November is already here. While some are setting up their Christmas trees and picking out the perfect Thanksgiving turkey, travel team leaders are gearing towards setting their strategies and travel budget for next year.
2020 is seeing a catastrophic drop in travel spend. According to the BTN Corporate Travel 100 index, travel spend for 2020 is falling drastically below 2019 levels. Intel has predicted that its $95 million figure in U.S. air volume for 2019 will fall to $10 million in 2020. Pfizer was similarly grim, projecting its $95.2 million spend in 2019 to barely reach $20 million for 2020. Merck, who spent more than $116 million in U.S. air tickets in 2019, said 2020 volume will look more like $25 million.
What 2021 holds for business travel is not certain. Without a successful Covid-19 vaccine in play, countries promise to be placing continuing emphasis on the use of border restrictions for limiting pandemic transmission rates. As in 2020, most multinational companies remain wary of unnecessarily putting their staff at risk through business travel.
Even so, business travel is still seen as a crucial business endeavour that produces ROI. Buyers reported to BTN that many company stakeholders are turning to travel teams when it comes to directing task teams and strategy for “return to work” and “return to travel” plans.
Travel team leaders will still play a crucial role in strategy and budgeting for 2021.
With the travel team’s improved visibility within their organisation, now is a great opportunity to assess how the travel programme can be re-strategised to better serve both those employees who are travelling and the wider company.
Budgeting for a new financial year can be daunting. Here are four steps to getting started:
1. Report on spend on previous years and identify trends
Reporting on the travel spend in 2020 is a good starting point. As catastrophic as Covid-19 related restrictions have been, there are nonetheless patterns that can inform plans for 2021. Having an idea of spend breakdowns (by geography, departments etc) this year will help you map out how much partial returns to travel will impact total company spend on travel. Regional or department heads will be able to take into account levels of travel spend in their own projections and the company as a whole can potentially see the opportunity for investment in longer-term programme objectives. A drop in travel spending and an improved profile in the company can give travel leaders the opportunity to start new programme initiatives that were previously unfeasible.
Audit your travel technology strategy and see where improvements can be made. A few companies are currently making major programme decisions like switching TMCs, for example. With the travel programme needing to have more updated information on traveller whereabouts in the current travel climate; now would be a great opportunity to evaluate your programme’s data visibility and optimise it.
2. Optimise savings opportunities
In 2020, when approaching how much the company spends on travel and how cost savings can be realised, comparing the years’ spend to previous years is unlikely to prove as effective as other years for many savings categories.
Savings drivers such as advanced booking may be counterproductive in a year when a large proportion of tickets are likely to be paid from vouchers rather than cash, and rolling lockdowns may mean that tickets purchased in advance are added to the pile of vouchers or lost altogether. Equally, other savings metrics may be inappropriate in the current environment. Travel teams may be willing to accept that departments retain the discretion to allow those willing to travel to fly business class, or stay in self-contained accommodation rather than a preferred hotel.
All this will mean that driving savings and being on top of spend will likely play second fiddle to other considerations and it would be sensible to model a proportional reduction in what savings are able to be achieved from policy optimisation.
One way which your strategy could drive savings is by tracking and optimising cancelled airline tickets and vouchers from 2020 and beyond. Buyers report they have amounts reaching into the millions sitting in unused tickets – all with varying terms attached. Tracking each ticket and how to claim it will give you an opportunity to tap into those savings. For an easy way of ensuring no cash is left on the table use PredictX Air Ticket Status Analytics to monitor past and future air ticket activity.
3. Examine the coverage of the managed programme and assess how it can be improved
In 2020, and 2021, the managed travel programme is becoming more crucial for organisations. Off-channel bookings pose an increased organisational risk if employee travel does not go through an adequate approval process and is not tracked at every point by timely data.
In light of the risk to employees, most companies have been creating new policies for travel. Ensure these new policies are communicated effectively and that booking tools and suppliers used in the programme are aligned with these policies and communicate them to travellers at the point of sale.
Ensure that your programme’s data management approach enables you to track policy compliance and programme leakage so that effective, preventative action can be taken for any off-channel bookings. This may mean an increased reliance on more real-time data, such as ‘pre-trip’ or data flows directly from the OBT.
4. Reprogramme supplier relationships
2020 rates were volatile and this trend promises to continue. If air, hotel or ground transport supplier contracts need to be renewed, programmes need to be certain they are getting the best deal on offer. An excellent way to do that is by using data to measure demand and how contracts are performing.
Measure total demand for preferred carriers, routes and hotel properties and, if travellers are booking away from preferred suppliers, look for the underlying reasons such as availability, for example.
If your data management capabilities can also analyse supplier contract terms and compare this to programme activity, you will be able to easily see if contracts are being honoured.
If your programme opts in for dynamic pricing with hotels, measure your rates against the Best Available Rate (BAR) to assess performance and see whether more savings can be achieved.
5. Identify new KPIs and track them throughout the year
A new year equals new goals. 2020 and 2021 have been remarkably different from any other year for company travel. Expectations will have no doubt shifted. According to a BTN article, many organisations are more focused on policy compliance. Targets and objectives for policy compliance like online adoption, for example, may become more ambitious. Other policies like advanced booking will become less important in an unpredictable 2021. With the 2020 drop in overall travel spend, cost control may also be less of a priority.
Make sure you and your stakeholders have a defined set of objectives and KPIs to measure them. Incorporate measuring these KPIs within your data strategy so that, in 2021, budgets and objectives are monitored throughout the year through timely and accurate reporting.
During these difficult times, being proactive and using a data-led approach will provide a strong foundation for future travel programme strategy. Our product, The Story, allows travel managers to easily communicate complex programme metrics to senior stakeholders – making it invaluable when creating and explaining 2021 budgets and strategy.
If your current data strategy cannot easily provide you with this visibility, book a free consultation with a member of our team, and we can help you with your data strategy.