Business travel is a pricey cost of doing business, so it’s important to enter into financial planning armed with all the facts. Because you can go one of two ways — employing managed or unmanaged travel — it’s essential to weigh the pros and cons.
If you go the managed travel route, it means enlisting the services of a business travel agency — also known as a corporate travel management company (TMC) — to oversee and streamline your company’s travel bookings via an online system or staff of reservation specialists. This includes everything from flights and hotels to car rental services, conferences and events. The TMC, which is paid by transaction or managed fee, offers advice along the way based on available travel data.
A business travel management company like AmTrav has extensive knowledge of the travel industry and working relationships with suppliers. As a result, their negotiating power enables them to procure the best deals. Their clients also receive emergency assistance while traveling, and it keeps corporate travel spending in check. Add that to the fact that it paves the way for more efficient travel and prevents a reduction in employee productivity since there’s no time wasted on self-booking.
Nevertheless, because there are associated fees, companies do incur upfront costs when using a business travel agency. Typically, they are also required to sign a contract; this binds you to a TMC for a period of time, usually one- to-three years. However, this seems like a small price to pay (literally) for the benefits provided.
When employees book their own travel, it’s referred to as unmanaged travel, using familiar tools like online travel sites. Typically, organizations that follow this approach enlist travel policies that their employees must follow. Travel bookings may be limited to certain employees in the company, with a set approach to tracking and managing expenses.
When you look at unmanaged travel on paper, it appears cheaper than managed travel since there are no associated fees for bookings. Plus, it gives companies complete freedom when it comes to bookings because decisions are not based on relationships, commissions or incentives. In the event issues arise, there is no need to go through a third party, the travel management company.
Conversely, unmanaged travel requires due diligence. Cost containment is in the hands of those booking travel and, if problems arise, you’re on your own to deal with them. That includes when you’re on the road or in the unlikely event of force majeure.
From a cost perspective, unmanaged travel does not include the built-in negotiating power that makes TMCs appealing. So, you may end up paying more, not less, in the end. What’s more, because travel data is spread throughout the company, it’s harder to keep a handle on business travel spending and harder to make improvements to policies since the consequences of in-house bookings may not be fully understood.
At the end of the day, every company has to consider the pros and cons and decide what they truly mean for their business and their business travel needs.
By: Jennifer O.