for the managers and employees when travel is not really smooth.
The previous low phases in economy have made travel managers work in the front and central role within companies. This has shaped the travel management profession into a significant department for every executive to take into account while doing strategic planning. There are several instances where travel managers were asked to try and cut costs on travel using inputs from the entire company and track the savings and then report the findings to senior management.
However, travel management remains highly misunderstood and even undervalued by many of the corporates. Hence, business travel’s role in the corporate structure has to be put in proper context to enable its value so that it can be appreciated and measured.
Most SMEs keep the notion that travel management is a cumbersome task and can only be leveraged by larger corporates. However, it is found that the financial advantages of using technology for travel management helps in streamlining the functions within all other departments also.
Potential of Travel Management
Travel management has the potential to contribute to the shareholder value of a corporation and plays vital role in finance. As you can control to a large extent the travel costs, it is better to contain experienced travel managers who will negotiate and manage services related to travel and ensure reckonable financial benefits towards the business. Moreover, the monitoring and analysis of travel expenses is necessary to identify opportunities towards cost cutting.
Importance in Financial Strategy
There was a survey done in 2002 by GTBA of around 250 professionals in the travel sector throughout the United States. This survey found, 33% of these professionals were reporting to their company’s finance department. This count is much more than any of the other departments, clearly showing how important travel management can be for the overall financial strategy of a business.
Channelizing Activities within Departments
What SMEs can ideally do is work on its travel requirements separately and determines its needs with every other department. A reasonable travel budget can be made depending upon the current needs and the demands likely to arise later. With the consolidated travel requirements, a representative can negotiate discounts with travel agents, all on the basis of travel needs for the entire company. This not only creates good credibility of the company with the travel suppliers, but also helps in creating a long term relationship.
The dynamics which describe the ambiance in corporate travel management have shown that most of the corporations are developing relationships with the travel suppliers. This has helped them in getting discounts in different travel modes in large volume. All that is required is one small group of dedicated employees looking into the entire travel plans and executing the entire process in advance. A survey revealed almost 90% of the members of GTBA have looked for negotiations with most of the airline corporates to address the issues with rising fares of the airlines.
An excellent example that shows effectivity of travel managers is cited by an analyst. It shows that by saving $1.5 million of costs by controlling the cost in travel means actually helps the company afford $23.5 million less in its product sales. Without that $1.5 million saving, the company could not afford fewer sales of its products to make up for the difference. In another term, this can be seen as 17% ROI, something that substantially contributes to the shareholder value.