Corporate Travel Management

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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