Tom Rigby, Reed & Mackay’s Commercial Director, shares top tips for designing a robust travel budget for the coming year.
REMAIN AGILE IN YOUR AIR NEGOTIATIONS FOR 2019
There isn’t a one size fits all approach for aviation in 2019. Depending on your top routes, you could find yourself negotiating in a consumer or buyer led market. Do your research up front and tailor your negotiation strategy accordingly. Depending on the market concerned, replicating best practice for 2018 could mean fixing yourself in for a year on year spend increase.
Tom’s top tips: “In North America, competition to key business hubs is intense and while international players may be focused on yield improvement, local carriers are offering great on the spot deals to improve market share so factor in flexibility.
In APAC, growth in the Chinese Corporate Travel Market means demand is outweighing supply so book early to avoid disappointment.
In Europe, legacy carriers are changing tact to compete with low cost carriers who continue to disrupt the market. The unbundling of legacy services often results in a lead price that only represents part of the final flight cost. Sense checking fare rules is a must to ensure you get the flexibility you require – you can lean on your TMC for this.”
PLAY THE LONG GAME
Minimising exposure to the unexpected is key when budgeting. This makes negotiating static hotel rates for primary markets a good strategy, as long as they come with the security of last room availability. However, not every business will meet the minimum room night requirement, leaving many wondering what to do for key locations that fall below the quota.
Tom’s top tip: “Play the long game. Don’t just budget for the next twelve months, loyalty goes a long way. Hotels become sceptical when they’ve handed out contracted rates only for the targets to be missed by a mile. Concentrate contracted rates on higher volume markets with properties that work for your traveller’s needs. Use dynamic rates with city rate caps in place for important but lower volume markets to remain in control of your budget. This will see you leverage better deals year on year”
DON’T UNDER ESTIMATE THE 20%
Headline costs may make up the bulk of your budget but there is significant opportunity to be found in the 20%. Take ground transport for instance; the increasing uptake of newer ground entrants such as Uber or Lyft means you can run the risk of losing visibility and compromising traveller wellbeing if you only focus on the big ticket items. Reliable data and good visibility are key when it comes to consolidating spend to leverage greater buying power.
Tom’s top tip: “Mapping how your people are using ground transportation to get from A to B enables you to channel spend exactly as you would for air or hotel. For instance, free limo services offered as an incentive by airlines can significantly reduce transfer cost without compromising traveller productivity or wellbeing”
ANTICIPATE EXCEPTIONAL COSTS
Unplanned activity poses one of the greatest risks to travel budgets and often ‘exceptional items’ are an annual occurrence. Creating a central view of all business activity that will touch your travel programme in the coming year makes for a more accurate budget and generates greater opportunity to drive savings.
Tom’s top tip: “Getting ahead of exceptional items can make a big difference to your budget. If you can flag them to your TMC ahead of time then you stand a much better chance of negotiating with suppliers on your terms. For instance,
- Office openings can drive a one off period of high volume traffic to a particular destination. Evaluating options early will enable your TMC to assess whether they have deals you can leverage or whether a short term contract would be beneficial.
- Travellers who are going on secondment will have different needs to the average trip. Consider apartments over hotels and air fares with greater flexibility and baggage allowance to improve experience and bring down cost.
- Meetings for over ten people qualify for group rates which can drive significant savings on air, hotel and ground packages. Upfront visibility also ensures that you can mitigate unnecessary risk by splitting travellers across a mix of flights before availability makes this expensive or impossible.
Responsible for Reed & Mackay’s global commercial strategy, Tom and his team work to bring together a view of the wider market and a deep understanding of supplier strategies to drive service and savings for Reed & Mackay’s client base.