business travel consultant

The real cost of legacy business travel !!

Business travel audits identify 5 top malpractices that add 10%++ indirect travel costs!

Do you operate a business travel program in India and emerging markets?

Does your travel agency normally prefer

  • Email / “call to the book” or “implant” led fulfillment?
  • Manual operations to technology-led operations?
  • Offer you a free implant/s + extended payments facility + free reporting + free account management staff  +  low transaction fees + a “beck & call” service ?

This article speaks to industry malpractices that are often seen in emerging markets like India. These are inherent in legacy business travel operations that deploy limited technology in self-booking, payment automation  & expense management. We will cover only those elements that increase the direct costs of the customer ….. the indirect costs are additional !!

Note :

This article does not intend to make a sweeping generalization for the entire market. In India and many emerging markets, there are very high quality ethical & professional travel management company ’s(TMC’s) who run very successful operations nationally and globally.

In our experience as an independent business travel consultant specializing in emerging markets like India, there are 4 primary malpractices that frequently occur. These came across on recurring instances as we conducted business travel audits, for national and global client operations in these markets

A. Creative Ticketing 

Creative Ticketing refers to an industry practice where a travel agency staff quotes an airfare that’s higher than what’s the actual lowest logical airfare Such a situation can have multiple manifestations in actual practice 

Situation 1 – Delayed ticketing approval 

The client asks the travel agency to reserve an airfare. The airfare is quoted at US$X. The client then takes a couple of hours or days to give the final go-ahead. 

the airfare now is modified from US$X to US$ Z.

( Original Fare $X + Markup $Y  = Final Fare $Z ). 

  • There can be a valid operational reason for such a hike
  • However, given the absence of visibility for the client, nothing stops a travel agency from adding an arbitrary markup since there is a valid operational reason that can justify the increase.

Situation 2 – Intentional upselling by the travel agency

i. The Travel agency deliberately tickets a higher fare level. This is generally the due point of sale ticketing incentives extended by the airline to the travel agency. Or simply to secure greater commission if the airline offers one.

ii. An airfare is available at US$X. The agency staff, instead adds a markup of US$Y and sells it to the client at US$Z ( Z = X+Y). The actual ticket masks the mark-up. There have been recorded instances where travel agency staff and supervisors are actually incentivized to promote such sales.

iii. A client prefers airline A. The Travel agency responds to the client that airline A is not available ( though in reality, it is) and asks the client to shift to Airline B. Airline B is promoted by the travel agency as it receives a point of sale incentives & productivity linked bonuses based on targets achieved

Such instances occur more often in international travel now, as against domestic air travel, which has to some extent now moved to self-booking. If you consider a small business travel program which generates around 1000 international tickets annually, a 5% occurrence can of such malpractice nationally, can add significantly to your direct costs.

In a legacy business travel program, there is almost no way that such malpractices can be detected by the client. Most contracts, are inadequately structured and don’t protect customer interests. Consequently, there is no ability for the client to audit vendor operations or penalize them for malpractice, should such an instance come to light.

Most corporations never audit their vendor so the malpractice continues undetected, for years !!

B. Abuse of corporate negotiated rate agreements.

Most corporations today generally secure airline corporate negotiated rate agreements. This is done with the intent of securing discounts on usage/productivity linked bonuses on the overall business. These contracts also secure waivers on fees & penalties that may arise. Additional value adds like luggage/meals onwards / frequent fliers program benefits are some of the additional benefits that are consequent on such agreements.

In the course of multiple business travel audits that we have conducted (please refer our earlier article https://bit.ly/37KPynf), we have found severe gaps in contract compliance by incumbent travel agencies

  1. Most such contracts are shared manually with the travel agency.
  2. It’s expected that the agency will ticket using the specific codes that the airline has assigned to the client.

     3. The corporate negotiated rate codes are not necessarily incorporated in the global distribution system (GDS) used by the travel agency.

   4. If the client operates nationally, airlines place multiple different codes that apply to different points of sale. These are often never correctly updated or aligned with the central/national code.

   5. The problem of contract leakage is further accentuated by the inertia of airline sales staff. Airlines who don’t generally conduct monthly/quarterly reviews with the client, regionally/ nationally. The absence of quality reporting from the travel agency further compounds the problem.

C. Cancellation penalties

In the case study referred to  https://bit.ly/37KPynf, the client incurred almost 4% of their domestic air spend in cancellation penalties. Due to the absence of consolidated reporting by their two incumbent travel agencies, this matter slipped under the radar.

The travel agencies defaulted to using market rates vis-a-vis the corporate negotiated rate program, in a majority of instances. As a result, whenever the client canceled, a cancellation charge applied, on the ticket issued. This was a cost that could have been wholly been avoided!

On questioning the incumbent vendor, they stated that they found the airfare cheaper on the market promotional rates versus the negotiated rates, so market rates were used. No one evaluated the real cost of such a change.

While this was the official reason, as the business travel auditor, we felt that this approach by travel agent added to their actual airline productivity on their own airline-specific contracts.

This was an intentional approach to generate additional incentives, based on their existing airline & travel agency incentive program.

D. Refund mis-management

This is a massive issue with clients who operate without a credit card form of payment.

The problem becomes more pronounced when a client operates a multi-location business travel program with no real control or tracking of cancellation requests. In such a situation, individual travelers may send back tickets for cancellation or route it through a central implant or agency representative.

Generally, there is no automation or systemic tracking. Apart from the tracking, there is a clear challenge for the client to know what cancellation charges would apply.

Given the myriad airfares and related conditions, it’s nearly impossible for a client to know upfront, what are the actual charges that will apply. Further, in a legacy non-credit payment system, the refund is given by the airline to the travel agency, who had done the ticketing.

It is up to the agency to refund or credit the client’s account with the correct refund value. In practice, this is an exception !!

Most travel agencies have refunds as a significant revenue stream. Given that contract’s leave a lot of gaps, clients remain ignorant and if they do find out, they lack contractual commitments from the vendor to recover the actual refunds

E. Invoicing integrity

One of the most startling issues we came across when conducting business travel audits, were the frequent instances where invoices reflected arbitrary costs and charges. These related to

  • Mis-match between the actual ticket price and the invoice amount charged
  • Incorrect service charges recovered from the client, as per invoice
  • The actual credit note value did not match with the airline refund actually issued
  • Absence of relevant data fields in the invoice

In some audits, we found over 11% of invoices that reported a difference with the actual amounts. Given that business travel adits are not a standard operating process in India and emerging markets, the mind boggles at the impact that such un-detected mis-matches have on the actual program costs.

Act now !!!

a. Employ a business travel consultant

Business travel is a complex specialized function. Securing an independent supplier agnostic business travel consultant & market specialist is a vital component in your success.

b. Conduct a business travel audit annually

Ideally, such an audit should be a mandatory annual affair similar to a statutory / tax audit. Conducting such an audit is a very specialized affair as it requires domain expertise in business travel, understanding travel agency operations, airline reporting and reconciliations, and IATA BSP reporting.

The audit can take different structures and scope given the wide scope. This could include

  • Overall T & E process – gap analysis. This can include the travel policy, requisitioning, approvals, advances, refunds & supplier/employee reconciliation’s
  • Travel agency contract audit to ensure it has inbuilt safeguards & due diligence
  • Invoicing integrity audit
  • Full commission & IATA BSP audit

There are several reasons for TMC’s and travel agencies to encourage their clients, to independently audit their operations :

1. Modern client/vendor relationships should be based on trust and transparency.

2. Conducting an audit successfully and validating your relationship with a vendor, allows you to develop deeper and more strategic partnerships with them.

3. There could be no better way to identify ethical & professional business partners

Any program generates bugs and inefficiencies as it runs its lifecycle. Given that Business travel is the 2nd largest controllable cost for most organizations, it’s important to debug the program &  ensure that the interest of all stakeholders is optimally aligned.

            Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

                               Drop us an email  prokonsul@prokonsul.in or call +91-9873196115.

                                                We would love to work with you! Call us now !! 

 ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, it is the pre-eminent business travel consultant firm in India, Asia & emerging markets. We are located in Gurgaon, India. ProKonsul ®  advisory services are supplier agnostic & governed by a robust integrity policy. 

                                                        2020 © ProKonsul – All Rights Reserved 

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Pay “Peanuts”, Hire “Monkeys” – Is this smart buying ?

Legacy business travel systems can add 10%++ in direct costs!

                                                                     

Do you operate a business travel program in India and emerging markets?

  • Does your travel agency give you a free implant/s + extended payments facility + free reporting + free technology + free account management staff  +  low transaction fees + a “beck & call” service?
  • Why does your travel agency normally recommend manual systems like email / “call to book” or “implant” led fulfillment?

Note:

This article does not intend to make a sweeping generalization for the entire market. In India and many emerging markets, there are very high quality ethical & professional Travel Management Company’s (TMC’s) who run very successful operations nationally and globally.

There are no free lunches!

If your answer to the questions above is YES, you have a serious problem. Our suggestion as a business travel consultant is for you to either conduct your own validation of the operational & financial processes deployed by your incumbent travel agency or engage an external business travel audit.

In our markets, buyers place a very high focus on fees & transaction fulfillment. Hence they end up working with a travel agency V/s a TMC, primarily due fee pricing attributes. The general preference is to choose the lowest fee vendor.

A good way to get started is to ask your incumbent vendor to present a full  P&L for your account. This should give you several pointers, on how operations are being run.

No one does business at a loss!

The P&L presented must explain the profit that your vendor makes from your operations. If your vendor indicates that they make no money in managing your account or operate at breakeven, there is clearly an issue!

  1. Every business, especially a travel agency, conducts business with you, only if they make a profit!
  2. If any business claims that they will run your business at a financial loss or simply to achieve breakeven … you are getting ripped off somewhere else in the program!
  3. In the above statements, we have referred to a “travel agency”. This is deliberate. Normally an entity that supports your business travel operations is referred to as a travel management company (TMC). However, if your incumbent vendor operates similar to the manner outlined above – they cannot be deemed to be a TMC!

Be aware!!

Make sure your vendor contract have explicit due diligence clauses that allow for:

  1. Client specified audits of travel agency operation at a time of the clients choosing
  2. Travel agency being obligated to allow inspection of all your specific account-related transactions
  3. Specific’s on how  the agency will report and allocate direct & consequential revenue generated from your business travel operation. This would include, but not be limited to
    • Airline direct commissions
    • Ticketing point of sale incentives ( Overrides )
    • Airline productivity linked bonuses (PLB)
    • Direct hotel ./ accommodation revenue
    • Mark-up’s & transaction type-specific service fees
    • Any other direct revenue generated from your operations
  1. Penalties for creative ticketing, invoicing integrity & refund mis-management
  2. Adequate business continuity planning (BCP), should you need to induct a new travel agency?

Act now!!!

a. Employ a business travel consultant

Business travel is a complex specialized function. You need to be  fully conversant with the intricacies of the industry & have the resources to navigate it. Engaging an independent supplier agnostic business travel consultant & market specialist is vital for your success. This is a worldwide accepted best practice; as such specialized knowledge may not be inherent in your travel administration team.

b. Legacy business travel operations are opaque

Legacy operations are generally promoted by travel agencies because they are opaque and allow abuse of systems to generate additional revenue for the travel agency.

Further travel agencies generally target clients based on price leadership rather than technology & best practice implementation. They don’t generally invest a lot of resources in such initiatives, which is also a reason why they can operate at such low fees.  Hence they promote legacy operations.

Creative ticketing, cancellation penalties, refund mis-management & invoicing integrity are some of the most common industry malpractices that the legacy system perpetuates.

This can result in a financial loss of over 10 % in your direct costs annually.

c. Technology delivers transparency & control

The penetration of self booking technology is very limited in India and emerging markets. This is largely due inability of the industry to articulate the value. In addition, an in-depth understanding of technology solutions is not an industry-wide feature as travel agencies don’t invest a lot in training their staff. Many solutions locally available are essentially mid office / back office automation tools that have been given a client facing interface !

Corporate buyers are hesitant to deviate from accepted business practices because of the fear of being a “first mover”. This inertia is a massive factor for the lack of innovation and radical thinking!  An excessive focus on costs to the exclusion of more strategic cost optimization results in selection off the lowest common denominator. Additional corporate leadership at the CXO level does not regard business travel as a strategic program, that requires management focus. 

Business travel self booking technology, automated payment & expense systems automation have  been around globally for over 2 decades. In our experience, if effectively implemented, this solution can effectively eliminate most malpractices that legacy systems lend themselves too.

d. Question your travel agency

Given the pressure of fees etc., travel agencies promote sub-optimal technology solutions. If your travel agency suggests low-cost self-booking options, as part of their service offering, independently evaluate the solution for

  • Adequate operational safeguards to protect your interest
  • Guarantees to stop fare & fee markups
  • User interface quality
  • Functionality & effectiveness of the mobile application
  • Ability to aggregate air + hotel + car rental in a single transaction
  • Reporting & MIS capability

To state the obvious, call for presentations of multiple solutions and benchmark the capability set offered by your vendor versus other solutions. Evaluate more advanced solutions to understand what else is possible, should you later plan to upgrade your program.

Implementing self-booking and automated systems for payments & expenses have far greater enterprise-wide repercussions and benefits …. It’s important to take a well thought out decision.

Smart buying strategies can ensure that you have a robust program. Be aware of what you may get into if you go by default with the “lowest cost vendor”. Having a supplier agnostic independent business travel consultant can help you navigate complex emerging markets like India.

High quality best in class program delivery has a basic inherent cost …

Beware of vendors who promise the moon, while being paid peanuts!!

They may be taking you for a royal ride !!!

 

 

Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

                          Drop us an email prokonsul@prokonsul.in or call +91-9873196115.

                                                We would love to work with you! Call us now!!

ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, it is the pre-eminent business travel consultant firm in India, Asia & emerging markets. We are located in Gurgaon, India. ProKonsul ® advisory services are supplier agnostic & governed by a robust integrity policy.

                                                    2020 © ProKonsul – All Rights Reserved

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Big 4 firm appoints ProKonsul, business travel consultant for India. Saves 9.8% YOY

A case study on ProKonsul’s lifecycle optimization approach as a business travel consultant

This case study represents the details of a project that ProKonsul delivered as a business travel consultant to one of the Big 4 consulting firms in India. To maintain customer confidentiality, we will refer to the client in the article as John Doe India (JDI). 

Background 

John Doe India is the India arm of one of the largest consulting firms globally. They operate from 8 locations in India. Total employee strength of 12000 employees directed by  400+ partners. 

The India travel program generates over US$ 50 Million in air, hotel and car spend with the operations being managed by incumbent 2 travel management companies (TMC’s) One of the incumbents is the India arm of a global TMC major while the other is a major Indian TMC. The program generates 100000 air transactions annually and an additional 25000 hotel room nights. They have a global hotel program which is booked centrally on their intranet. 

JDI has its internal team of over 8 employees who would manage their travel and BT MICE operations supported by the two TMC’s who have 14 resources implanted within the various offices nationally. The 2 TMC’s have a common Self Booking Tool application that had been deployed. Adoption was limited to less than 10%. The predominant booking mode was “ call to the book “ or “email to the book” 

Problem statement 

JDI and their project leadership, lead by their India COO and CFO commissioned ProKonsul, as their business travel consultant.  The initial  objectives were

  • Analyze & present a gap analysis of their India business travel program
  • Recommend steps to bring it in line with best practice. 

JDI leadership had a general unease with the current TMC’s support, technology & financial processes relating to business travel. The operations were largely legacy with limited technology usage.

They were also challenged by the absence of strong data and insights into their program, with lots of gaps in the TMC reporting. Data was not adequately consolidated across national locations. Further, the two incumbent TMC’s followed different reporting protocols. 

Step One – Program & Process Analytics™ by ProKonsul 

ProKonsul initiated the mandate by conducting its tested Program & Process Analytics™ (PPA). This involved an evaluation of JDI’s India business travel program across 16 program & process parameters. 

The resultant report presented by ProKonsul gave JDI’s leadership with a 360° assessment of their national business travel.

The PPA presented JDI with 

– Program maturity modelling v/s industry & global best practice 

– Identified what was “right” and “what could be better” 

– Benchmarked all program parameters v/s industry baselines 

– Identified specific recommendations and action plans to improve program ROI 

Primary findings from the PPA were 

– Major gaps in 12 of the 16 parameters assessed from the standpoint of program maturity 

– Direct financial saving opportunity of 6% 

– Extremely high cancellation charges on account of improper supplier contracts & questionable TMC operational practices. 

– Need for immediate change in the incumbent Self Booking Tool (SBT ) platform 

– Need to conduct RFP for the introduction of single TMC with stronger SLA & commercial terms 

– Complete review of the airline & domestic hotel program. 

– A total absence of the Duty of Care program despite subscribing to a global  Travel Risk & Security agency 

JDI was given the option to take the PPA report conclusions & implement the changes recommended directly. JDI declined that approach as they felt their teams lacked adequate industry expertise. JDI appointed ProKonsul as their business travel consultant for the project. ProKonsul was asked to lead their various teams & determine the best solution fit. 

Step Two – Business travel lifecycle optimization by ProKonsul

A. 5-year business travel strategy defined 

ProKonsul commenced the project with an initial definition of the 5 year Business Travel Strategy for JDI. This required multiple sessions with JDI leadership. The objective was to ensure direction & continuity in the corporate mandate for the medium term. This was the first time JDI leadership had spent any time on their business travel strategy!

B. Travel Policy refined & aligned to strategy 

The second step was to reset the travel policy to align policy parameter’s with the overall strategy. As with many corporations, the travel policy had actually never been truly reviewed and optimized. This brought up several uncomfortable truths that JDI leadership were confronted with . This generated a lot of discussion on corporate ideology ,  financial & business objectives , safety of travellers & employee satisfaction.

The primary objective of the exercise was to ensure that the policy translated the corporate strategy into reality.

C. RFI & RFP for TMC & SBT solutions 

One of the most shocking things that came out in the Program & Process Analytics™ (PPA) was that JDI had an extremely poor contract framework with their existing TMC’s. The contracts were essentially a single page MOU with service charges listed. None of the due diligence clauses that were required to protect JDI’s interest from a commercial / legal standpoint, were mentioned. 

As an immediate action , addendums were executed to plug these gaps, in the interim, while the RFP was concluded. 

All Self Booking Tool (SBT ) solutions that currently available in India, were invited for the RFI. ProKonsul developed a 30 point RFI document to evaluate all Self Booking Tool (SBT ) providers from different technical and operational factors. 

Consequent to the RFI & the review with JDI leadership, a shortlist of Self Booking Tool (SBT ) providers who had relevant capabilities was drawn. Concurrently an RFI & RFP project was initiated for the travel management company (TMC) selection. 

These finalists were called for detailed presentations with JDI’s operational leadership and finally asked to submit an RFP response. The RFP was scored on commercial & technical  parameters. 

A new TMC and SBT partner was identified in consultation with the JDI. A structured contract & SLA framework was built with financial penalties for shortfalls in program delivery. Incentives were also built in to ensure that the business partners were rewarded for enhanced service levels. An operational process document was built to prevent abuse, in view of current malpractices that had been identified. 

Most importantly, the contract structure was revised to ensure adequate operational, financial and legal governance to protect JDI’s long term interests and business continuity program(BCP).

D. Very high cancellation charges – Operational abuse by incumbent TMC’s 

JDI experienced extremely high % of cancellations and related charges. Annually, this approximated to over $350,000 in cancellation penalties alone. Far  higher than the industry average in India. 

This reflected two major challenges

  •  Airline contracts had been structured sub-optimally.
  • Incumbent TMC’s tended to avoid using the designated corporate rate program. They preferred to use non negotiated market rates. When probed the incumbent TMC’s indicated that they chose the market rates based on the fact that it was lower. However, when canceled, there were severe penalties for such fares. This was a clear area of concern with incumbent TMC’s integrity of operations. It seemed apparent that the TMC’s were using market rates to secure direct incentives from airlines based on productivity linked bonuses. 

As an aside,  ProKonsul found multiple instances of creative ticketing, incorrect management of refunds/credits & billing integrity concerns with both TMC’s.

Much of this was perpetuated due to ineffective SBT implementation and faulty payment systems for TMC settlement. This resulted in a separate project to conduct a full-scale business travel audit of both TMC’s. This will be covered in a separate case study.

E. Consolidation & review of all airline contracts 

All airline contracts  – domestic & international , were reviewed and re-contracted. 

One clear principle followed was selecting airline networks that addressed then primary travel destinations and service requirements of JDI. Contracts were simplified and fewer fare levels were selected so administration/ control were more effective. 

The further process was set up to prevent any leakage in case of preferred fare with a unique process implemented to aggregate all national ticketing on preferred airlines. Quarterly reports & review meeting were built into the contract to ensure that program goals were met.

F. Domestic hotel program reconstructed 

The domestic hotel program originally had over 500 hotels. JDI’s travel team believed that if they had all possible hotels in their program, they would secure every possible benefit ….. obviously an erroneous assumption !! 

When ProKonsul started the review, almost every hotel came back stating that JDI never delivered the committed volumes. There was tremendous leakage in the program . Importantly hotel reservations were not routed exclusively through the official TMC’s. A lot was booked directly by the traveller or their assistants. Since so many multiple channels were used m, hotels were not reporting any data to JDI travel

As the business travel consultant, ProKonsul approached this problem differently. We initiated a chain-wide consolidation so fewer chains that offered multi-segment inventory were shortlisted. Further, the number of hotels in the program was slashed from over 500 to only 160 hotels nationally. 

Again a common RFP document with pricing required for a standard set of inclusions was built. This resulted in the standardization of the rate program. Rate audits post the RFP award was done to ensure that the correct rates were loaded and bookable through the SBT & TMC operations. Direct hotel bookings were strongly discouraged through travel policy directives.

G. Duty of Care integration

Though JDI’s global operations were subscribing to a global travel risk & traveler tracking solution, the program had never been implemented in India. 

A few partners had been issued with program access cards but no one really knew how to use the program. The TMC’s did not integrate ticketing reservations into the global duty of care tool. 

This required multiple discussions with the global travel team of JDI as also their duty of care partner. As a second step, the incumbent TMC’s were provided with an orientation on processes to consolidate all ticketing data  to the global duty of care partner. 

From an almost nil tracking, within 4 months JDI had 100% tracking of air ticketing nationally on the duty of care platform. 

Summary of results delivered by ProKonsul 

The overall project lasted for 7 months. As JDI’s business travel consultant, ProKonsul delivered the following results 

  1. 16 step Program & Process Analytics™ that identified a 6% direct saving opportunity
  2. Stopped operational abuse of the business travel program by the incumbent  TMC’s 
  3. Conducted the RFP resulting in appointment of new Self Booking Tool (SBT) &  single national travel management company (TMC). 
  4.  Reconstructed their domestic hotel program. Brought down preferred hotels from 500 to 160. 
  5. Reconstructed their airline preferred partner’s
  6. Implemented 100% integration of all air transactions into the global travel risk & traveler tracking system
  7. Delivered an actual financial saving of 9.8% YOY v/s the initial estimate 6% direct saving. 

This case study illustrates ProKonsul’s  approach as a business travel consultant

 

      Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

                            Drop us an email prokonsul@prokonsul.in or call +91-9873196115. 

                                             We would love to work with you! Call us now !! 

ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, we are the pre-eminent business travel consultant in India, Asia & emerging markets. We are located in Gurgaon, India. ProKonsul ® advisory services are supplier agnostic & governed by a robust integrity policy.

                                                        2019 © ProKonsul – All Rights Reserved 

 

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Indian CXO’s – Waiting for a Black Swan moment ?

5 reasons why Duty of Care in Indian business travel programs is non-existent !! 

Business Travel Duty of Care is largely ignored by Indian CXO’s who pay scant attention to this aspect, given their exclusive focus on cost/ fee minimization. As the premier business travel consultant in India and emerging markets, ProKonsul has evaluated over 250 programs in the last 5 years. With some exceptions, there is very little CXO oversight to managed travel programs.

Despite being recognized worldwide for their talent and business acumen, it is surprising how shortsighted Indian CXO’s have been when it comes to their business travel programs

Most of CXO’s regard business travel as more an act of fulfillment and purchase. Priorities like strategy, technology best practice & due diligence to limit corporate liability, are largely ignored. In addition, the effective cost rises due the opacity of legacy operational models. 

CXO’s have ceded total control to their travel gatekeepers, who have limited ability to introduce best practices and ideate innovation internally. The approach hence becomes one targeted at perpetuating the status quo.

Overall program hygiene is a low priority. Indian business travel programs focus excessively on the lowest ticket cost / lowest fees. 

There are some exceptions, but honestly, they are still few and far between. These include Global MNC’s who have a globally consolidated travel program in India & some Indian transnationals. These organizations have evolved their travel program to include traveler risk & duty of care.

1.Working with Travel Agencies V/s TMC’s 

Most companies in India execute their corporate travel programs with “Travel Agencies “ and not “Travel Management Companies (TMC’s”). 

“Travel Agencies’ – are generally non-specialists in the business travel domain & generally win business largely on price/location & relationship attributes. They don’t deliver the full range of managed business travel services. These agencies could also be ticketing consolidators or tour operators for whom corporate ticketing is a useful add-on.

2.Highest focus on lowest fees 

The most important  KRA of most Indian travel administrators & travel sourcing departments is fee & ticket price minimization. Travel agencies / TMC’s are appointed based on the lowest transaction fee pricing or the highest levels of discount. Many of our travel managers & procurement professionals place a far higher value on fee pricing rather than the qualitative aspects of their vendors’ capabilities like 

  • Technology 
  • Strategic account management 
  • Cost optimization 
  • Risk management 
  • Management reporting 

3. Managing travel using the “IT/ ITES Industry ” model 

The IT / ITES industry, who should be leaders in best practice implementation, have sub-optimal travel programs. They follow a very unique business travel operating model. They put each travel request out to “bid” amongst multiple travel agencies / TMC. In this situation, the lowest bidder wins the ticket and fulfills it. 

This places in question, how they ensure data consolidation of all tickets purchased through different vendors & track their employee, amongst multiple other areas.

4. Hotel reservations disaggregated 

Another very unique situation seen in India, is that travel programs don’t consolidate their hotel reservations with their preferred TMC or Self Booking Tool (SBT),  if implemented. 

Bookings for hotels especially international hotels are done in multiple forms 

  • through room aggregators
  • through OTA’s and public websites
  • directly with the hotel concerned on call/email 
  • through secretaries and administrators 
  • on reaching the destination from the airport by the traveler 
  • by the overseas office staff 

Tracking and consolidation of booking information on hotels booked is a major grey area. Consequently, there is limited or nil visibility on where an employee is staying. Such dis-aggregation also impacts data analysis and optimal sourcing of room rates.

5. “Per Diem Advances” for foreign travel 

Many Indian firms give their employees a “per diem” – The employee is expected to arrange their stay in their destination country using this per diem. This can vary from $25-$60 per day, generally. 

The employer may not mandate receipts for the stay from the employee. IT / ITES companies actually regard such a practice as being “employee-friendly”. This is presented as a staff incentive, since the employee could technically stay with friends & family, retaining the per diem. 

However, what is completely ignored is the fact that the employer has little or no information on 

  • where the employee is staying 
  • the quality of the accommodation 
  • the health & safety standards 
  • risks to employee  

Overseas medical travel insurance is still not a mandatory part of Indian business travel programs. Implementation is erratic. Hence the overall approach with some exceptions in largely reactive – The overall motto can be summed up as  “Let something happen, the travel team will firefight the issue”. 

As a business travel consultant, ProKonsul believes the approaches outlined above, create corporate liability, generate traveler friction &  negative employee CSAT. They directly & indirectly impact the cost of the program. The resultant inefficiencies inflate indirect costs, creates complexity in processes & reduces the ability of the enterprise to reduce overall spend.

Wake up before its too late! 

 

Business Travel Duty of Care is defined as the corporate obligation that an employer has to secure the welfare of their employees when the employees travel on official work. The concept of Duty of Care emerged and become a major component of business travel policies worldwide post the incidents of 9/11. 

In many parts of the world – like USA / Canada & Europe / Australia, this is a legal obligation of the Directors & management of the company. There have been many instances where the courts have found the officers of the company legally & financially liable for negligence. The negative impact of a brand & hiring standpoint is incremental negative liabilities.

This is not yet a legal obligation in India and in most emerging markets. Which is why there is limited or nil CXO visibility or focus amongst most Indian companies. 

Modern business travel is not purely about pricing and fee minimization. It is built solidly on the principles of program optimization. There are multiple aspects that have to be accorded priority to build a program that protects enterprise and employee interest while optimizing spend. Partnering with a supplier agnostic business travel consultant like ProKonsul, can bring objectivity in decision making & allow program maturity to leapfrog to the best in the industry. 

There is an innate desire, when it comes to Indian business travel, to keep the head buried in the sand. The approach here is that what is not seen or heard or recognized will not impact the business! 

India is targeting to be a $5 Trillion Economy by 2025. It’s business travel market is the fastest-growing worldwide. Ranked 7th largest globally. 

For a business to scale and become efficient, Indian CXO’s have to spend time understanding and strategizing business travel. They need to take advantage of external business travel consultants like ProKonsul, who can simplify this complex domain, prioritize goals and deliver global best in class business travel programs. 

Don’t wait for a Black Swan moment to happen, before you wake up !! 

               Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

                            Drop us an email prokonsul@prokonsul.in or call +91-9873196115. 

                                                 We would love to work with you! Call us now !! 

ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, it is the pre-eminent business travel consultant in India, Asia & emerging markets. We are located in Gurgaon, India.

ProKonsul ® advisory services are supplier agnostic & governed by a robust integrity policy.

                                             2019 © ProKonsul – All Rights Reserved

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Global VAT Reclaim – An opportunity missed by Indian & Asian Business Travel buyers?

Global VAT Reclaim – An opportunity missed by Indian & Asian Business Travel buyers?

Recoverable Global VAT Reclaim can constitute up to 20% of your company’s overseas T&E spends in designated countries. Surprisingly there is limited understanding & negligible focus on recovery of this significant expense category in India and Asian countries…… Why??

Global VAT Reclaim is today the single largest saving’s opportunity inherent in Asian & India business travel programs that has yet to be fully exploited.

ProKonsul represents Taxback International, Ireland. Taxback is one of the world’s largest processors of Vat Reclaim and an app center partner of SAP Concur. Their seamless integration with SAP Concur delivers unmatched technical and operational convenience to enterprise customers.

While domestic VAT reclaim on travel-related expenses are still largely recovered, Global VAT recovery is largely ignored or swept under the carpet!

There are many reasons for this inertia 

  • A lack of recognition of this extremely important cost-saving opportunity amongst the corporate & travel leadership
  • KPI’s of the business travel buyers/managers do not recognize this as a primary deliverable
  • Absence of clarity on who owns this activity – business travel operations/ procurement/ finance/ accounts payable. As a result, the ball falls between the cracks as no one takes ownership!
  • The travel management company’s & BT MICE agencies lack understanding and hence do not educate their clients on this opportunity.

Indian & Asian buyers need to engage an independent business travel consultant like ProKonsul, who can link the dots and help facilitate recovery of such significant savings inherent in their business travel program.

1. How much money is at stake?

Generally, Western Europe has the highest rates of VAT with rates going up to 27%. Overall VAT rates vary between 5% – 27%, depending on the country in question.

A simple way to calculate your potential Global VAT reclaims

Total spend on international air ticketing to the designated countries  $100,000 p.a.

Your overall reclaim potential – 20% of your air travel spend US$20,000 p.a.

The reclaim potential will vary with the destinations to which your employees travel …. More travel to Western Europe will mean higher potential recoveries being possible.

That’s a very handsome income generation by a traditional cost center like business travel …. Wouldn’t this be music to your CFO’s ears?

2. What is the scope of the opportunity?

When a company resident in India / Asia sends its employees overseas to designated countries in Europe/ Americas and Asia, they are legally entitled to recover the VAT component of expenses that their employees incur overseas during travel on expense categories.

Additionally, there are some direct corporate overseas spends that are also eligible for recovery.

The countries from which you can claim is dependent on the country in which your company is a resident. If a company pays tax in a given country and can prove this through a tax residency certificate, it is deemed to have residency in that country.

Important – This enterprise VAT reclaim is very different from the individual VAT reclaim that travellers may do to recover VAT on certain purchases overseas at airports.

The eligible expense categories for Global VAT Reclaim can be segmented into three broad groupings

A. Business Travel related expenses

  • Accommodation of any type
  • Meals & Business Entertainment
  • Fuel Taxi & Transport

B.  Expenses related to overseas marketing & BT MICE

  • Participation in Conferences/ Exhibitions/ Trade Fairs
  • BT MICE groups that are sent overseas for education, training, incentives, etc
  • Marketing & advertising
  • Printing and stationary

C. Direct corporate expenses overseas

  • Expenses for professionals appointed overseas – lawyers/ consultants/ advisors/venture capital firms etc.
  • Inter-Company charges
  • Account payable invoices

3. How easy is it to recover Global VAT?

 All you need to recover your overseas Global VAT is to call ProKonsul. We will need

  • Your tax residency certificate
  • Original invoices

That’s it !!

If you don’t have the original invoices or invoices in the correct format, don’t fret – ProKonsul & Taxback International will arrange an invoice retrieval & correction service so the maximum number of eligible invoices can be filed for recovery.

If you work with SAP Concur, life becomes even simpler due to the seamless integration that SAP Concur has with Taxback International. This allows for a no-obligation no-fees VAT Reclaim assessment & eventually simplified reclaim filing process.

Further, there are no upfront fees payable !!!

The customers’ liability for fee payment arises only when a successful VAT Reclaim is processed in their favor, by the tax authorities of the respective countries.

We will handle the processing, invoice retrieval, and correction, filing of paperwork with the respective country tax authorities. Normally it can take between 90-180 days for the process with the tax authorities to complete.

4.  So …………What are you waiting for?

 Act now to exploit this massive saving opportunity inherent in your program.

VAT Reclaim’s are governed by strict annual deadlines, which if missed will mean that your entire reclaim becomes void.

Further, if your claims are structured, claims can be filed every quarter which means that there is a regular inflow of cash from this activity.

For business travel buyers in India & Asia, this is the single most important way for their corporate leadership to take notice of their ability to positively contribute to the company’s P&L and profits …..

What better way to build a positive perception of the business travel team within your company?

Act now, recover your Global VAT reclaim, today !!

 

Want to setup your 30 minute FREE consultation with a ProKonsul business travel expert ?

Drop us an email  prokonsul@prokonsul.in or Call +91-9873196115.

We would love to work  with you ! Call us now !! 

 

ProKonsul ® optimizes the business travel lifecycle of its clients. It deliver’s domain expertise in enterprise  business travel. Established in 2014, it is the pre-eminent business travel consulting firm in India, Asia & emerging markets. We are located in Gurgaon, India

ProKonsul ®  advisory services are supplier agnostic & governed by a robust integrity policy. 

2019 © ProKonsul – All Rights Reserved

 

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Globalizing your Business Travel program

Integrating emerging markets like India into your global business travel program can be challenging.

Your recipe for success must include a well thought out strategy. Active engagement of in-country stakeholders and a clear “Go To Market “ roadmap are equally important.

Such markets have unique complexities and challenges. It’s important that you have a knowledgeable in-market business travel consultant/ India expert like ProKonsul. Prokonsul can help solve local market complexities and align the project with global objectives.

The Challenge

In commencing your India integration initiatives, some of your top concerns will include:

  1. Demand for legacy  high touch service delivery 
  2. Desire to maintain “Status Quo” in view ofunique India specific needs
  3. Strong resistance to change
  4. Complex operating models & varying degrees of technical maturity – self-booking technology, expense management & payment systems
  5. Limited MIS, Data & Analytics on the health of the program
  6. Absence of a structured employee CSAT & vendor performance scorecard

To secure success, one would need to start by understanding the dynamics of  Indian business travel. Always consider employing an external business travel consultant who can help you navigate the road ahead to achieve success.

1. Market reality

Indian business travel market is  the fastest growing business travel market worldwide. The market stands at US$40B approximately. It will grow north of 10% YOY for the next 3-5 years. 

Despite the exponential growth in business travel, most India corporations still regard business travel as primarily a fulfilment activity. In-adequate attention is given to matters of strategy & forward planning. Success in business travel, is still largely deemed to be securing the lowest possible transaction fees.

Often, service fees are so skewed that the only way the travel management company (TMC) can operate is at a sizeable loss !!

It’s not uncommon for travel agencies/ Travel management company (TMC) to offer

  • Minimal transaction fee
  • Free account management
  • Free Onsite staff or implants
  • Extended credit and on-account payment facility

Many global travel management company’s have a very different (and truncated) technology, operating & service delivery model in India v/s their global offering.

There is very limited engagement from the senior leadership in the corporate business travel program. Most Indian CXO’s recognize that travel is a big cost. However, they are limited in their ability to drive meaningful change due opaque systems & lack of quality data/ analytics. Predominantly, buyers & travel partners share an antagonistic relationship, driven by lack of trust & transparency.

2.   “Unique” India specific needs

Often, in market’s like India, there is very strong resistance to change. It’s important to take an objective neutral view of such situations and understand the underlying drivers that fuel such comment.

Engaging a business travel consultant or India expert like ProKonsul allows you objectively navigate the dynamic’s and develop relevant market-specific responses.

Yes – there are many operating situations in India that very different from European & American markets. These have to be understood & taken in account when planning a transition.

Visae 

Indian’s require a visa to most countries. Further consular requirements can be complex. Requirements can vary even by the respective consular location where the visa is applied. This poses additional challenges when planning a self-booking tool (SBT) implementation. These would need to be thought through and planned to ensure an effective migration.

Credit cards & Foreign Exchange advances

Many companies in India do not provide their employees with corporate credit cards. If provided, they can be limited to  senior management. There is preference to work with foreign exchange advances. Alternately employees are equipped with foreign exchange advances using a debit card that is preloaded with the relevant currency.

Traditional Cheque payments 

Most companies still pay their travel agency/travel management company using a cheque payment or on account models. There is still limited lodge cards/purchase card implementation.

This results in a unique eco-system of travel advances for domestic & international travel. Supplier payments are made on-account payments with attendant reconciliation challenges. There are many organizations that still dont implement automation in business travel expense management , which pose additional challenges.

Market conditions

Enterprise business travel in India has just remained behind in innovating and accepting new ideas. A large part of the problem rests with the business travel industry, who have been unable to change the  narrative. They have been unable to verbalize and ideate value. Concurrently, buyers have not evolved  and understood best practice. They remain  focussed on fee minimization & using the lowest common denominator.  Hence the the old adage gets repeated often “ if you pay peanuts, you get monkeys”.

While these realities exist, it would be correct  to point out that …. Indians don’t live on another planet! What’s required is the need to understand issues, socialise the change and drive an effective transition.

3.   Engagement with the India stakeholders

The size & criticality of your Indian business travel program mandates a robust transparent engagement with your India team. This would require a multi-level employee engagement commencing with the India leadership team.

The best way to take this forward is to do a detailed objective assessment that includes

  • Survey the Indian employees & secure CSAT with the current program
  • Use this CSAT to establish new service delivery parameters / set expectations for the future 
  • Establish a check list of mandatory service deliverables & expectations of local India team across levels of management/ function
  • Evaluate the strengths & gaps in the current Indian business travel
  • Evaluate the value of current incumbent travel agency/TMC  V/s benefits consequent on implementation of the global program partner

Such analysis requires an external business travel consultant like ProKonsul, who can objectively assess inputs and connect the dots. Once the baseline assessment is done,  plan a formal presentation to the India leadership team. This is a key step in securing their formal buy-in which is essential for  future success.

It’s important for your India leadership to share this mandate with the wider organization. This will give confidence to your India team that your recommendation is based on solid facts. Further it will eliminate needless debate and pushback.

4.   Operationalizing the Mandate

Getting the mandate operationalized is now the next big challenge. This is the most critical part of your project. A lot of your success requires balancing your global objective with local business needs including cultural / operational nuances. 

The first step is to build a clear commercialization plan that outlines landmarks, tracks milestones &  service delivery stats.

Start with smaller pilot groups in SBU/ Regions, establish success and then widen the scope of the project.

Periodic CSAT surveys and benchmarking travel management company’s service delivery standards are crucial.

A project plan with scheduled check-in’s and sign-offs is imperative. Plan regular update sessions the senior management/executive sponsor in-country at periodic landmarks so they are kept abreast of the progress.

Based on your evaluation, you will probably find that you will need to conduct negotiations with your global travel management company (TMC) to meet India specific operational & commercial expectations.

High quality account management support from your preferred travel management company would be required both globally and in-country. This is essential to ensure your internal objectives interlink with your partner’s ability to deliver locally.

The assumption here is that you intend to perpetuate an existing relationship rather than conduct an RFP for a new vendor. Conducting a new RFP will require a different approach.

Your travel management company must assign a transition team, which project manages the implementation.

A note of caution – account management service delivery and project management can be widely different in-country versus global standards. This is a reality even with the established global travel management company’s (TMC). Be sure that you have effectively evaluated the process as also the specific candidate who will be responsible for this from your TMC.

Once the negotiations & commercial considerations are finalized alongwith the operational delivery, the stage is set for the actual program rollout!!

5. The Moment of Truth – “Going Live”

Planning a smooth “Go Live” can be both exciting and nerve wrenching !!

Getting to the moment of truth  will require several components to work in tandem:

  • Structured Employee engagement
  • Roadshows to socialise the changes in program management & operational processes
  • A continuing user feedback & survey mechanism through CSAT Surveys
  • A “Success Scorecard” that recognizes vendor program management & success with business-critical initiatives
  • Smooth de-implementation of the incumbent travel management company, if required
  • Progressive rollout of new phases in the project

The focus in this stage is to make the transition as free from “noise & smoke”, as possible.

It’s a  fact that something’s will not go as planned …. It’s important to tackle this with minimum fuss  thru an escalation matrix and  tiered levels of support 

6. Tracking Success

While the the program transitioned successfully, its important not to move your foot of the gas pedal! A program, especially in a market as complex as India should be monitored by you directly for at least 6 months post the “Go Live”.

This stage requires active involvement of your entire team and your an in-market business travel consultant. Progress needs to be tracked effectively against targets and challenges mediated.

This will include:

  1. Frequently scheduled meetings with your project leader & in- country support teams
  2. Close tracking of employee CSAT Surveys & Vendor “Success Scorecard”
  3. Re-training & refreshers so the employee user-base clings with  the new program
  4. Present regular executive leadership reviews  on performance, gaps & steps to improve.
  5. Active involvement of your in-country executive leader to drive unambiguous messaging
  6. Set the agenda for the next set of important transitions related to business travel.

Securing success in complex markets like India requires a clear understanding of market dynamics & unique user needs. 

Welcome to India !!!

 

Want to setup your 30 minute FREE consultation with a ProKonsul business travel expert ?

Drop us an email  prokonsul@prokonsul.in or Call +91-9873196115.

We would love to work  with you ! Call us now !! 

 

ProKonsul ® optimizes the business travel lifecycle of its clients. It deliver’s domain expertise in enterprise  business travel. Established in 2014, it is the pre-eminent business travel consulting firm in India,  Asia & emerging markets. We are located in Gurgaon, India

ProKonsul ®  advisory services are supplier agnostic & governed by a robust integrity policy. 

2019 © ProKonsul – All Rights Reserved

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