What is the role of the independent business travel consultant in today’s market, asks Alex Blyth, and when should a travel buyer consider using one?
THERE WAS A TIME when buying business travel was simple. Travelling executives went to a set number of destinations, flew in business class, and stayed in hotels, which charged an upfront, all-inclusive price. The job of a travel buyer and manager was to pick the right suppliers and negotiate a good price with two or three of them. But business travel has changed as the world economy has grown and executives are finding themselves jetting off to far-flung destinations outside of Europe and North America to places such as China, India and South Africa.
A baffling array of new airlines and hotel groups entered the market, and suddenly unbundling services and fares became a trend, with little thought for the corporate travel manager. On top of all these changes, there is now pressure for travel managers to report on the environmental and social impact of their company’s travel. Add to that the global downturn, smaller budgets and tighter deals, and a travel buyers’ job seems to be a growing pain.
The result has been that, increasingly, corporate travel managers are unable to cope, and are bringing in external business travel consultants. Paul Tilstone, chief executive of the Institute of Travel & Meetings (ITM) observes: “We have seen an increasing use of the skilled, knowledgeable consultant. Some look for advice and assistance with specific elements of their travel management; others are totally outsourcing travel management to them.”
Few travel managers will admit that they use these consultants – they like to claim credit for the results themselves – but the practice is quietly becoming more and more widespread. So, what exactly can these consultants do, how useful are they, and how do you pick the right one for your business?
A CONSULTANT’S ROLE
Broadly speaking, there are three types of business travel consultancy: the small specialists like Corporate Travel Partners and Bouda, which are usually owned and run by one or two experienced and senior travel industry experts; the large generalist procurement consultancies such as 4C Associates, which have travel divisions; and the main travel management companies (TMCs), such as HRG, that have independent consultancies attached to them.
Consultants perform a wide range of roles, as Robert Daykin, managing consultant at Corporate Travel Partners, explains. “In 2008 we spent 15 months with the Home Office completely re-engineering its travel programme so it cost 10 per cent less than when we started. We’ve advised BT on its travel policy. We worked with RBS, implementing its travel agency programme in Europe, Asia- Pacific and Australia.”
Cost-cutting is important but as Lesley Turvey, senior partner at 3Sixty Global, explains, today’s travel managers look for more than this from their consultants. “Traditionally, the focus has been cutting spend,” she says.
“However, our remit is widening to incorporate global consolidation, TMC selection, travel policy reviews, process re-engineering projects, corporate cards and interim management.”
Ultimately, a consultancy provides you with skills, expertise or resources that you lack internally. For this you can expect to pay around £450 per day for a junior consultant up to £1,500 per day for those at the top of the profession. Clare Murphy, co-founder and director at Bouda, urges her clients to look beyond the headline cost. “Our pricing is flexible,” she explains. “We can charge a daily fee, project fee or savings share. The focus should always be on return on investment.”
Indeed, most of these consultancies predict that their clients receive five times their investment within the first year of working with them. HRG even guarantees it.
It might be tempting to try to plug these gaps in skill, expertise or resource with in-house people.
However, many travel managers find a consultant preferable for several reasons. An external, impartial party can bring much needed perspective to the often highly emotive issue of corporate travel.
Colin Brain, director at Management Solutions says: “Next to motoring, travel is usually the most contentious of administration issues. We believe that using an independent and unbiased consultant takes the internal politics out of the travel debate.” Not only does this add weight to final decisions, but it also makes it more likely you will reach the right decision. Your external consultant can bring fresh eyes and decades of experience to seemingly intractable problems, and often a formal benchmarking process that gives you the objective facts you need to make difficult decisions. In the same way they can help you stay ahead of the technology curve in the fast-moving world of travel.
Furthermore, a consultant can be an invaluable partner in negotiations with suppliers. “It’s a sellers’ market out there,” says Chris Pouney, managing director at Severnside Consulting.
“Hotels and airlines have honed their skills in yield management, and if not managed effectively, costs can increase massively. A good consultant knows ‘where the bodies are buried’ and can advise on how to structure requests for proposals and subsequent negotiations to make the most efficient use of everyone’s time, ultimately saving you money.”
Brain gives some examples of what all this can do to the bottom line: “One corporation wanted to reduce costs by 10 per cent. The company’s spend on travel the year before we were appointed was £11 million, and we reduced spend by £2.25million whilst actual travel increased. At a law firm we introduced an expense management system, which in just the first year enabled it to bill out more than £1 million to clients for their employees’ time.”
GETTING IT RIGHT
Not every relationship between travel consultancy and client works out as well as that. It is essential to select the right consultancy and then to manage the relationship effectively. Some will advise you to stay away from those connected to TMCs, but Paul Dear, director of client consultancy at HRG, is keen to stress the independence of this part of the group. “We are completely independent from our TMC,” he says. “Only around half of our clients are also clients of the TMC, and our consultancy recommendations are not in any way influenced by that side of the business.”
So, what should you look for? While it might seem obvious to look for consultants with experience of your sector, it might not, in fact, be the best approach. Pouney at Severnside Consulting says: “Traditionally, consultants were selected if they had the right experience or right cultural fit, but I’m now seeing companies selecting consultants specifically because they don’t know the corporate’s sector at all. They want consultants to challenge the status quo and bring in ideas from other sectors.”
You do, though, want consultants with experience in producing results.
The best guide to this is references, but qualifications such as the Certified Management Consultant award, from the Institute of Consulting, can also be useful, as can membership of travel organisations such as the Global Business Travel Association (GBTA), ACTE and ITM.
All too often buyers invest all their time and effort into supplier selection and fail to focus on managing the relationship. Karen McKenna is director at SSSource, a virtual business travel marketplace, which runs courses on how to manage relationships with consultants.
She offers this advice: “Begin with absolute clarity on why you actually need one and what you want from them. Use this to provide a clear brief with specific objectives. Spend time telling them about your business. They need to know all the ins and outs to understand it.”
She continues: “Agree a detailed workplan. Insist on frequent and regular progress reports, including an outline of their methodology, presentation of interim findings and progress, preliminary reports and final report and evaluation. Meet regularly to identify completion dates of phases and tasks. Give clear feedback to the consultant throughout the project.” Get all of that right and your consultant should be able to improve your travel processes, increasing executive productivity and cutting travel costs.
Finally, be prepared to be surprised by what they discover. “A few years ago I was working with United Utilities,” recalls Corporate Travel Partners’ Daykin. “It was a six-week project advising them on their travel policy, but while I was there I noticed a way they could save money, and it ended up saving them £750,000.”