SMEs continue to drive the UK economy – but are they driving efficiencies in their travel programmes, asks Catherine Chetwynd?
One of the abiding myths surrounding SMEs – small and medium-size enterprises – is that travel management companies (TMCs) are too big and too expensive for these smaller organisations to contemplate using them. Many TMCs of all sizes have the services and expertise to handle such business, but have different approaches to the sector.
For example, FCM has a specialist brand, Corporate Traveller, which specialises in services for organisations spending between £100,000 and £2 million per year on travel. Whereas at Carlson Wagonlit Travel (CWT), although roughly 70 per cent of its customer base is SME, it no longer has a definition (or definitive service) for SMEs.
“Smaller companies can grow into big companies or can be small in the UK and big in other markets, and some smaller companies travel intensively, so much so that they have the same needs as a bigger company,” says Johan Wilson, UK & Ireland director at CWT.
Given SMEs’ contribution to the UK economy, he has a point: according the Federation of Small Businesses (FSB), at the start of 2016, 99.9 per cent of the UK’s 5.5 million private sector businesses were SMEs. They provided 60 per cent of private sector jobs and their combined £1.8 trillion annual turnover was 47 per cent of total private sector turnover.
For smaller companies that think they are better off handling their own travel, it is worth considering time savings alone. “We estimate it takes 43 minutes to look into making a booking,” says CWT’s Wilson. In addition, large TMCs bring the benefit of leverage of a global customer base that SMEs could not possibly wield themselves, and technology allows a less expensive self-service option, with a bigger transaction fee levied where hands-on intervention is required.
TMCs also provide tools and apps that allow clients to make bookings, track staff, receive safety and security messages, and more. Much of this comprises duty- of- care, which is no longer an option for any business but it requires time and effort. HRG points out that many high-risk destinations are key global business hubs and, as recent events testify, there is no such thing as a safe city.
“There are a number of areas, including safety and security measures, where a TMC can provide guidance which the traveller or their company would not otherwise be aware of,” says head of corporate travel (Europe) for Direct Travel Andrew Newton.
Tracking travel spend
One of the most important means of control is travel policy, which defines what, how and where travellers spend. A central credit card keeps all expenditure in one place, giving in-depth and accurate MI (management information), allowing companies to negotiate with suppliers where they have sufficient spend. In short, a policy ensures strategic use of budget, and to be effective it must be communicated to travellers clearly and regularly.
“Companies that don’t use a TMC tend to find it difficult to track travel spend,” says Paul Casement, sales director at Clarity. “A TMC is able to provide core data, patterns and behaviour analysis around the best routes and hotels to ensure that businesses can control their travel budget and get value for money.”
Clarity Hub is the TMC’s dedicated SME service, providing flights and accommodation at competitive rates, account management, travel alerts, telephone support and duty-of-care.
A travel policy does not have to be a formal document. “Even if a business is a one-man band, it will have a travel policy. It may not be written down but the individual will have a view on what they are willing to spend on flights and hotels – and that is a policy,” says Direct Travel’s Newton. “Larger organisations might put that thinking in writing, covering whom employees report to when they have a travel requirement, restrictions they are expected to abide by, and so on.”
A good example of a successful informal travel policy is at marine engineering company Mandiesel, which has 18 employees of which 75 per cent travel, largely in the UK, with some engineers also covering the rest of Europe and a recent business trip to China to make a presentation on behalf of an original equipment manufacturer (OEM).
“Our travel bookings largely go through our finance administrator Sarah Macleod but most of our staff have a company credit card and they are free to book on that or through Sarah, who uses one card,” says commercial director Jade Chalk. “She uses the booking information to get the best deal. She also gets feedback from travellers on the standard of accommodation.”
Many of the engineers are travelling to remote locations, where a large choice of properties does not exist. “They stay in hotels that are good value and convenient; they tend to be accessible from where they are operating, which is often near docks or the sea,” Chalk says.
“Travel and accommodation ought to be common sense,” she adds. “A reasonable budget is £75 to £80 per person per room and our travellers do try to stick to that. If they cannot find it, they ring to say, ‘This is the best I can get, are you OK for me to book it?’”
The only time Mandiesel used a TMC was for the trip to China. “That is partly because it was the OEM’s travel agency and partly because the trip was more complicated and required visas, so we thought it was safer to pay people who knew what they were doing,” she says. “As is typical in a company like ours, as we have grown, people have taken on tasks like booking accommodation without having formal training in it.”
And finally, “SMEs need to recognise that there’s no such thing as a free lunch; everyone charges for their service,” says Newton. “Most airlines no longer pay the agent a commission but the charge is built in somewhere. With a TMC the fee for the service will be visible.”
Corporate loyalty benefits
Membership of SME loyalty programmes can pay dividends.
“There is no reason not to join any and every programme from travel suppliers with which you do more than just an occasional booking. In one way or another they all offer an element of rebate on future purchase. Not joining is leaving money on the table,” says global loyalty consultant for ICP Iain Webster. If there was any doubt, in 2016, members of British Airways’ On Business scheme saved £48 million on reward flights alone.
Here are some of the airlines that run loyalty schemes for SMEs, through which member companies and individuals earn points. These can be earned on the host airline, partner and alliance carriers and at participating hotels, and redeemed against flights, upgrades and other rewards. Some require organisations to appoint a programme administrator as a central contact point.
On Business members and members of British Airways Executive Club and Iberia Plus earn points and/or a cash discount for the company. Earn and spend on British Airways, American Airlines and Iberia.
Air France-KLM and Delta
Blue Biz members earn Blue Credits on flights with these airlines.
Business Rewards members will earn Skywards Miles for the company and for themselves, if they are a member of Emirates Skywards.
Business Connect members must have between two and 50 travellers. Points can also be earned on Air Berlin and Virgin Australia, and can be converted into cash.
Q Biz and individual Privilege Club members earn points and the programme is linked with other members of the Oneworld alliance.
High Flyer launched in April for businesses with up to 30 travelling employees, which earn points on Singapore Airlines and Silk Air flights. Individuals earn Kris Flyer miles.
Partner Plus Benefit credits the company account with Benefit Points, which can be earned and spent on 11 airlines.
Virgin Flying Co. is for companies with two or more travelling employees, who must be members of Flying Club. The company receives 40 per cent of the miles credited to individuals and 10 per cent of those earned with selected partners.
Perks Plus gives points on flights with United, United Express and other partners. Company-earned points can be converted to Mileage Plus points to be credited to individuals’ Mileage Plus accounts.