Business travel demand is slowing down, and many companies are tightening corporate travel budgets. In 2020, travel pricing is set to slow globally, according to data released by the Global Business Travel Association (GBTA) and travel management company CWT.
What’s driving the drop? “It all comes down to uncertainty, making consumers more cautious and businesses more likely to cancel travel,” according to Skift reporter Isaac Carey. However, even with tighter budgets, small and medium companies can’t ignore the value of in-person meetings. A face-to-face request is 34 times more successful than an email, per Harvard Business Review.
For small and medium-sized enterprises (SMEs), the landscape presents a challenge. But with the right kind of corporate travel partner, SMEs can continue to travel as much or more without increasing costs and while maximizing the benefits of in-person meetings.
Why Cutting Business Travel Costs Isn’t the Right Answer for SMEs
“The first response to any uncertainty in the market is often to cut costs associated with in-person meetings, especially in SMEs,” said Jonathan Kaplan, vice president of global sales strategy at IHG. “But there are lasting proven benefits for SMEs to keep facilitating travel for in-person meetings. Smaller companies can differentiate themselves by continuing to engage customers face-to-face while other companies are reducing travel.”
These meetings can become a way for SMEs to show their clients that they are always going to put their customers first. As a result, when revenues return, smaller companies will be top of mind. “Customers and partners in today’s business-to-business playing field understand that prices may go up and down,” said Kaplan. “What they really want is the assurance that regardless of market fluctuations, their partnership is being respected and appreciated.”
However, in spite of the proven success of in-person meetings, small and medium-sized companies are constantly trying to do more with less. Corporate travel managers, as a result, must deliver more value at lower costs with their travel programs. One of the first steps that small and medium-sized companies should take towards delivering value is finding the right partner and/or travel supplier. The supplier must understand the unique needs of the SME and customize the offer to meet those needs, while enabling corporate travel managers to offer incentives that encourage in-policy bookings.
One of the challenges that smaller companies often face is finding a corporate travel partner that understands their needs. SMEs do not have the same volume as a billion-dollar revenue company and therefore have a tough time negotiating for the best rates. “We recognized this, which is why IHG Business Edge provides a global discount without the need for lengthy negotiations,” Kaplan said. “We also make sure that corporate travel managers have a direct connection to us for help with unique cases or challenges with our dedicated service centers.” IHG Business Edge has over 10,000 corporate accounts in its first year and a half of existence.
Selecting a Corporate Travel Supplier
“Hotels can often facilitate deeper discounts and enhanced loyalty benefits for their preferred SME clients,” Kaplan said. “With such a combination of benefits, the SME will receive the best available rate and is also able to incentivize their employees to book within the travel policy and budget. The other added benefit of having more employees book within policy is also the promise of more volume that can help travel managers get deeper discounts in the long term.”
Another way to encourage in-policy business travel bookings is to partner with a supplier who offers the best loyalty program benefits. “Today, allowing employees to combine their personal and business loyalty benefits is not enough,” Kaplan said. “Corporate travel managers should partner with hotel brands that offer diverse ways to redeem those points. Also, by partnering with fewer hospitality companies, employees can consolidate their points within one or two programs and get a higher loyalty status more quickly.”
An employee might prefer staying in downtown hotels when traveling for work but in resorts with suites outside the city when traveling with his or her family. Having a portfolio of properties that allows employees to redeem their loyalty benefits any way they want is definitely a perk. Thanks to a new partnership with Mr & Mrs Smith, a travel club and boutique hotel specialist, IHG will be able to offer IHG Rewards Club members ways to earn and redeem points across more than 500 additional luxury and boutique properties outside of IHG’s portfolio of nearly 5,800 hotels, starting in early 2020.
From an employee satisfaction standpoint, out-of-policy travels are often an indication that employees are unhappy with the current program. This leads to attrition and incurs additional costs for a company. From a financial point of view, growth in out-of-policy bookings seriously undermines corporate travel managers’ ability to leverage volume to negotiate better offers. Either way, it benefits SMEs immensely to invest time and effort to find the travel partner that works for them.
“Finding a travel partner with a network and presence that aligns with where employees travel for business is key,” Kaplan said. “But outside of that, SMEs should consider suppliers who share the values of the company and the employees.” He notes that companies should not hesitate to ask their supplier questions such as, “Do you support any green initiatives or social causes?” “Do you have a diversity program?” or “Do you have strong relationships with local businesses?” Stepping outside the parameters of the commoditized product of a hotel room, small companies should investigate what value the partnership will bring to them and their employees.
The success of any travel program and partnership depends on the users. “Therefore, especially with a millennial workforce, finding a program that makes the employees feel good about their company and their own choices will help to keep bookings within budget,” Kaplan said. Having employees who are happy with the travel perks offered goes a long way to help with retention as well.
Corporate travel suppliers should also facilitate ease of operations for corporate travel managers. As managers’ needs change, providing them capabilities to be more efficient is very important. For example, enabling them to do more with fewer tools, giving them instant access to reporting around expenses, and providing a network of peers they can go to for help with unique situations can be the value-adds that help travel managers choose one partner over another. “Ultimately, a good corporate travel partner will be able to facilitate all of the above without having implications on a company’s bottom line,” Kaplan said.