Corporate travel programs have always fallen into one of two tidy buckets – managed or unmanaged. Historically, a managed program has been largely defined as a travel program whose operations are handled by a single Travel Management Company (TMC) of record whereas an unmanaged program is defined as a program that either has no TMC in place or uses a TMC but without any expectation of commitment. Today, while the term “managed travel” is still routinely used as a euphemism for “best in class”, an industry expert may argue that this definition is only vaguely relevant or perhaps meaningless as a result of industry change over the years.
The reader at this point may ask: “So what?”
A Managed Corporate Travel Program Has Always Been the Gold Standard
While the definition of managed travel has changed over the years, the operational requirements to be considered “well managed” have never really changed:
- Consolidated Data – All air, car, and hotel reservations need to be aggregated and normalized in order to make smart management decisions
- Agent Support – In particular, prior to the advent of corporate online booking tools, having a centralized call center was critical for consistent service metrics, customer support, and economies of scale
- Duty of Care – A single TMC had to work hand in glove with a third party risk management company and without the advancements in technology we have today
- Supplier Leverage – A fragmented program, one where multiple TMC’s supported a program, was seen by suppliers as an indication that the market share provided by the client was by happenstance and not well controlled. As a result, leverage was lost and the perception that the program is well managed was mitigated
- Global Support – Providing travelers both reservation service and operational service as she traveled to multiple destinations around the globe
While the term “managed” itself may be misleading in today’s environment, these factors remain the goal to optimize a travel program. Fifteen years ago, a travel program operating under the watchful eye of a single TMC was the only way to claim a program well managed with all of the above mentioned boxes appropriately checked.
By the early 2000’s, some best in class corporate travel programs recognized that the traits described above could still be achieved without having to commit to a single TMC. Global provider networks, affiliations of regional TMC’s across the globe standardized various support services that enabled some clients to consider that a well-managed program could enjoy a “best in local market” approach. Online Travel Agencies (OTA’s) such as Expedia for Business also came on the scene offering another approach to re-define how the industry manages travel.
The line between “managed” and “unmanaged” continued to blur as both TMC and third party capabilities became more mature. Global data integration, a trend toward self-service driven by online booking technology, global travel profiles, European privacy laws, more flexible supplier point of sale discount programs, and a closer look at the cost/benefit of a traditionally sourced single TMC supplier strategy have caused even more blurring between what we have always accepted as managed (optimized) vs. unmanaged (not optimized).
Modern Day Optimization
While I still think the industry can hold onto the nomenclature, we need to recognize that there are multiple paths to achieve a best in class, managed program. The most common pitfall we see are clients who still accept the idea that the traditional definition of managed travel is the only pathway to program optimization and as a result can be pigeonholed to a service model which may not be ideal for their particular corporate culture or business operation.
Each element described above can be optimized by employing a single TMC, a best in local market approach, utilizing some of the industry’s new closed system procure-to-pay applications, or in a totally open booking environment.
The corporate travel industry seems to be in a constant state of rapid change and has been in this state for as long as I can remember. The past several years has witnessed even more change including an unprecedented and prolonged industry recession while at the same time attracting more investment interest than at any time I can remember. As companies have started to return to travel we have seen many consider how changes to the industry such as renewed focus on topics like duty of care, sustainability, and policy will impact their programs.
Defining how current industry change plays a role on key program objectives is critical for business owners when determining how best to manage their travel program. Starting from the false premise that there is only one way to successfully manage a program curtails critical thinking around how to drive efficiencies across all functional areas that touch travel including finance, human resources, IT, et cetera. No doubt, business travel is witnessing hyper-growth among organizations who have never considered corporate travel as a controllable expense and many blue chip accounts are re-examining best practices.
The quest to optimize corporate travel is far from dead but the historically accepted definition of a managed travel program has become both irrelevant and potentially costly for the apathetic or distracted category owner.