It's no surprise that companies are reacting swiftly in this economic climate, but it’s the way in which they are seeking savings that is both encouraging and disappointing. In the recent poll of travel managers in the US and Europe for The Wire…from AirPlus, 84 percent of respondents report that their companies have already made changes to the travel program in the last few months or are making changes now. [more]
We also found, as you might expect, that two-thirds of companies are going back to their suppliers looking for savings opportunities and renegotiated terms to address the need to cut back on travel expense. For me, it's heartening to see that over 75 percent are also getting more serious about traveler compliance to policy and more willing to "mandate." It puzzles me why some companies have a tough time mandating adherence to a company policy. I sincerely hope that this new strictness, of enforcing use of the travel program, will not fade away once the economy starts to recover.
Disappointing to me though, was that so few respondents to the survey (34 percent) reported using demand management techniques to manage the cost cuts they are searching for. Do we interpret this to mean that the vast majority of companies have learned nothing about how to best manage cuts to a travel program from the previous economic downturns? Are budgets still being slashed across the board without regard to the bottom-line impact or strategic value of the trip? It's a dangerous proposition to a company's financial situation if the "highly" regarded ROI trips are cut equally alongside those of "lower" value. Without an effective measure of the ROI of a trip, and controls in the booking process, companies are simply cutting costs in the dark.
I feel demand management is necessary for effective strategic management of travel spend. Through its application, companies will know what travel to cut when, not only in the tough economic times like we face today, but also when their programs are growing. For more survey results from The Wire…from AirPlus and additional research, visit us online at www.airpluscommunity.com. Or leave your comment here. I'm curious as to how your company is reacting.