By implementing rate caps on business class travels, a major member of the TPE Group has made significant savings on business class travel – amounting to saving of 22%.
Travel policy – the rubix cube of modern travel management - a complex, but vital matter to handle for every organization doing business travels. Being able to solve the puzzle and be on top of your company’s travel policy is an ongoing process of revising and optimizing in accordance with market trends, company strategy and traveler needs. For many companies staying updated on the latest business travel trends and prices is a time consuming and demanding task. But as the business travel industry is constantly developing, it is often worth investing your time in diving into the wealth of new opportunities to improve your perspectives on business travel.
A tendency in the market that we have spotted lately restricts travelers from booking business class on intercontinental flights to reduce costs. This often affects travelers negatively as they are now forced to make longer travels on economy class. Not only does it lower the traveler’s satisfaction and efficiency, but it possibly pushes them to order out of policy.
So how do you work around the issue of reducing costs, maintaining employee happiness, while still ensuring compliance?
Saving more than 1 million in a year
Through close contact with a member company, TPE have been revising and improving their travel policy continuously. Together, we set frames of a new policy where the business class option was still allowed on intercontinental flights. But we set up rate caps on business class bookings which were mandatory for any trips - and if the traveler couldn't find a price within the allowed minimum price, he/she should pick an economy class ticket.
This resulted in travelers adjusting their purchasing-patterns and find on-average cheaper business class tickets than they had previously in order to stay on business class. A biproduct of establishing the rate caps was also that travel spend became more consolidated on the in-policy routes and airline vendors, which improved conditions for savings further. The adjustment in policy and behavior resulted in savings of a total of 22% savings on all business class tickets.
Beyond the change in behavior by the traveler, the result was created by digital controls to ensure high compliance, and the fact that the suppliers were able to meet the caps in their pricing to keep business.
Savings are to be expected when implementing a travel policy adjustment like rate caps – this is, after all, one of the main reasons of implementing them. But in this case the expected savings were met in a market where prices for flights had seen an increase in the same period, when comparing to the previous year. This makes for a curious and compelling case, but leaves a central question unanswered – how?
Three determining factors for success and how TPE handled them:
Naturally, achieving savings of this caliber is the result of a wide range of initiatives and adjustments on all levels of the corporation. But in our experience at TPE we see a parallel between especially three key focal points and having success in achieving a higher compliancy rate.
Knowledge is power
Being one step ahead of the game means knowing where you are, why you are here, and what direction you are meant to be heading. This requires data and reporting on a broad variety of initiatives in your organization. Accessing travel data in itself can for many companies be a tricky task. Travel management alone holds a wide range of parameters available for scrutiny and adjustment – a goldmine for any analyst but a headache for a decision maker.
For TPE members the hard work has been taken out of travel and expense management handling and reporting. Our aim is to give all members total transparency of their data and what these mean to their business. This leaves all members room for directing their attention to areas where they are experts themselves.
Communication is key
As with all organizational changes, communication plays a key role in unlocking the gates to success. Making sure your company travelers have a clear policy to consult, they know where to find it, and are instructed in do’s and don’ts is a valuable investment. In a study on the issue an expert claims that a “5% increase in policy compliance relates to a 10% reduction in travel costs”. So that begs the question: what level is your travel policy compliance at?
At TPE we offer assistance in handling communication processes in relation to support changes in the travel policy. Furthermore, we add a series of elements to our booking tools to help ensure compliancy. For example, we have added nudging-elements to our booking tools in the form of logo and color differences to help the travel booker easily distinguish between in- and out of policy suppliers.
TPE also provide controllers and compliancy personnel of your company access to a real-time overview of your company’s travel activities through our Traveler Performance app. The app allows you to monitor, who is travelling within policy, and quickly act on cases that fall out of policy. Our 28 years of experience tells us that the combined efforts of company and booking provider secure high compliance – resulting in increased savings.
Leveraging the buying power
Having an emphasis on your travel quantity and frequent destinations is a beneficial first step towards securing lucrative business travel savings. But the step from knowing where and how you make company travels to turning it into a strategic tool is a steep hill to climb.
The fact that TPE has helped all new TPE Members to 10-24 % savings the first year of membership is not solely due to extensive market knowledge and a close cooperation with our members. A large part of cost saving through TPE is secured by combining the purchasing power of our members. Negotiating prices with supplier on behalf of 38 large corporations gives us a unique leverage, resulting in better terms and conditions for all our member companies.
What can we offer you?
TPE, as your member owned outsourced travel operation, offer assistance and sparring on all matters of business travel. This allows you as a member to focus on your core area of business while we handle everything related to travel.