Welcome to the CWT Travel Management Institute research series

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3 Welcome to the CWT Travel Management Institute research series The CWT Travel Management Institute conducts in-depth research into effective travel management and meetings and events (M&E) practices to help clients worldwide derive the greatest value from their travel and M&E programs. Drawing on the global resources of Carlson Wagonlit Travel (CWT), the institute provides a regular flow of business intelligence and best practices, offering actionable insights into the eight key levers to effective travel identified by CWT. The research presented in this report focuses on how companies can optimize booking processes and provide the right services and assistance to travelers. Other original research publications include: Meetings and Events: Where Savings Meet Success (2010) Room for Savings: Optimizing Hotel Spend (2009) Playing by the Rules: Optimizing Travel Policy and Compliance (2008) Global Horizons: Consolidating a Travel Program (2007) Toward Excellence in Online Booking (2006) In addition, the CWT Travel Management Institute publishes white papers, case studies and articles on industry issues. Eight key levers to effective travel management 1. PROVIDE THE RIGHT SERVICES AND ASSISTANCE TO TRAVELERS AND OPTIMIZE TRANSACTION PROCESSING 2. Tackle hotel spend in a disciplined and professional manner 3. Continue to drive air and ground transportation savings 4. Increase policy compliance and optimize demand management 5. Further consolidate travel programs 6. Address security needs and corporate social responsibility 7. Integrate meetings and events into the travel program to control and optimize the related spend 8. Develop executive dashboards and actionable performance measures

4 Contents Introduction...3 About this research...7 Key findings in brief...9 Key findings explained 1. Online booking tools bring proven benefits when implementation is tailored to each company s specific context To find the right service configuration, savings and program objectives must be carefully balanced with the needs of travelers and travel arrangers A wide range of services enhance the traveler experience, helping to boost well-being and productivity Improvements in travel and expense management can bring considerable cost savings, while increasing policy compliance and reducing fraud...95 Conclusion Glossary...116

5 Introduction As business travel spend increases along with the global economy, travel managers need to keep focusing on their two most important objectives: driving savings while keeping travelers safe, productive and happy. The services a company provides to its travelers play a key role. A return to growth and rising business travel Business travel has always been closely linked to the global economy: any major event that affects GDP makes a similar impact on travel spend, as seen after 9/11 and during the recent economic crisis. Now that the global economy has pulled out of recession, business travel should grow steadily over the next few years. Forecasts show annual growth of approximately 4.5 percent for GDP and 7.4 percent for international business travel (including tourism), according to the International Monetary Fund 1 and the World Travel and Tourism Council. (See Figure 1.) Figure 1: 7.4 percent annual growth is forecast for international travel spend ( ) US$ billion at current prices Business travel and tourism spend Annual growth (%) 2, ,030 1,115 1,204 1,294 1,388 1,488 1,595 1, ,500 1, Asia Pacific Latin America North America Europe, Middle East and Africa Sources: World Travel and Tourism Council, CWT Travel Management Institute What these spend figures do not show is the link with prices and travel. In 2011 at least, price increases are expected in all areas of travel, with the exception of car rental in some markets, and travel managers will continue to face pressure to contain costs as companies ease restrictions on travel. 1 World Economic Outlook, International Monetary Fund (April 2010) 3

6 At the same time, there is growing awareness of the need to balance cost savings with traveler well-being, providing the right services to ensure convenience, comfort and safety for employees. This is reflected in a survey of CWT clients, 2 which shows a mix of travel management priorities for 2011, ranging from cost-driven items such as optimizing online adoption (ranked second out of 11) and enhancing the traveler experience (ranked fifth) to addressing safety and security (in eighth place). The top ranking item, improving compliance, brings improvements across the board savings, service and security by ensuring travelers use the recommended suppliers and processes. (See Figure 2.) Figure 2: Travel management priorities for Improving traveler compliance Optimizing online adoption Driving air and ground transportation savings Optimizing hotel spend Enhancing the traveler experience Optimizing the travel policy Developing key performance indicators Addressing safety and security needs Further consolidating the travel program Tackling meetings and events Making the program more environmentally friendly Sources: CWT Travel Management Institute 2 Travel Management Priorities 2011, CWT Travel Management Institute (2011)

7 When designing a travel management program, companies must make a number of trade-offs to satisfy different requirements. For example: Local vs. global content. Companies need to consider local and regional contexts when deciding on content and processes. One of the questions, for instance, is whether a single, global online booking tool (OBT) is the best choice, given that a multitude of country-based or regional OBTs can often provide more complete content (e.g., access to national rail offerings and local support). While major OBT providers are developing a strong rail offering in larger markets, they have yet to do so in some smaller markets. Streamlined vs. high-touch service. To boost cost-savings, companies can look carefully at eliminating superfluous services and ensuring that core services are provided in the most efficient way. Here an important issue is whether or not the cost savings provided by streamlined service provision can offset the potential leakage (booking outside the preferred channels) and associated risks for safety and security if travelers resist change and continue booking through local travel counselors. Cultural expectations and local languages are often sticking points when a decision is made to consolidate service internationally and limit service to one language (usually English). According to CWT research, 3 when highly aligned processes and simplified services are introduced as part of global program consolidation, companies can save up to 20 percent of total travel spend. Online vs. offline booking. Many companies simplify service provision and put a strong emphasis on online booking, but this model is not suitable for all companies. First, satisfaction rates are invariably better for offline than online booking, and second, some companies have a corporate culture or travel booking requirements that disqualify a very high share of online bookings. This report aims to help companies with the following questions: How to find the right balance between online and offline services? What is the impact on cost savings and traveler satisfaction? What are the criteria for selecting an online booking tool? Should companies buy directly from online booking tool providers or through their travel management company s reseller agreements? How to find the most relevant service configuration? How can a company balance savings, program objectives and traveler satisfaction? How to best manage simple and more complex bookings? What are the key criteria for designing a service configuration or a request for proposal? What kind of service level agreements should a company negotiate? What services and features do travelers and travel arrangers expect, and which add real value (e.g., end-to-end service, VIP service, unused-ticket management, mobile services and social networks)? Which services are essential and which are simply nice to have? How do companies manage expenses? Who handles expense management internally? Which types of suppliers are preferred? What are the synergies with travel management? What are the best practices? 3 Global Horizons: Consolidating a Travel Program, CWT Travel Management Institute (2007) 5

8 About this research Objectives This CWT research has four main objectives: 1. Identify key ways to optimize transaction processes 2. Define the appropriate service configuration, optimize the request for proposal process and set appropriate service level agreements 3. Identify the services that improve the traveler experience 4. Define an effective strategy for expense management Methodology CWT combined several research techniques: Surveys A detailed questionnaire on business traveler services, answered by 204 travel managers worldwide An online survey of travelers and travel arrangers worldwide on their preferences and behavior, answered by 2,439 travelers and travel arrangers from 15 companies A detailed analysis of 152 CWT global or regional clients and 322 local clients to determine the maturity of companies travel programs and room for improvement in terms of savings and traveler safety (CWT Diagnostic) In-depth interviews Interviews with more than 40 experts from corporations, expense management companies, global distribution systems and online booking tool providers Quantitative analysis An analysis of CWT transactions worldwide to observe the evolution of online adoption by industry and by region An analysis of a company s top 15 routes to see the differences in performance between online and offline booking (advance booking and impact on average ticket price) An analysis of CWT transactions worldwide to determine the share of point-to-point vs. multi-segment trips Case studies 1. How a leading biotechnology company increased cost savings and traveler satisfaction by introducing a full-service center configuration (Page 55) 2. How a global reinsurance company reduced transaction fees by 10 percent, achieved 90 percent online adoption and boosted compliance through a standardized service center configuration (Page 57) 3. How a global technology company made savings of 42 percent on travel management costs and 99 percent booking accuracy by

9 implementing a global travel policy and a network of multinational service centers (Page 59) 4. How an energy services firm improved its unused-ticket management, raising the redemption ratio by 50 percent (Page 93) This research was carried out from September 2010 to April 2011 and involved a wide sample in terms of company size and industry, travel managers scope of responsibility and travelers home region, as shown in Figures How a European multinational made its expense management more efficient by introducing an automated system (Page 104) 6. How a large global conglomerate worked with its TMC to fully outsource expense processing (Page 106) Figure 3: Breakdown of surveyed travelers By sector By region Other 31% Retail 23% Europe, Middle East and Africa 16% Asia Pacific 15% No response 4% Engineering and technology 3% Banking and financial services 3% Consulting 17% Consumer products and services 4% Aerospace and defense 9% Healthcare, life sciences and pharmaceuticals 10% North America 65% Based on a survey of travelers (2,439 responses) 7

10 Figure 4: Breakdown of surveyed travel managers By sector Banking and financial services 13% Other 45% Healthcare, life sciences and pharmaceuticals 6% Telecommunication equipment and services 6% Industrial manufacturing 5% Retail 3% Automotive and transportation 4% Media and communication 3% Chemicals 4% Government and public sector 3% Consumer products and services 4% Computer hardware, software and services 4% By region of headquarters Asia Pacific 4% Latin America 7% No response 14% Europe, Middle East and Africa 45% North America 30% By geographical scope of responsibility Regional 18% Local 38% Global 44% Based on a survey of travel managers (204 responses)

11 Key findings in brief This CWT research highlights best practices in four main areas: 1. Online booking tools bring proven benefits when implementation is tailored to each company s specific context. According to travel managers estimates, just over half of all bookings (52 percent) are made online in companies that have implemented OBTs, and some companies achieve much higher adoption rates. Clearly, the type of trips being booked plays a key role, as simple point-to-point travel and domestic travel are typically more suited to efficient online booking than more complex itineraries, and the proportions vary between companies (45-64 percent in a sample of companies). Online adoption is also driven by factors ranging from the macro-economic context to travelers willingness to use an OBT and the company s ability to successfully institute internal change. In particular, travel managers introducing OBTs need to explain how online booking fits with their travel program and underline the benefits compared to using consumer travel sites, which inevitably offer more choice. (Many travelers are dissatisfied with the range of travel options and fares on their OBT and 41 percent say OBTs decrease the level of service they receive, indicating room for improvement.) High adoption is not a goal in itself, however, and performance varies in terms of each company s ability to maximize the benefits of online booking. On average, OBTs increase program compliance, increase productivity and minimize costs, not only through more efficient, convenient processes but also lower ticket prices. Surveyed travel managers estimate that ATP is 7 percent lower when booked online than offline, and a sample analysis reveals savings of 6 percent in one organization, reaching 24 percent on one city pair. This said, online booking becomes less efficient if a high proportion of transactions involve errors or queries that cannot be handled through automation. Companies can also dilute the benefits of OBTs if, for example, the repeat trip feature on OBTs prevents travelers from obtaining the lowest available fare with an alternative supplier at the time of booking. Last but not least, companies need to carefully consider the trade-offs involved in sourcing a single OBT or best-in-market OBTs regionally or locally, as well as whether to source directly or use reseller agreements. A multiple OBT approach is chosen by more than 90 percent of CWT global clients despite the higher costs, to ensure the best possible fit with travelers needs in specific countries. 2. To find the right service configuration, savings and program objectives must be carefully balanced with the needs of travelers and travel arrangers. In general, travelers value simple, fast booking and 24/7 access to service far more than other features such as service in their native language or the quality of technical support, although needs vary between organizations (e.g., some populations of travelers may require special VIP service or end-to-end trip management). 9

12 In terms of booking services, the features that count most are the ability to book when it suits travelers, obtain the lowest rates and make all bookings through the same channels. At the bottom of travelers priorities are items such as access to other travelers advice, pre-trip information and the quality of advice obtained, which suggests that travelers already know what they want when booking. When switching service configurations, travel managers should consider a whole range of criteria, ranging from the need for local content and service support to their company s ability to manage change. The main available configurations (on-site, fullservice, standardized and multinational service centers) each serve different priorities that should be discussed with the travel management company, along with service level agreements. For best results, companies should ensure they have an effective travel policy in place with measures to reinforce compliance. The savings available to companies vary with the starting point but can reach 20 percent of operational costs (i.e., percent of total travel spend), mainly due to more efficient processes and lower operating costs linked to service center location. 3. A wide range of services enhance the traveler experience, helping to boost wellbeing and productivity. Among those that stand out for travelers are easily accessible information, user-friendly technology that facilitates trip planning, and 24/7 assistance around the world. Seven important services are particularly worth exploring: Web-based traveler portals that provide easy access to practical tools and information (e.g., destination intelligence for safety and security purposes); traveler profile tools that make booking more efficient while helping to improve compliance; numerous mobile services that are highly valued by travelers wanting to save time and stay informed while on the go; highly-valued emergency assistance and risk management services; social media, which are likely to be used more commonly in business travel in the future, compared to the small minority of travelers who use them at the moment; VIP and end-to-end services that may be required for specific segments of travelers; and unused-ticket management solutions, the best of which are fully automated. 4. Improvements in expense management can bring considerable cost savings, while increasing policy compliance and reducing fraud. It follows that expense management is a major focus area for companies, especially in view of the recent economic downturn and increasingly strict regulation on corporate governance. Three main areas need to be tackled: policy (including which expenses are acceptable, how to pay and how to file claims), processes (many of which can be outsourced), and systems (either Webbased or hosted, and ideally automated and integrated into other IT systems). Companies can often gain in efficiency and flexibility by reorganizing the way these tasks are handled. For example, an automated expense management system can reduce the cost of processing expense claims by more than percent, according to industry experts. Efficiency gains and cost savings can also be made through in-house shared services or outsourcing, and/or the use of low-cost locations.

13 1. Online booking tools bring proven benefits when implementation is tailored to each company s specific context. To reap the full benefits of online booking, companies require a tailored strategy and thorough implementation plan. Online booking tools (OBTs) are used increasingly by companies wishing to minimize costs while providing convenient booking features for travelers. Many factors influence online adoption, from the macro-economic context to organizational culture, but high adoption rates are possible, particularly when a comprehensive implementation strategy is implemented. Companies also need to carefully consider the trade-offs involved in using a single OBT or best-in-market OBTs regionally or locally, as well as whether to source directly or use reseller agreements. Benefits of online booking When implemented in the right way, corporate online booking tools enable companies to generate significant savings while offering travelers convenient service features. This CWT research confirms a number of benefits: Lower transaction costs. Transaction costs typically represent 3-5 percent of total travel spend. Within this budget, simple, touchless online transactions generally cost half as much to process as manual offline bookings, while the cost of assisted bookings comes about halfway between online and offline Figure 5: Transaction costs are significantly lower for online bookings High case Low case Online transaction Assisted online transaction Based on CWT client transactions for North America Offline transaction 11

14 transactions. In some cases where assistance is required more than once, however, the cost may be higher than for offline bookings if per-touch charges are applied, given that companies must also pay an OBT fee. Travel managers rank booking cost optimization top of the list of factors driving online adoption, followed by service features that enhance the traveler experience (24/7 availability and ease of booking), as shown in Figure 6. Figure 6: Travel managers say optimized booking costs are the main driver of online usage Booking cost optimization Factors driving online usage in order of importance Average ranking /7 availability Ease of booking Increased compliance with travel policy Speed of booking Standardization of travel management across regions Respondents (%) 100 Least important Most important Based on a survey of travel managers (103 responses)

15 Lower average ticket price (ATP). Previous in-depth CWT research 4 indicates that the ticket price is on average 5 percent lower when travelers use online booking tools instead of contacting a travel counselor, and savings can sometimes reach 15 percent from combined savings on airfares and booking fees. In the current survey, travel managers say the average air ticket price paid through online booking tools is 7 percent lower on average, while close to a third of respondents (or 45 percent when excluding don t know responses) believe it is more than 8 percent lower. An analysis of transaction data for a global company s top 15 city pairs used by its global headquarters in Paris shows a reduction of 6 percent in ATP. (See Figures 7-8.) Figure 7: Travel managers say online booking reduces the average air ticket price by 7 percent on average Travel managers (%) 40 Estimated savings on airfares through online booking Average: 6.7% 1, No savings 3 <2% % 4-6% 6-8% 8-10% >10% Don't know. Based on a survey of travel managers (112 responses) 4 Toward Excellence in Online Booking, CWT Travel Management Institute (2006) 13

16 Figure 8: The average air ticket price paid by a global company on its top 15 city pairs from France is 6 percent lower when booked online Difference in average air ticket prices (online vs. offline) Average: -5.9% Route A B C D E F G H I J K L M N O. Based on tickets between France and a company s top 15 destinations in economy/coach class in 2010 A key reason for the lower ATP is that travelers are more likely to choose cheaper fares when they see a range of options on their screens and experience visual guilt. They may also access cheaper booking classes by booking earlier, although the impact of online booking on advance booking appears rather limited: nearly 35 percent of surveyed travelers and 20 percent of travel managers say OBTs do not lead to earlier booking. (See Figure 9 on Page 16.)

17 Improved compliance with the travel policy, bringing savings. In the CWT survey, just over half of travelers (52 percent) agree that booking online forces them to be more compliant with the travel policy, and previous research 5 also shows that companies using OBTs have higher levels of compliance with preferred airline policy and a greater share of restricted fares than other companies. Improvements in both these areas can bring substantial savings. This is true both in mandated and non-mandated policy environments, as online booking tools can be configured to display preferred options, flag out-of-policy alternatives, provide policy reminders or refuse non-compliant bookings. Efficient booking processes. OBTs can save travelers time when booking through standardized, well-designed processes, and can add convenience by being available 24/7 and offering relevant information (e.g., on travel options that comply with the travel policy). Surveyed travelers tend to acknowledge these benefits: for example, 54 percent of respondents say that booking online is faster than contacting a travel counselor (vs. 23 percent who say it is not), while 46 percent say booking is simpler and requires fewer iterations (vs. 28 percent who say the opposite). It is worth noting, however, that 41 percent of travelers say online booking decreases the level of service they receive. (See Figure 9.) 5 Playing by the Rules: Optimizing Travel Policy and Compliance, CWT Travel Management Institute (2008) 15

18 Online booking: numerous benefits Figure 9: Travelers and travel managers acknowledge the benefits of online booking Travelers More appropriate for simple bookings Forces me to comply with the travel policy Faster than offline booking Average score Simpler and requires fewer iterations Reduces the level of service I receive Generally helps me to book cheaper fares/rates Reduces the content I have access to Forces me to book earlier in advance Respondents (%) Completely disagree Completely agree Travel managers More appropriate for simple bookings Generally helps travelers to book cheaper fares/rates Forces travelers to comply with the travel policy Faster for travelers than offline booking Simpler for travelers and requires fewer iterations Forces travelers to book earlier in advance Reduces the level of service travelers receive Reduces the content travelers have access to Average score Respondents (%) Completely disagree Completely agree Based on a survey of travelers (2,106 responses) and travel managers (110 reponses)

19 More often than not, survey respondents say the benefits of online booking tools far outweigh the limitations: 65 percent of travel managers and 52 percent of travelers say yes, by far or yes, somewhat. (See Figure 10). Figure 10: Travel managers are more enthusiastic than travelers about the benefits of online booking Travelers views on whether OBT benefits outweigh the drawbacks Don't know 11% No, not at all 8% Yes, by far 13% No, not really 29% Yes, somewhat 39% Travel managers views on whether OBT benefits outweigh the drawbacks No, not at all 7% Don't know 12% Yes, by far 27% No, not really 16% Yes, somewhat 38% Based on a survey of of travelers (2,120 responses) and travel managers (192 responses) 17

20 Growing use of online booking tools Given the benefits, it is hardly surprising that more and more bookings are being made online, as noted by 70 percent of travel managers and 53 percent of travelers in companies that implement OBTs. On a scale of 1-10 (1 being a strong decrease and 10 being a strong increase), the average scores are 7.5 for travel managers and 6.7 for travelers. Interestingly, there are two peaks in travel managers responses: one around 5 (online booking remaining the same over the past few years) and a slightly higher peak around 10 (a strong increase), as shown in Figure 11. Figure 11: Travel managers and travelers note an increase in online booking over the past 3-5 years Perceived evolution in online booking Travel managers (%) Average: Strong decrease No change Strong increase Travelers (%) Average: Strong decrease No change Strong increase Based on a survey of travel managers (115 responses) and travelers (2,266 responses)

21 Today, OBTs are used for just over half of all bookings on average, according to travel managers. (See Figure 12.) Figure 12: Online adoption reaches 52 percent on average, according to surveyed travel managers Respondents (%) 30 Average: 52% Don t know <30% 30-50% 50-70% 70-90% >90% Online adoption (% all online and offline bookings in companies that use OBTs) Based on a survey of travel managers (119 responses) In the future, online booking should grow further, according to 84 percent of travel managers. Most travelers, however, say their use of online booking will probably remain the same (56 percent, compared to 14 percent of travel managers). These opinions are shown in Figure

22 Figure 13: Most travel managers believe online booking will continue to grow, whereas travelers expect usage to stay the same Estimated future evolution of online usage Travel managers (%) Average: Strong decrease No change Strong increase Travelers (%) Average: Strong decrease No change Strong increase Based on a survey of travelers (2,265 responses) and travel managers (116 responses)

23 There are wide variations in online usage levels between different countries and industries, however. For example, Australia s online usage is nearly triple Spain s (44 percent vs. 14 percent). Moreover, according to a CWT analysis of 70 million transactions, high-tech companies have been faster to adopt online tools than those operating in energy and utilities, chemicals or the public sector. For example, usage reaches 61 percent in electronics companies, compared to 17 percent in the public sector and 34 percent on average across all industries. (See Figures ) Figure 14: Online usage varies considerably between countries and industries OBT usage by country (% all transactions) Australia United States Canada France Germany United Kingdom Sweden Spain Based on CWT transaction data 21

24 Figure 15: High-tech industries lead the way in online usage Electronics Agriculture Hospitality Construction Telecommunication equipment and services Computer hardware, software and services Food and beverage Engineering and technology Consumer products and services Business services Healthcare, life sciences and pharmaceuticals Industrial manufacturing Media and communication Retail Consulting Metals and mining Banking and financial services Aerospace and defense Automotive and transportation Energy and utilities Chemicals Government and public sector (incl. not for profit) Other Average Based on 70 million transactions Online usage by industry Online usage (% all transactions) 61 These variations are partly explained by external factors such as Internet usage and the economic context, as well as corporate culture: Internet usage. The extent to which a country s population goes online impacts travelers readiness to use online tools, as well as the maturity of the service offering. Figure 16 shows the correlation between online booking and Internet usage in different countries. In this way, the growth in online booking is part of a wider online trend in all areas of business and people s private lives.

25 Figure 16: Online booking usage correlates with Internet usage Online booking vs. Internet usage by country Internet usage June 2010 (%) Norway United Kingdom Finland New Zealand Germany Singapore Australia United States Hong Kong Latvia Switzerland Ireland Czech Republic y=0.4x R 2 = Online booking 2010 (%) Sources: ITU, European Union statistics, CWT transactions, CWT Travel Management Institute 23

26 Economic context. Companies tend to accelerate their online usage plans when under greater pressure to reduce costs, as has been the case over the past few years with due to the economic downturn. Figure 17 shows how online usage grew percent faster after the start of the financial crisis (third quarter 2008 to third quarter 2010) than before (first quarter 2005 to second quarter 2008). Figure 17: Online usage increased with the economic downturn Impact of economic crisis on OBT usage in Europe and Asia Pacific Growth in online usage (%) +36% +32% Europe Asia Pacific Growth increase per quarter before crisis (Q Q2 2008) Growth increase per quarter after crisis (Q Q3 2010) While general trends can be observed, the pattern is different for every company, as illustrated by three examples in Figure 18. The first shows a global high-tech company with very high, stable levels of online adoption (more than 80 percent), while the second shows a global chemical company with much lower adoption (hovering around 20 percent). In the third, a global manufacturer doubled its adoption to around 50 percent in 2009 but later lost some momentum.

27 Figure 18: Online adoption trends vary between companies Online adoption (% all transactions) 100 Example 1: a global high-tech company Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Based on 1,400,000 transactions Online adoption (% all transactions) 100 Example 2: a global chemical company Based on 314,000 transactions Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Online adoption (% all transactions) 100 Example 3: a global manufacturing company Based on 181,000 transactions Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

28 Corporate culture. In addition to being influenced by external factors such as the industry context, companies with the highest adoption rates tend to have one or more of the following internal attributes: Adaptable to change Self-enabling: a strong do-it-yourself culture, where most employees do not have administrative assistants Process-focused: a methodology to improve process performance that is systematically measured and managed E-culture: employees are technology driven and go online for many administrative tasks, such as expense reporting Mandate-based: decision-making is generally a top-down process They also employ best practices in terms of online implementation, as discussed on Pages Figure 19: Online adoption is impacted by corporate culture Average score Very strong 10 Impact on online adoption Very weak 1 Ability to change Self-enabling Process performance E-culture Culture of mandates Online adoption <30% 30-50% 50-70% >70%. Based on a survey of travel managers (107 responses) Travel patterns. In Figure 14 on Page 21, the countries with the highest online usage levels (Australia, the United States and Canada) have a high proportion of domestic travel and many simple point-to-point bookings. Access to a growing range of content and features. Online booking tools are integrating more content and features that were previously only available offline (e.g., low-cost flights, rail bookings or reservations for more than one passenger at a time), although performance varies considerably between providers in different markets.

29 Implementing an online booking tool The way an online booking tool is implemented goes a long way to ensuring high adoption levels and optimized benefits. A number of best practices are worth noting: Define an OBT implementation strategy. Ideally clear objectives are set before embarking on a project that involves considerable stakes and challenges. Surprisingly, many companies either have no online strategy or no action plan attached to their strategy (Figure 20). Figure 20: 37 percent of companies have no online strategy or action plan Breakdown of companies by OBT strategy/action plan Strategy and action plan fully communicated 21% Don't know/ not applicable 1% No strategy defined and no action plan 19% Strategy and action plan ready for deployment with appropriate resources 16% Strategy defined but no action plan 18% Strategy and action plan complete but no resources/budget 5% Strategy defined and action plan being prepared 20% Based on a travel program diagnostic survey for 152 clients Set realistic objectives for OBT adoption, in terms of the amount and type of bookings that can be made online. Surveyed travelers and travel managers agree that online booking is most suitable for simple transactions (67 percent and 93 percent respectively, as shown in Figure 9 on Page 16). Above a certain level of complexity (e.g., multi-segment trips) booking tends to be more efficient through a travel counselor. Before implementing an OBT, companies should therefore consider the proportion of simple trips being booked, and in particular, point-to-point trips compared with more complex multi-segment itineraries. Based on CWT global client data for second semester 2010, point-topoint trips account for more than half of all transactions: 55 percent overall, rising to 62 percent in Europe, Middle East and Africa, although they are less common in Asia Pacific (34 percent of transactions) and in first class (45 percent). (See Figure 21.) 27

30 Figure 21: Point-to-point trips account for 55 percent of transactions on average Point-to-point vs. multi-segment trips (H2 2010) Trips (%) 100 By region Asia Pacific Europe, Middle East and Africa Latin America North America Global Trips (%) 100 By travel class Economy/ coach Premium economy Business First All classes Multi-segment Point-to-point Based on 12.5 million transactions

31 At a company level, point-to-point trips account for percent of transactions in a sample of 15 global CWT clients, underlining the need for a tailored approach to online booking strategy. (See Figure 22). Figure 22: Point-to-point trips account for percent of transactions in a sample of 15 global companies Trips (%) 100 Point-to-point vs. multi-segment trips by company (H2 2010) Type of company 0 Consumer goods (cosmetics) Oil, gas and mining Conglomerate Oil, gas and mining Computer technology Banking Consulting Oil, gas and mining Energy and transport Internet and computer technology Telecommunication Consumer goods (sports) Consulting Tire manufacturing Conglomerate Based on 2.1 million transactions Point-to-point Multi-segment Companies should not exclude all complex trips from online booking, however. When the same multi-segment trips are booked repeatedly, offline travel counselors can identify suitable flight options and two or three hotels in each location, enabling travelers to easily replicate previous bookings using the standard OBT repeat trips feature. Moreover, in Germany, Cytric has developed software to handle multi-segment itineraries efficiently. This said, offline booking remains the most effective way to guarantee the best routes and prices for complex trips, especially when repeat online booking may exclude the lowest available fare. 29

32 Companies can also consider their share of domestic and international trips. CWT client data for Asia Pacific, for example, shows that online booking is 3.5 times more common for domestic flights than international flights, which tend to be more complex and less recurrent. (See Figure 23.) Figure 23: In Asia Pacific, online booking is 3.5 times more common for domestic flights than international flights Online booking tool usage in Asia Pacific ( ) x3.6 x3.0 x3.4 x3.7 OBT usage (%) (January October) International flights Domestic flights As mentioned earlier, the success of online booking for different kinds of trips also depends on the company culture and travelers willingness and ability to use an OBT. One surveyed firm, a global consultancy, has dropped online booking after meeting with considerable resistance from travelers who prefer to book through travel counselors. In contrast, a global high-tech company with a strong self-help culture has a high online adoption rate, including for multi-destination itineraries. For the latter company, the key question is how to ensure sufficient content in the OBT so that travelers can book the most cost-effective travel options: country-specific content such as rail or lowcost carriers must be included if the company is to optimize savings. This illustrates how high adoption is not a cure-all solution by itself and must be part of a well thought-out market-bymarket strategy. Minimize assisted online bookings. This is important if companies are to reap maximum benefits from their online booking strategy in terms of efficiency and traveler satisfaction. Fifty-one percent of travel managers of large global or regional companies say online bookings require assistance due to traveler error or request, compared to 15 percent who say they are due to TMC back-office or technical constraints. (See Figure 24.)

33 Figure 24: 51 percent of travel managers in large global/regional companies say assisted bookings are due to traveler error or request, compared to 15 percent who say they are due to TMC back-office/technical constraints Online bookings requiring assistance for different reasons Large global/regional companies 21-40% >40% 16% 5% >40% 5% 21-40% Don't know 34% 16% Online bookings requiring assistance due to traveler error or request <20% 5% 5% 5% 30% <20% 21-40% Online bookings requiring >40% assistance due to TMC back-office/technical constraints Local companies >40% 5% 21-40% Don't know 34% 13% 31% Online bookings requiring assistance due to traveler error or request <20% 6% 3% Online bookings requiring 21-40% assistance due to >40% TMC back-office/technical constraints 8% <20% Based on travel program diagnostic surveys (152 and 322 clients) 31

34 Many more bookings could be completed without assistance if the right processes are used. For example, companies can switch off the OBT s add comment function, which is often used unnecessarily. They can also require travelers to keep their profiles up to date so that all the relevant information is available without involving a travel counselor. (The main reasons for automation failure are incomplete or outdated credit card information, or missing passport information, such as full name, gender and country of passport issuance, which is required by the Advanced Passenger Information System used in many countries, such as China, India, Japan, the United Kingdom and the United States.) Billing issues that call for manual intervention, such as hotel bill-back (where the travel management company pays upfront and invoices the customer), can be avoided by requiring travelers to use their corporate payment cards when making a reservation. Further bookings can be completed without assistance if the company favors instant ticketing, since around 50 percent of all air bookings require intervention by travel counselors when airlines bring forward their ticketing deadlines. According to surveyed travel managers, at least percent of assisted bookings could be avoided. (See Figure 25.) Some companies reach considerably higher levels of performance: (See Pages ) Figure 25: Travel managers estimate that percent of assisted bookings could be made touchless Assisted online bookings that could be avoided (i.e., non-assisted) in a sample of large regional/global companies Don't know/not applicable 45% <5% bookings 22% 5-20% 21% >80% 1% 60-80% 2% 40-60% 5% Average: 16% 20-40% 4% Based on a travel program diagnostic survey for 152 clients

35 Ensure that the travel policy and OBT configuration meet travelers needs. When questioned about why travelers book outside the preferred online channel, travel managers say the main reason is cheaper fares being available through other booking channels. This is confirmed by travelers relatively low satisfaction ratings for access to the cheapest fares: just 5.7 out of 10 on average, with a score of 6 or more for only 49 percent of respondents. (See Figures ) Figure 26: Travel managers say the main reason travelers book outside the online booking tool is that they find cheaper fares elsewhere Travelers finding cheaper fares through other booking channels Influence of different factors on non-compliance with preferred channels according to travel managers Average score 6.1 Proposed travel option not meeting traveler needs Travel management company not empowered to enforce policy for non-compliant bookings Compliance not a high management priority Travel management company strictly enforcing the policy Travelers personal preference for booking on other travel Websites Travelers lack of awareness of preferred booking channels No influence Respondents (%) Strong influence Based on a survey of travel managers (185 responses) 33

36 Figure 27: Traveler satisfaction scores are relatively low regarding lowest-fare availability on their corporate online booking tool Respondents (%) 25 Traveler's satisfaction with online booking tools for obtaining cheapest fares Average: Score Very dissatisfied Very satisfied Based on a survey of travelers (2,123 responses) Another important reason travel managers mention for travelers booking outside the OBT is their dissatisfaction with the travel options offered. This may be due to the OBT parameters set by the company, or some trips deviating from the main travel patterns covered by preferred supplier agreements. Travelers may also want to book with the same suppliers they use for leisure travel (e.g., low-cost carriers that may not be part of the travel program) and compare the OBT with leisure reservation sites that inevitably offer more choice. Travelers need to be reminded that OBTs are intended to facilitate their access to bookings supporting the travel program, and that using their OBT positively impacts supplier negotiations and the cost of travel after discounts. For example, research by Topaz International in 2009 shows that airfares booked through travel management companies were equal or lower to fares paid on public Internet sites in more than 90 percent of cases. (See Figure 28.) Moreover, booking through the preferred channels brings other benefits, such as the ability to track travelers effectively in emergencies. Communication on these issues plays a key role in change management programs, as discussed on Pages 37.) Ensure that the OBT is user friendly and travelers are trained to use it. Travelers are more likely to abandon their online booking tool in favor of another booking method if processes are unnecessarily complicated or time-consuming, especially compared to airlines Websites that are fast and easy to use, being limited to their own offerings. This is a weak point, according to travel managers satisfaction ratings: OBT usability/ features receive one of the lowest average scores, just ahead of OBT evolution and traveler satisfaction. (See Figure 29.)

37 Figure 28: Airfares booked through TMCs were equal or lower to fares booked on public Internet sites in more than 90 percent of cases Airfares (%) Agency fare equal or lower Agency fare higher Source: CWT Management Institute, Based on research by Topaz International, May 2009 Figure 29: Travel managers are less happy with traveler satisfaction than other criteria for evaluating online booking Compliance with travel policy Travel managers satisfaction with online booking tool features Average score 6.6 Accuracy of proposed rates Ability to steer travelers toward preferred suppliers Comprehensiveness of content Adoption rate (% of bookings made online) Ergonomy/functionalities Evolution of the tool Traveler satisfaction Respondents (%) Very dissatisfied Very satisfied Based on a survey of travel managers (105 responses) 35

38 Ongoing traveler satisfaction surveys carried by CWT (CWT Listens) reveal significantly lower scores for online than offline transactions in all regions, underlining that progress can still be made in terms of user-friendliness and travelers acceptance of this way of booking. In an analysis of close to 270,000 bookings worldwide made between January 2010 and May 2011, the population expressing high satisfaction (at least 7 out of 10) is much larger for offline bookings (87 percent) than for online (78 percent). Conversely, the population expressing high dissatisfaction (4 or below) is much smaller for offline bookings (6 percent) than for online (10 percent). These results are mirrored across all regions. Figure 30: Satisfaction scores are significantly lower for online than offline transactions Travelers (%) Offline Online Offline Online Offline Online Offline Online Offline Online Asia Pacific Latin America North America Europe, Middle East and Africa Global Average satisfaction scores Based on traveler feedback (CWT Listens survey) after 270,000 transactions (January 2010 May 2011) 5-6

39 Design and communicate a clear policy on online booking, supported by measures to reinforce compliance. Mandating the policy, rather than merely presenting it as guidelines, tends to work best, although this is not suitable for all company cultures. Compliance can be reinforced at the time of booking by the OBT configuration and offline measures such as empowering travel counselors to refuse bookings that could be made online. Travel managers should constantly review policy settings to enable travelers to make smart decisions (e.g., accepting a flight that costs US$100 more if it avoids an overnight stay or a 4-hour connection). (See Pages for more information on travel policy and compliance.) Implement a change management program to support OBT adoption. Typically a plan will include communications, training and post-implementation support rolled out over several weeks initially, combined with longer-term action (e.g., regular communications on OBT features and user tips). Effective change management is critical to the success of an online strategy, by preparing employees for the new processes, explaining the benefits and creating buyin. However, the survey reveals plenty of room for improvement here: 23 percent of companies fail to implement specific action to support their online booking policy. Figure 31: Few companies implement medium- to long-term change management to support online implementation Breakdown of companies by change management/communication program to drive online booking adoption Actions for permanent/lasting change actions focusing on only one area or target audience 8% Don't know/not applicable 7% Permanent/lasting change management actions (e.g. coaching/training) 13% No specific action 23% Multiple actions in the mid-term (about 2 years) 13% 3-5 actions in the short-term (a year or less) 18% 1-3 actions (e.g., a memo at launch) 18% Based on a travel program diagnostic survey for 152 clients 37

40 Selecting suppliers The choice of online booking tools is critical to the success of an online strategy, and travel managers need to work through a number of important steps: Choose between a consolidated global OBT strategy or best-in-market model. No single OBT offers all the features available in all markets: for example, OBTs that lead the market in North America lag behind the leaders in Europe in terms of content (particularly rail) and service/support features. In addition to content, local service support can also be lacking. Each strategy involves trade-offs, depending on the company s culture and goals. Companies opting for a single OBT worldwide can gain in terms of ease of use, consistent content and streamlined, more cost-effective operations (e.g., implementation, maintenance and updates). However, this approach can come at the cost of local content and features, and may not suit travelers in all markets. A best-in-market, multiple OBT approach is more appropriate when a company wants to ensure the best possible fit with its travelers needs in specific countries. This is particularly true of companies that do not mandate online booking in their policy and must therefore obtain buy-in from travelers. The main disadvantage is the potentially higher cost, linked to implementation and managing several suppliers. More than 90 percent of CWT global clients who implement online booking take a best-in-market approach, but it is important to note that overall traveler satisfaction levels are comparable for both types of online approach, indicating that the execution is as important as the strategy. The benefits of each approach are summarized in Figure 32. Figure 32: Key benefits of a consolidated global OBT and multiple best-in-market OBTs Single global online booking tool Economies of scale Single supplier management Improved leverage and customization Consistent user experience Simplified implementation Best-in-market Market knowledge Local support Local content Multiple best-in-market online booking tools

41 Choose the right OBT provider. A number of key criteria should be considered when selecting one or several online booking tool suppliers: Geographical footprint and strengths in key markets. As mentioned above, an OBT may be present in the relevant markets but not have the same capabilities in each due to market constraints or the OBT vendor focusing its development on specific geographical markets. As a result, the OBT that offers the best fit varies with each company s global or local needs. (See Pages ) Air booking capabilities, such as enabling one-way bookings and maximum segments on itineraries involving multiple destinations, displaying all types of fares (negotiated and public), showing fees for exchanging tickets and other ancillary charges, and offering low-cost carriers. Hotel booking capabilities, such as integration with non-gds hotel databases, displaying spend caps per city and showing previously booked hotels per destination. Other booking capabilities, such as integrating national and international rail bookings (a key feature in some markets such as France) and enabling guest booking for travelers outside the company who do not have a profile in the system. Mobile applications, and in particular booking features, which will be increasingly important. Alignment with GDSs. GetThere is aligned with Sabre, its parent company, while AeTM is owned by Amadeus. These booking tool providers tend to focus their development and support on configurations using their related GDSs. Ability to support preferred payment methods, such as corporate payment cards for all bookings, or different payment methods (e.g., individual corporate cards or lodge cards) depending on the type of booking (air, hotel, rail or car booking) and pay-as-you-fly travel passes (e.g., for American Airlines, Air Canada and SAS). End-to-end integration with expense management tools. For example, Concur and KDS both offer end-to-end travel and expense management solutions. Rearden Commerce integrates ExpenseWire and other financial systems. Policy support, such as targeting dynamic messaging at specific groups of travelers, customizing exception codes, restricting out-of-policy bookings, and automating pre-trip approval or notifying designated personnel when out-of-policy bookings are requested. Site administration, to support the travel policy (e.g., only displaying preferred suppliers or displaying them more prominently on the screen), the company s branding (adapting the screen environment) and customized OBT parameters (e.g., the number of authorized hierarchy levels impacting the options appearing on the screen). Configuration features such as data protection certification and the ability to synchronize with Web-based portals. Other factors, including cost, service level agreements and the quality of commercial relationships. 39

42 Which OBT for which market? For companies wishing to consolidate their online booking, CWT recommends a choice of six regional suppliers (no single provider has the strongest offering in all regions): Amadeus e-travel Management (AeTM): a market leader in Europe, also present in the Americas and strongly developing in Asia Pacific Concur Cliqbook Travel, which is driving high satisfaction as a leader in North America and developing in other regions, especially Europe, Middle East and Africa GetThere: the optimal choice for a single OBT strategy, as a leader in North America, which is present also in Latin America and Asia Pacific, and developing in Europe KDS: a market leader offering integrated expense management in Europe, and also developing in other regions Rearden Commerce: a growing OBT in North America that is a close fit for smaller companies and offers additional traveler services such as airport parking, dining, events and Web conferencing Traveldoo: an OBT with a strong presence in France and growing in Europe

43 Companies implementing a best-in-market OBT strategy, can also consider a variety of multilocal providers, including Arnold in Australia and New Zealand; CWT B+Plus in Japan; CWT Connect Now for small to medium companies in Europe, Middle East and Africa; CWT Online in China; and Smart Traveler in Brazil. In some countries (e.g., China, Indonesia, Japan and Korea), companies must continue to use local OBTs regardless of their strategy because regulations on content availability are limiting foreign providers development there. In other markets (e.g., Nigeria and other low-cost labor countries), CWT may recommend a fully offline strategy, which can be more cost-effective and efficient than implementing an online booking tool. As technology evolves along with user expectations, travel managers should carefully monitor the available features and switch OBTs if necessary to ensure an optimal fit with needs. 41

44 Select an appropriate OBT supplier model. Companies are fairly evenly divided in their use of direct agreements with OBT suppliers or reseller agreements. Direct deals are slightly more common, especially among larger companies, but the proportion of reseller agreements is growing. This reflects companies different priorities. Both types of clients see advantages of their type of model but the top three benefits noted by companies sourcing OBTs directly are (in order) commercial relationship, price and evolution of the tool, while the top three for clients who delegate OBT management to their TMC are price, commercial relationship and quality of service. (See Figure 33.) Figure 33: Companies that source OBTs directly rank the benefits of their model differently to those that manage OBTs through their TMC Companies that manage their online booking tool(s) through the TMC Most important Price Commercial relationship Quality of service Evolution of ftool Companies that have a direct relationship with their OBT provider(s) Commercial relationship Price Evolution of tool Technical support Responsiveness sivene eness Responsiveness Least important Technical support Quality of service Based on a survey of travel managers (98 responses)

45 There are plenty of arguments in favor of using the travel management company as the single point of contact for OBTs: Access to best-in-class OBTs, integrated with other TMC products. Lower licensing, hosting and transaction fees. Small to medium companies will almost certainly obtain better pricing deals thanks to the TMC s negotiations on behalf of all clients, while larger companies can benefit from competitive pricing, along with reduced costs and increased consistency. A wide range of services from consulting and initial set-up to ongoing site administration that removes the burden of handling travel policy updates, entering preferred suppliers, managing rules and updates. (This said, TMCs also offer site administration services to companies that sign direct deals with OBTs, since this facilitates day-to-day problem resolution.) Handling of technical issues (e.g., troubleshooting and managing escalation to OBT providers). The ability to expand OBT usage to other geographical markets without lengthy contractual work. At the same time, arguments in favor of direct agreements with OBTs include: Fully negotiable licensing, hosting and transaction fees with any OBT editors. Control of the relationship with the editor and the TMC, the company being the main point of contact. Local language support for OBT users through a technical help desk and end-user training. 43

46 SUMMARY Best practices for companies that have not yet implemented an online booking tool include: Identifying the benefits of online booking compared to offline transactions in the context of a specific organization and how best to take advantage of them (e.g., to maximize cost effectiveness through unassisted bookings, companies can reduce booking error with measures such as instant ticketing and up-to-date traveler profiles) Choosing the most appropriate online strategy: a single global supplier or a best-inmarket, local approach, and a direct relationship with the supplier or coordination through the travel management company Identifying the supplier/s that can best suit the organization s footprint and strategic priorities as they evolve Planning and implementing a full online booking strategy, from setting realistic objectives and ensuring that online booking tools meet travelers needs, to carrying out a change management program. This should include explaining the differences between consumer travel Websites and a corporate OBT, and policy designed to support a travel program. For companies wishing to increase adoption, best practices include: Understanding the drivers of online adoption, which include both external factors and each company s internal context (e.g., corporate culture and types of bookings) Balancing corporate savings objectives with traveler satisfaction Constantly reviewing policy settings to enable travelers to make smart decisions (e.g., accepting a flight that costs US$100 more if it avoids an overnight stay or a 4-hour connection) Keeping up momentum for online usage through regular communications on new OBT features and tips Monitoring new technology and user expectations, pushing OBTs to develop new features, and switching OBTS if necessary to ensure an optimal fit with evolving needs

47 2. To find the right service configuration, savings and program objectives must be carefully balanced with the needs of travelers and travel arrangers. A range of key factors, such as the company s ability to manage change and switch to a more standardized, automated system, also need to be taken into account. The main available service configurations each best serve different priorities, and these should be discussed with the travel management company, along with service level agreements. To reap the full benefits of a service configuration, companies should ensure they have an effective travel policy in place with measures to reinforce compliance. Finally, companies benefit from efficient access to content through global distribution systems. Which services are considered most valuable? The survey underlines that travelers and travel managers above all expect corporate travel services to be user-friendly, simple to use and efficient, with travel managers placing a slightly greater focus on savings features. When asked to rate different features of corporate travel services by importance, travelers say they value booking simplicity, 24/7 access and speed far above other criteria. Access to relevant content ranks fourth, while service in their mother tongue, quality of technical support, and access to VIP services come next. (See Figure 34.) 45

48 Figure 34: Above all, travelers want simplicity, 24/7 access and speed from corporate travel services Travelers ranking of corporate travel services by importance Average ranking Ease of booking /7 access Speed of booking Access to relevant content (e.g., rail and low-cost flights) Access to service in mother tongue Quality of technical support Access to VIP services Respondents (%) Least important Most important. Based on a survey of travelers (2,044 responses) Looking specifically at booking, travelers rate the ability to book at their convenience far above other features. (See Figure 35.) Convenience is therefore a decisive factor in determining the right service configuration. Travelers also value highly the ability to obtain the lowest rates, book all travel through the same channel and access a wide range of options. The ability to book through the same channel is all the more important as more than half of surveyed travelers say they booked a combination of flights, hotel accommodation and car rental for their last trip. (See Figure 36.) At the bottom of travelers priorities are items such as access to other travelers tips, pre-trip information and the quality of advice obtained, which suggests that travelers already know what they want when booking. (A survey carried out in in relation to hotel booking 6 had similar findings.) 6 Room for Savings: Optimizing Hotel Spend, CWT Travel Management Institute (2009), pp

49 Figure 35: The most important booking features for travelers are the ability to book when it suits them, obtain the lowest rates and book all travel through the same channel Travelers ranking of booking services by importance Ability to book when it suits me Ability to obtain lowest rates Ability to book all travel through the same channel Access to a wide range of options Ease of booking within the policy/program Ease of changing/cancelling if required Speed of booking Cost of transaction to the company Quality of advice Pre-trip information Immediate booking confirmation Access to other travelers' tips Average ranking Number of responses 1,614 1,179 1, ,398 1, Respondents (%) Least important Most important Based on a survey of travelers (1,614 responses) Figure 36: Just over half of travelers book a combination of flights, hotel accommodation and/or car rental at the same time Booking categories for most recent trip Flight 37% Hotel accommodation 7% Other 2% Car rental 2% Based on a survey of travelers (2,233 responses) Several of the above 52% 47

50 In terms of satisfaction, two of the features travelers consider the most important (the ability to book when convenient, and the ability to make all travel bookings through the same channel) score highly (8.0 and 7.5 out of 10 respectively). Two other important features (the ability to obtain the lowest rates and access a wide range of options) achieve lower scores (6.3 and 6.0 respectively, as shown in Figure 37). Figure 37: Travelers are most satisfied with OBT convenience features such as the ability to book anytime and immediate booking confirmation Ability to book when it suits me 2111 Immediate booking confirmation 2112 Ability to book all travel through the same channel Travelers satisfaction ratings for different booking services Speed of booking Ease of booking within the policy/program Access to a wide range of options Ability to obtain lowest rates Pre-trip information Ease of changing/cancelling if required Cost of transaction to the company Quality of advice obtained Access to other travelers tips Very dissatisfied Respondents (%) Very satisfied Average score Based on a survey of travelers (2,062 responses)

51 Travel managers value the same booking services: their top five criteria are the ability to obtain the lowest rates, the ability to book at the traveler s convenience, ease of booking in compliance with the policy/program, the cost of transactions to the company, and the ability to make all travel bookings through the same channel. However, they place slightly more focus than travelers on savings features, ranking the ability to obtain the lowest rates first by far, and the cost of transactions fourth (compared with eighth for travelers). (See Figure 38.) Figure 38: Travel managers value the same booking services as travelers, while placing greater focus on costs Travel managers ranking of booking services by importance Ability to obtain the lowest rates Ability to book when it suits the traveler Ease of booking within the policy/program Cost of transactions to the company Ability to book all travel through the same channel Average score Number of responses Quality of advice Access to a wide range of options Speed of booking Ease of changing or cancelling if required Access to travelers' tips Immediate booking confirmation Pre-trip information Respondents (%) Least important Most important 5 Based on a survey of travel managers (146 responses)

52 While travel managers report a high level of satisfaction with convenience features (ease of making a booking compliant with the policy/ program, the ability to make all bookings through the same channel, and the ability to book at the traveler s convenience), they are slightly less satisfied with savings features such as the ability to obtain the lowest rates and the cost of the transaction to the company (6.8 and 6.5 out of 10 respectively). (See Figure 39.) Figure 39: Travel managers are more satisfied with convenience features than savings features Travel managers satisfaction ratings for booking services Ease of booking within the policy/program Immediate booking confirmation Ability to book all travel through the same channel Ability to book when it suits the traveler Speed of booking Quality of advice obtained Ability to obtain the lowest rates Cost of transaction to the company Access to a wide range of options Pre-trip information Ease of changing or canceling if required Access to travelers tips Average score Respondents (%) Very dissatisfied Very satisfied Based on a survey of travel managers (105 responses)

53 Balancing service and savings The right service configuration for a company is not necessarily the cheapest but the one that best serves the purpose at the best price. Trade-offs are involved in any service configuration. For example, to improve access to content, companies ideally keep the set-up as local as possible, but to reduce costs they might want to consolidate the service locations. Each company s situation will be different, disqualifying a one size fits all approach. Here, travel management companies can provide valuable insight based on their experience with different client profiles. When determining the most appropriate service configuration, travel managers should look at a whole range of key criteria, from the required services and savings to the organization s ability to effectively transition to new processes: Local content and cultural proximity. In some countries, access to local content (e.g., rail) can be very important and a local service presence is required for example, China, where all domestic air travel is on a different global distribution system (TravelSky); Japan, where five out of the seven computer reservation systems (CRSs) are only available domestically; or Brazil, where the main domestic airline (TAM) is only available in local CRSs and local-language skills may be hard to find outside the country. Companies should therefore analyze their needs country by country. How satisfied are travelers with the current services? Where are the gaps? Standardization. Is the company ready for standardized, simplified services and processes? Can travelers book using a single language (English) or are several languages required? Companies need to bear in mind that multilingual service pushes up travel counselor employment costs by at least percent in a consolidated service configuration. Online adoption. A company has scope for increasing online adoption if it has already achieved at least percent and is able to successfully institute internal change. The challenge may be greater if adoption has been lower in recent years in this case, the company should investigate the possible barriers to online usage (e.g., a large proportion of complex transactions that are less suited to online booking; or a lack of policy mandates, effective communication or fit with corporate culture) and identify possible solutions. Cost savings. Economies of scale are impacted by the economic context of each country. When considering local volumes and costs (e.g., salaries and occupancy), it may be cheaper to service travelers from a center in their domestic market (which is the case for Spain, for example, where salaries are highly competitive on a European level due to the current economic situation) or from another country (the case for Swiss travelers, where both labor and occupancy costs are high). Personalization. Does the company have traveler segments that require specific service configurations (e.g., a VIP desk)? 51

54 Service quality. As seen earlier (Page 46), a range of features are important for travelers, such as 24/7 access to services, user friendliness, and efficient booking processes. Depending on the type of trips and the company culture, some travelers may also expect highly experienced travel counselors. Other considerations include: Operational simplicity. One advantage of moving to a multinational service center is that companies work with a single team and standardized services, saving on costs, as well as facilitating policy changes. In addition, a centralized service configuration makes it easier to implement a single global supplier for online booking tools and/or expense management. Seamless implementation and change management. Effective change management and communications, along with a mandate culture, impact a company s ability to effectively drive online adoption or switch from a full-service center to a standardized configuration. These factors need to be taken into consideration when looking at the available service configuration options. Commercial considerations. This point concerns the largest companies that sign global deals directly with a global distribution system. If they agree to use a single GDS across most markets, their options may be limited in terms of service configuration. Such organizations may be best served from a multinational service center, which avoids the need for local knowledge of their particular GDS, but the downside is potentially poor local content in some markets. Companies that do not have a formal preferred GDS have more flexibility in their choice of configuration. The key features of different service configurations are shown in Figures Figure 40: Overview of available service configurations and key features Local content & cultural proximity Personalization Standardization Driving online adoption Cost savings Service quality Centralization On-site service center Full service center with dedicated team Full service center with designated team Standardized service center Multinational service center

55 Figure 41: Different service configurations suit different needs in terms of low- or high-touch service, and standardized or customized processes Cost and complexity of different service configurations High On-site service center Full -service center Cost VIP service team Standardized service center Multinational service center Low Low Complexity of change High The savings companies can make by switching service configurations vary with the starting point but can reach 20 percent of operational costs (i.e., percent of total travel spend). The key factors driving savings are booking efficiency through standardization, which improves travel counselor productivity, and lower employee/ occupancy costs linked to service center location. 53

56 Main service configuration options The five main types of service configuration are described on the following pages, along with the fulfillment and technical support centers that support them: On-site service center or implant. This highly adaptable configuration places a dedicated team of experienced counselors on the company s premises, where they work alongside travelers. Several benefits are available: Traveler satisfaction. Many travelers greatly value being able to talk to a travel counselor just down the hall. The solutions available through face-to-face interactions can also be more flexible. Increased compliance, control and visibility. Having travel counselors on site can facilitate management supervision and interaction. Optional targeted services. Implants may include dedicated staff to meet the needs of designated VIPs (e.g., senior executives and frequent travelers) and/or other specific segments (e.g., international travelers). On the downside, implants do not offer economies of scale like other kinds of service centers, and smaller teams make staffing more complex (e.g., ensuring consistent service levels and business continuity during vacations or peak periods). In addition, the technology infrastructure of this configuration lacks the robustness of service centers. However, contrary to popular belief, implants are not necessarily the most expensive option, thanks to high productivity and excellent quality. This type of service can meet the requirements of companies that have: A strong cultural identity A high share of VIP travelers and/ or frequent travelers with complex requirements A strong employee-service culture where cost is not a major driver The desire to preserve a certain degree of management control and avoid standard policies, procedures and online technologies Companies in the banking, insurance, consulting and legal sectors usually fit this profile. Full-service center (off-site). With this service configuration, travel requests are handled by a team of travel counselors at a centralized, off-site service center. The team can be either dedicated to the company s travelers or, for additional savings, part of a shared pool serving different companies. In both cases, travel counselors are trained in the company s specific program. An off-site model is often a more costeffective choice than implants as it may reduce some direct expenses, such as occupancy costs at the company s offices, (e.g., if the company is short of space and considering moving), while offering the efficiencies of service center operations. Shared teams and equipment provide economies of scale, as well as greater staffing flexibility than on-site centers to ensure consistent service regardless of call volumes. (Small dedicated teams, on the other hand, share the same limitations as implants.) In addition, local service-center

57 management can promote best practices, personal development opportunities and employee engagement, resulting in longer tenure and better service. Finally, the ability to leverage state-of-the-art technology, systems and processes is another key differentiator. This service configuration is designed for companies that need consistent quality of service combined with the flexibility of a larger team than their transaction volumes would normally justify. Such companies tend to have some or all of the following features: A budget that does not provide for a large enough team of on-site counselors to ensure consistent cover during peak periods, training, vacations and sick leave Fluctuating volumes with peaks and troughs in transactions A desire for travel counselors to integrate the organization s culture Requirement for local services in the local language A strong focus on cost savings Case study: a full-service center to optimize savings and satisfaction A leading biotechnology company wanted to take its US$80 million travel program to the next level, increasing cost savings and traveler satisfaction. After reviewing its processes and introducing a full-service center configuration, the company improved service quality and reduced costs by US$1 million within three months. Moreover, it estimates annual savings at US$1 million on air spend and US$2.5 million on car rental over three years. Working closely with its travel management company, CWT, the company decided that a full-service center configuration would best support its efforts to consolidate travel spend globally while fulfilling local travel needs country by country. CWT helped the company negotiate air and car-rental contracts globally and implemented an online booking tool, along with a suite of products to improve data consolidation and service (e.g., traveler profiles, a traveler portal, an online reporting center and Web-based customer service tracking). This configuration also allowed for the use of best-in-market global distribution systems. Initially rolled out in North America, the full-service center configuration will cover 30 locations worldwide when complete. 55

58 Hybrid model (on-site facility and off-site full-service center). In this configuration, one or more dedicated travel counselors work on the company s premises (typically to handle more complex business such as international transactions, visa/passport assistance and VIP services), while a dedicated or shared team of counselors at a low-cost service center manage less complex arrangements for the general traveler population. The hybrid model allows more flexibility for both day-to-day operations and emergencies, since the off-site and on-site teams can back each other up when necessary. However, companies that require only a small number of counselors (under a dozen, as a rough guide) should consider implementing a fullservice center to best manage staffing issues without affecting service levels. This model is worth considering when the company has one or several main markets with sufficient travel volumes to justify an on-site team, and smaller markets that can be handled by a shared full-service center. Standardized service center. This configuration consists of local services (onand offline) with high levels of standardization across all the company s markets, enabling decentralized service at the lowest possible price. All but the core booking services are removed, and all simple transactions are made online where possible unassisted. When counselors intervene, the leanest processes optimize their productivity. Local teams provide the benefits of cultural proximity, local language and content, simplicity (by limiting operations to simple transactions) and knowledge of each market s travel infrastructure. In addition, standardized processes keep online and offline transaction costs to a minimum. Other benefits include uniform service levels in the markets served, consolidated reporting and improved compliance, since policy changes and updates are easier to enforce through consolidated teams. Companies implementing a standardized service configuration may also add services for specific traveler segments (e.g., VIPs). A standardized service center is suitable for organizations with high transaction volumes and the ability to implement uniform processes across their traveler population. Such companies usually have the following features: A need for local content and services in at least four countries, with country-based counselors who speak travelers language and understand the local culture and travel infrastructure A desire to minimize transaction costs while closely aligning the service with traveler requirements to ensure maximum use of preferred booking channels The ability to manage change and gain buy-in when switching to standardized processes, notably by mandating a single travel policy regionally or globally The standardized service center can be an important step in a configuration roadmap, enabling companies using a full-service center to move to a more cost-efficient configuration without making some of the compromises involved in regional or global consolidation.

59 Case study: a standardized service center configuration combining lower costs and local flexibility A global reinsurance company with US$60 million travel spend reduced transaction fees by 10 percent, achieved online adoption of 90 percent and boosted policy compliance after switching to a standardized service center configuration from a full-service center. This move was part of a program consolidation strategy aiming to increase cost-efficiency while retaining the flexibility of local content, languages and travel infrastructure knowledge. Roll-out involved eight European countries prioritized according to travel volume. Following a detailed gap analysis of the company s services, CWT implemented a standardized service center configuration, accompanied by a change management plan, consistent service standards and a Web-based monitoring tool. The company overhauled its travel policy and introduced an online booking tool, restricting services to a core offering using a single global distribution system. At the same time, productivity was boosted through lean booking processes for simple bookings (handled by fulfillment centers) and more complex transactions (handled by travel counselors). 57

60 Multinational service center. This configuration uses locations offering the most competitive labor and occupancy rates. English is usually the preferred language, with other languages available at additional costs. Multinational service centers use a processdriven counselor desktop application to ensure the consistency and quality of services delivered through automation and seamless processes. A multinational service center configuration offers the following benefits: Lowest possible transaction fees due to standardized services and processes Lowest staff and occupancy costs Standardized service levels Strong compliance with the travel policy Consolidated reporting Simplified service management This option is suitable for companies that have large GDS-bookable travel volumes and can fully benefit from the cost-efficiencies of online booking while reducing offline costs to a minimum (notably by managing internal change and promoting traveler compliance). Typically, these companies: Are prepared to mandate use of the service or accept some level of leakage (booking outside the preferred channels) in order to reap the benefits of lower transaction costs Accept that highly automated service centers require travelers to manage bookings with limited advice from travel counselors Are willing to have limited access to local content and services (e.g., rail content) Are able to adopt a single travel policy across the geographical areas served and mandate standard processes Are willing to carry out an internal change program to ensure successful implementation of online services (i.e., an adoption rate exceeding 35 percent) Are prepared to limit service to English It is worth noting that traveler satisfaction levels for multinational service centers may often match those for other configurations. This said, a country-by-country gap analysis should be conducted between the company s current service configuration and the proposed multinational service center in order to ensure that needs are addressed in the most effective way. Require service in at least five countries, representing at least US$30 million spend Have a strong focus on cost savings Have a strong global identity and management

61 Case study: a multinational service center brings impressive results A major global technology company achieved savings of 42 percent in travel management costs and 99 percent booking accuracy (i.e., error-free transactions) by implementing a global travel policy and a network of multinational service centers. Implementation was phased over two years and 60 markets, starting with the Americas, then Europe, Middle East and Africa, and Asia Pacific. In the first year, 85 percent of transactions were processed through the new streamlined network. With global control over its program, the company had more leverage to negotiate with airlines, producing a 12 percent reduction in the average air ticket price. Cost savings were also generated by the successful implementation of a single online booking tool, with a global adoption rate of 90 percent (70 percent unassisted transactions). In addition, robust point-of-sale processes and management tools enabled the company to closely monitor hotel compliance, while increasing the timeliness and accuracy of bookings and reports. Limiting the number of service centers enabled mandatory policy changes to be pushed through faster, with the online booking tool and travel counselors promoting compliance at the point of sale. All these service configurations are supported by fulfillment centers and technical service centers: Fulfillment centers are back-office teams who intervene in on- and offline bookings that cannot be processed without assistance. Many rejected online bookings can be managed at the fulfillment center without contacting the traveler. However, in a small number of cases (e.g., when alternative travel arrangements are required) the booking request is queued to the company s offline counselors, who contact the traveler to complete the booking. Technical service centers respond to travelers queries by phone or , resolving any problems with usage and thus helping to prevent travelers from disengaging from the OBT process. Costs can be kept to a minimum if communication, change management and training sessions are conducted within the company. 59

62 Figure 42: Fulfillment and technical service centers support all service configurations On-site service center Full-service center Standardized service center Multinational service center (customized, dedicated and local) (customized, shared and local) (distributed, standardized and pan-european) (centralized, standardized and pan-european) Fulfillment center Technical service center Preferred service configurations CWT asked travel managers and travelers to select their preferred service configuration from four options, ranging from very flexible, high-touch service (e.g., on-site implants) to highly standardized service that offers simplicity combined with local market content. The results show that travel managers seek a greater balance between cost efficiency and services than travelers, who lean more toward flexibility and customization. Travel managers top choice (Option 3) corresponds to a standardized service center configuration, while travelers would prefer a full-service center set-up (Option 2), giving their lowest score to highly standardized multinational service centers (Option 4), as shown in Figure 43. Again, this highlights the need to decide how far traveler preferences should be traded off against savings goals.

63 Figure 43: Travel managers seek a greater balance between cost efficiency and services than travelers, who lean toward flexibility and customization Option 3: service focusing on increased operational and cost efficiency while still providing flexibility to deliver company-specific services Travel managers Average rank 2.0 Sample size 155 Option 2: service offering maximum flexibility and customization (less high-touch than Option 1) Option 1: very flexible, high-touch service for executive travelers (e.g., 24/7 reservation assistance) Option 4: highly standardized service offering simplicity without losing local content and cultural proximity Respondents (%) Least preferred option Preferred option Option 2: service offering maximum flexibility and customization (less high-touch than Option 1) Travelers Average rank 2.4 Sample size 1,983 Option 3: service focusing on increased operational and cost efficiency while still providing flexibility to deliver company-specific services ,978 Option 1: very flexible, high-touch service for executive travelers (e.g., 24/7 reservation assistance) ,975 Option 4: highly standardized service offering simplicity without losing local content and cultural proximity , Respondents (%) Least preferred option Preferred option (Option 1: on-site service center, Option 2: full-service center, Option 3: standardized service center, Option 4: multinational service center) Based on a survey of travel managers (155 repondents) and travelers (1,983 respondents) 61

64 Service level agreements Service level agreements (SLAs) play an important role in delivering consistent service to travelers. When working with a travel management company, companies need to jointly define criteria for tracking performance and measuring ongoing progress. In doing so, they should: Keep sight of the big picture, monitoring traveler satisfaction and savings as a whole and zooming in on specific aspects as necessary. Define one or several key performance indicators for each SLA. Determine how often key performance indicators will be measured. Attribute an importance weighting to each SLA so that overall performance can be tracked (using a weighted average). Figure 44 shows examples of SLAs (mandatory and optional) that companies can adopt. Distinguish between mandatory and optional SLAs, keeping them to a workable number. Figure 44: Examples of recommended and optional service level agreements Recommended SLAs Category Key performance indicator Action Frequency of reporting Client satisfaction Average satisfaction score on an agreed scale (e.g., 7 on a scale of 1-10) Survey travel manager or client contact Annual Traveler satisfaction Average satisfaction score on an agreed scale (e.g., 7 on a scale of 1-10) Automated survey of a sample of travelers immediately after booking Monthly Responsiveness Percentage of calls answered within X seconds (generally 80% within 20 seconds) Monitor phone reports Quarterly Handling of customer complaints Percentage of complaints acknowledged within 48 working hours and progress updates provided until issue is resolved Review open/resolved issue log Quarterly Booking accuracy Percentage of errors (e.g., <2%) Review customer service reports/log Quarterly? Business planning Annual business plan Develop and review annual business plan Annual Business reviews Global review meetings/calls between the company and the program manager Review business performance Twice a year

65 Optional SLAs Category Key performance indicator Action Frequency of reporting Availability/access Minimum percentage adherence to agreed operating hours (e.g., 98%) Adhere to agreed operating hours Annual Data accuracy Usage of lowest available airfare if applicable and corresponding savings/missed savings Track lowest applicable airfare Monthly Data availability Consolidated data available XYZ days after the end of the month Provide consolidated data Quarterly Savings To be determined after a detailed study of savings opportunities* Achieve targets Annual Travel policy compliance? Percentage of compliant /non-compliant bookings Global review meetings/calls between the company and the program manager Twice a year * E.g., percentage of bookings where the lowest applicable fare was offered (depending on company policy) 63

66 Scope of services: items to include in a TMC request for proposal Every organization has specific priorities that should be explained to travel management companies to find the best fit with their needs. The following lists provide an idea of the core services that should be included in transaction fees, as well as optional services that may be required: Core services Service provided by counselors using the predominant market GDS Employees and non-employees (including contractors) serviced through standard processes Standard business hours for all locations (specified in the TMC proposal) and direct dial number for all locations Fulfillment of online booking transactions, either automated (unassisted) or with counselor intervention (assisted) as required Domestic and international airline reservation services (including low-cost carriers where relevant) in accordance with the company s business travel policy, using preferred rates (negotiated by the company or the TMC) when available in the GDS Low-fare management, including offering alternative quotes (requested routing and/or lowest logical fare, based on the TMC s air selling matrix but balancd with market practices, such as best-available fares that make alternative quotes irrelevant) Preferred vendor management, including offering the traveler s requested supplier and the lowest fare or rate available in the GDS Hotel and car reservations using negotiated rates available in the GDS in line with the company s travel policy, and promotional pricing offered by airlines Service level of an agreed percentage of incoming calls answered and serviced by a travel counselor within a set time (most commonly 80 percent within 20 seconds, although costconscious companies have started to move to lower service standars such as 60 percent of calls answered within 30 seconds to encourage the use of online booking tools) Customer service for pre- and post-trip traveler inquiries or issues Processing of schedule changes or cancellations upon notification by airlines during each location s opening hours Instant electronic ticketing prior to fare expiry as confirmed at the time of reservation Electronic non-refundable ticket tracking and management where relevant

67 A management system for traveler profiles, with Web access to self-service updates, and acceptance of initial and ongoing HR feed Access to a traveler portal for practical information and tools (described on Pages 73-74) Policy reporting using standard exception codes, consolidated management reporting and carbon emissions reporting Core safety and security services Timely customer experience surveys, 7 annual travel manager surveys coupled with automated quality assurance Optional services Specialized services: VIP, enhanced mobility, leisure, passport and visa, meetings and events, program management and consulting services Bookings: non-gds content, including hotel rooms/block space and company-owned properties, rail, car/limousine, ferry, private jet and chartered flights Ticketing: delayed ticketing, including courtesy hold and hold/re-book processes, paper ticketing and document delivery, refunds, frequent-flyer ticket redemption and upgrade management where appropriate Pre-approval and exception approval processes After-hours service and 24/7 emergency services Online booking tool support: implementation, integration, maintenance, technical help desk, training and measures to promote adoption Consolidated reporting, including credit card spend Single sign-on for TMC products within corporate network 7 For example, CWT Listens is a globally standardized 90-second survey that is sent automatically after a sample of on- or offline transactions, not more than every 180 days, for feedback while the service is fresh in the travelers or travel arrangers minds. 65

68 Travel policy and compliance To reap the full benefits of a service configuration, organizations need to implement an effective travel policy, along with measures to promote traveler compliance. Many can improve their performance in these areas: as described in previous in-depth CWT research, 8 companies save on average 20 percent of total travel spend when they introduce best practices to optimize travel policy and traveler compliance. Savings are available in five main areas: Advance air booking. Booking two or three weeks in advance enables travelers to access significantly lower fares. Discounts can exceed 50 percent of the ticket price, especially on highly competitive routes or in economy class. There is no price advantage, however, in some extremely regulated markets such as China and India. Restricted airfares. Even when the cost of changes or cancellations is taken into account, the use of restricted airfares usually brings savings: on average 24 percent of the price of fully flexible fares. Preferred suppliers. When used consistently, preferred suppliers enable companies to pay less, compared to using a mix of suppliers on a best price basis. Companies that require travelers to book preferred suppliers can save an estimated 16 percent on hotel rates and 18 percent on airfares, thanks to volume discounts. Travel class/category. Changes in the authorized comfort level can have a significant impact on savings: up to 30 percent of air spend and 20 percent of hotel spend, depending on the travel patterns. Companies can benefit by aligning their policy with standards in their sector. Preferred booking channels. Onand offline booking through the travel management company bring tangible benefits: lower prices, increased use of preferred suppliers, and consistent safety/ security tracking and services. CWT has identified a number of best practices for designing travel policies and boosting traveler compliance, as described below: Engaging management throughout the organization. Best-performing companies have support for raising awareness of travel rules, overcoming resistance to change and promoting compliance. Four action areas appear to be particularly important: 1) making senior management support visible, 2) escalating the approval process for exceptions, 3) involving management in pre-trip approval when implemented, and 4) engaging team leaders in post-trip follow-up. Providing travelers with clear, comprehensive guidelines. The most effective travel policies cover each of the five main savings areas mentioned above in a user-friendly format. This contrasts with many documents observed in the market that are long, difficult to read and imprecise. Ideally, a travel policy sets mandates where the corporate culture allows it. According to the current survey, mandates are now the norm: about 80 percent of companies mandate policy items, although this figure drops to 66 percent for booking through preferred channels. 8 Playing by the Rules: Optimizing Travel Policy and Compliance, CWT Travel Management Institute (2008)

69 Figure 45: 20 percent of travel managers and travelers say their travel policies are recommended rather than mandated Travel managers Travelers Recommended 20% No travel policy 1% Recommended 20% Don't know 10% Don't know 1% Mandatory 78% Mandatory 70% Based on a survey of travel managers (204 responses) and travelers (2,425 responses) Figure 46: One third of travel managers say the preferred booking channel is not mandatory Policy on preferred booking channels Recommended but not mandatory 23% No policy 9% No preferred booking method 1% Don't know 1% Based on a survey of travel managers (200 responses) Mandatory 66% 67

70 Standardizing the policy regionally or globally. By aligning travel rules and processes across business units and regions, travel managers can share best practices and save on average 12 percent of total travel spend. In the latest research, however, nearly a third of respondents (29 percent of travel managers and 27 percent of travelers) say their companies still use local travel policies. Figure 47: Nearly a third of travel managers and travelers say their companies use local travel policies Travel managers Travelers Regional 13% Local (country level) 30% Don't know 1% Regional 9% Local (country level) 27% Don't know 7% No travel policy 1% Global 56% Global 56% Based on a survey of travel managers (204 responses) and travelers (2,437 responses) Promoting compliance through communications and training. The bestperforming companies clearly explain the benefits of their travel policy to travelers. They also make the policy easily accessible online and in local languages, communicating any changes in a timely manner. All travelers and travel arrangers should receive thorough training in the travel policy, booking processes and tools. Finally, progress reports can help motivate travelers to comply by making their efforts visible. Driving compliance through point-of-sale measures. Compliance can be improved considerably by integrating the policy into the booking process, to steer travelers toward compliant options. For example, online booking tools can clearly indicate compliant options, filter out non-compliant content and provide policy reminders. Offline, companies can ask travel counselors to advise in-policy options and empower them to refuse out-of-policy bookings in fact, the vast majority of companies (88 percent) do so. (See Figure 48.)

71 Figure 48: 88 percent of companies require TMCs to enforce compliance at the time of booking Enforcement of the travel policy during booking No enforcement: the TMC process all bookings, regardless of whether they are compliant or not 9% The TMC must remind the traveler of the company's policy when a non-compliant request is made but can still process the booking 28% Don't know 3% The TMC must not process non-compliant bookings 9% Based on a survey of travel managers (202 responses) The TMC must ask for authorization or notify management when a non-compliant request is made 51% Companies can also use automated messaging set up to send policy reminders and other messages to targeted groups of travelers. CWT Program Messenger (formerly CWT Policy Messenger) is one such service, which allows travel managers to contact travelers who request a non-compliant booking, for example, while informing their managers. The service can also be used for other types of messages, such as health and safety information related to specific bookings. Client data indicates that automated messaging can make a significant impact on compliance and other key program metrics, resulting in 4-7 percent savings on total travel spend. 69

72 Tracking progress and taking corrective action. Travel managers should measure progress regularly. In particular, comparing results by business unit or division and sharing that information with team leaders can reinforce efforts to boost compliance. It is also worthwhile identifying the minority of travelers who are responsible for the majority of non-compliant bookings and taking targeted action (e.g., a personalized reminder of policy rules). Moreover, non-compliance reports may indicate areas of the program that need to be changed. Benchmarking industry performance. Although a travel policy should reflect a company s culture and business priorities, benchmarking can ensure it remains in line with evolving standards in the same sector (e.g., on the minimum flight duration for business class travel). In addition, companies can identify savings opportunities or highlight below-average results by tracking their peers performance in key program areas. Access to full content It is important to ensure efficient access to relevant content at competitive prices in accordance with the travel policy. Global distribution system (GDS) business models have evolved as financially strapped airlines seek to reduce their distribution costs, and optin fees are often charged to ensure that full content remains in the GDS and that the booking process remains efficient. Removing content from GDSs results in inefficiency, as travelers and travel counselors struggle to consolidate content from multiple sources. To date, no single alternative system provides the full range of content including hotel, rail and car or the pre- and post-trip services currently available in GDSs. And integrating a variety of alternative systems would lead to higher technology costs and more expensive servicing. (See Page 71.) Leveraging travel management company expertise. A travel management company can facilitate travel policy design and implementation, as well as compliance. TMCs are also well positioned to help monitor and improve performance, based on their specialized knowledge and technology.

73 GDS content: a crucial role in managed air programs Currently, global distribution systems house more than 6 billion airfares, half of which are fares negotiated by travel management companies or their clients. These systems play a key role in effective air programs for several main reasons. The ability to access GDS content through TMC counselors or online booking tools as opposed to connecting directly to hundreds of different suppliers, provides corporate clients with easy fare comparisons and an efficient, cost-effective one-stop shopping environment (on- or offline). CWT estimates that transaction fees would increase by at least US$25 per flight if a proliferation of direct connect models were required to maintain this environment. Another important strength of GDS distribution is the ability to easily change tickets, especially given that business travel itineraries are changed nearly six times per trip on average. Booking through GDSs not only facilitates spend reporting but also allows companies to track travelers effectively and provide invaluable assistance in emergencies. GDSs continue to invest an estimated US$ million annually to enhance their capabilities. As a result, they are technically able to integrate airline products and services that have previously required separate booking and payment (e.g., ancillary services such as meals and checked baggage). In 2010, American Airlines reignited debate by removing certain content from GDSs and selling fares only through its own Website, although a more fragmented airline offering significantly reduces transparency and efficiency for corporate customers. CWT believes a direct connect model cannot serve the best interests of corporate buyers. 71

74 SUMMARY Best practices for rolling out an optimal service configuration include: Identifying the service features that are most important to travelers and balancing ideal service with savings requirements Considering priorities in terms of online vs. offline, local vs. global, and customized vs. standardized service Making a realistic appraisal of the organization s ability to manage change when switching to a different configuration Discussing priorities with travel management companies and ensuring that the right features are included in TMC service offerings Jointly defining appropriate service level agreements with the TMC Implementing an effective travel policy and measures to promote traveler compliance Benefiting from efficient access to content through global distribution systems, compared to connecting with multiple suppliers

75 3. A wide range of services enhance the traveler experience, helping to boost well-being and productivity. Among the services that stand out for travelers are easily accessible information, userfriendly technology that facilitates planning, and 24/7 assistance around the world. This section discusses seven important services: Web-based traveler portals, traveler profile tools, mobile services, emergency assistance and risk management services, social media, VIP and end-to-end services, and unused-ticket management solutions. Web-based traveler portals A Web-based portal provides travelers with easy access to a wide range of practical tools and information that can help them prepare for travel and keep informed while on the road. Features include: Information for planning travel: flight schedules, destination intelligence, health and security advice, carbon emissions and visa/passport requirements. Booking services: access to the company s online booking tools, contact details for travel counselors, pre-trip approval processes, the traveler s profile, travel policy and travel itineraries. On-the-go information and alerts such as flight alerts, real-time news updates, and upto-date information on airport connections. Other practical tools such as a currency converter, world clock and international dialing codes. 73

76 Figure 49: Example of a traveler portal (CWT Portal) Much of this content is provided by the travel management company, based on service level agreements and third-party content provided to all portal users. In addition, travel managers can use the portal to communicate with travelers and travel arrangers, customizing content as required to different populations of travelers (e.g., by business unit, geographical region or language). Several main benefits can be drawn from a portal: Reduced costs and increased productivity. A Web-based portal helps reduce costs by facilitating travel arrangements and promoting efficient booking processes in particular, more online booking, fewer calls to the service center and less time spent by users searching for information from different sources. Increased policy compliance. Policy information can be displayed prominently on the portal, helping to ensure travelers are aware of important policy items and take into account any changes when booking. This kind of communications can make a significant impact on compliant booking behavior. Enhanced safety and security. By facilitating access to real-time news alerts, risk assessments and country-specific content, a Web-based portal helps keep travelers informed of safety and security issues related to their travel.

77 Profile management tools Profile management tools store traveler information to make the booking process more efficient, while helping ensure travelers preferences and policy restrictions are taken into account. This information typically includes personal data (e.g., full name, date of birth, passport number and contact details), preferences or special needs (e.g., aisle or window seat, and dietary restrictions) and loyalty program subscriptions. Other details (e.g., survey results) can be added depending on the company s needs. In the past, profile management systems were made up of multiple databases, requiring information to be duplicated manually for use with different online booking tools and global distribution systems. Now, Web-based systems make it possible to rely on one master database that automatically sends updates to the relevant tools, making information available more consistently without error. In addition, the importance of up-to-date traveler profiles has dramatically increased in recent months as the United States Secure Flight program and the Advance Passenger Information System used in various countries (e.g., the Australia, the United Kingdom and the United States) demand complete, accurate passenger details in advance of ticketing. In general, profiles are completed or updated by travelers, although some details can be entered automatically (e.g., from a payroll system, if integrated). A Web-based profile management tool offers numerous benefits: Greater convenience and efficiency. Travelers and travel arrangers can easily access their profile using a single sign-on and update the information as required since Web-based tools are available 24/7. In addition, travel managers can automate data feeds and eliminate time spent dealing with customer service issues that arise because of inaccurate profile information. Policy compliance. Accurate profile data can be used to improve policy compliance at the time of booking. In particular, upto-date information on the traveler s hierarchical status enables online booking tools and travel counselors to suggest the appropriate classes of travel and flag or block non-compliant requests. Safety and security. By housing relevant traveler details like mobile numbers, emergency contacts and visa/passport information, travelers can be assisted or contacted directly in the event of an emergency. In addition, data security is provided by encryption, personal identification numbers and passwords. Facilitated standardization and automation of other services. For example, up-to-date contact details and traveler information can be used for unused-ticket management or mobile services. (Mobile numbers are lacking for 55 percent of travelers in CWT s profile management system.) Moreover, organizational information (e.g., on travelers divisions or cost-centers) and other static reporting data can be used by a travel program management center, payment card companies or safety and security service providers. Data capture is more efficient this way than at the point of sale, and the data quality is enhanced, especially when refreshed by HR feeds. 75

78 In addition, automated HR feeds provide better control over access to booking channels and help prevent fraud by automatically barring service access when employees leave the company. Today, most companies lack an optimal traveler profile system, according to CWT data gathered in program diagnostic surveys. While 36 percent of surveyed travel managers say they have a profile management system with ongoing feed from human resources data, 40 percent have a profile management system without this efficiency. A further 21 percent manage profiles only through GDS profiles or through ongoing HR feed into online booking tools. (See Figure 50.) Moreover, these results come from a survey sample that includes a large proportion of large global or multi-regional companies, which have been quicker to adopt the most advanced practices. Figure 50: Only 36 percent of surveyed companies have an optimal system for profile management (Web-based profile tool with ongoing HR feed) Current profile management systems Ongoing HR feed into profile management system 36% GDS profile only 12% Ongoing HR feed into online booking tool 9% Don't know/not applicable 3% Profile management system without ongoing HR data 40% Based on a travel program diagnostic survey for 152 clients

79 Mobile services According to surveyed travel managers, more than 80 percent of companies provide travelers with smart phones, enabling them to access an increasing abundance of mobile services. These can enhance the traveler experience while providing opportunities to drive compliance and savings: An enhanced traveler experience. Numerous services provide convenience for travelers, including access to information (e.g. on itineraries, destinations and preferred suppliers), practical tools (e.g. local time, weather reports and currency conversion), real-time alerts (e.g., flight status and emergency alerts) and booking assistance (alternate flight search, a travel directory and click to call). In a separate survey carried out by CWT at the end of 2010, many travel managers said they planned to offer mobile technologies as a way to improve the traveler experience in fact, this was the most popular planned measure, especially in Asia-Pacific, where 47 percent of travel managers put this measure first. Travel managers in other regions also identified this as their first planned measure, although to a lesser extent (43 percent in North America, 35 percent in Europe, Middle East and Africa, and 20 percent in Latin America, as shown in Figure 51). Figure 51: Mobile technologies are particularly valued in Asia Pacific and North America Travel managers planning to offer mobile technologies to travelers (%) 50 Travel managers' scope of responsibility Asia Pacific North America Europe, Middle East and Africa Latin America Global level Country level Average 77

80 Opportunities for savings through increased productivity, since mobile services help employees make constructive use of their time when traveling. To make the most of these opportunities, companies need to work with their travel management company and online booking tool vendors to provide integrated online, offline and mobile solutions. This is necessary to ensure consistency and avoid a proliferation of systems that need to be managed and maintained, leading to higher costs and unforeseen technical challenges. The CWT survey clearly shows that, above all, travelers look to mobile services for time savings and convenience. These rank top among the expected benefits, far ahead of cost savings, better communications or increased safety and security. (See Figure 52.) Figure 52: Above all, travelers expect mobile services to bring time savings and convenience Travelers ranking of benefits offered by mobile services Average ranking Time savings Convenience (e.g., information about cancellations, delays or crises) Savings Better communications/networking Enhanced safety and security Respondents (%) Least important Most important. Based on a survey of travelers (2,016 responses) Rating the available features, travelers and travel managers agree that itinerary information, flight status updates and electronic boarding passes are by far the most important services to have through mobile devices. Safety and security alerts rank fourth, before maps, TMC contacts and tourist information. (See Figure 53.)

81 Figure 53: Travelers and travel managers agree on the most important mobile features Travelers ranking of mobile services by importance Average ranking Itinerary information Flight status updates Electronic boarding passes Safety and security alerts Maps Travel management company contacts Tourist information Respondents (%) Travel managers ranking of mobile services by importance Average ranking Electronic boarding passes Itinerary information Flight status updates Safety and security alerts Travel management company contacts Maps Tourist information Respondents (%) Least important Most important Based on a survey of travelers (2,043 responses) and travel managers (149 responses) 79

82 In addition to these mobile services, companies can negotiate with their online booking tool providers to obtain integrated mobile booking solutions when they become available, enabling travelers to book in compliance with their travel policy using preferred suppliers. For the moment, these booking services are still in their infancy. To make the most of mobile services, companies can consider a number of points: Create a specific policy on mobile use, including items such as the use of preferred roaming providers, and activating the geolocalization option Emergency assistance Natural disasters, political unrest, terrorism and health scares are an ever-present threat to travelers safety and well-being. Concerns have heightened in recent years, following a number of high-profile incidents requiring evacuation, such as the nuclear accident in Japan, the Arab Spring, severe hurricanes in the Americas and the ash cloud in Europe, to name just a few. Unsurprisingly, travelers and travel managers give a high importance rating to emergency assistance (8.8 out of 10 on average), followed closely by 24/7 booking. (See Figure 54.) Identify best-in-class applications for travelers, in cooperation with the travel management company Include mobile applications in the selection criteria for online booking tool and expense management providers, as these services will be an increasingly important integral part of their service. Pay attention to data privacy issues, as well as the costs related to mobile applications

83 Figure 54: Travelers and travel managers attach great importance to emergency assistance Travelers rating of corporate travel services Average score Emergency assistance in exceptional circumstances (e.g., extreme weather or strikes) /7 booking services (including hotline support) Ability to redeem unused tickets Traveler profiles automatically available to travel counselors to save time when booking Online expense management tool with direct feed from payment card data Social media (for other travelers tips) Respondents (%) Emergency assistance in exceptional circumstances (e.g., extreme weather or strikes) Travel managers rating of corporate travel services Average score 9.0 Ability to redeem unused tickets Traveler profiles automatically available to travel counselors to save time when booking /7 booking services (including hotline support) Online expense management tool with direct feed from payment card data Social media (for other travelers tips) Respondents (%) Irrelevant Relevant Based on a survey of travelers (2,185 responses) travel managers (184 responses) 81

84 Companies can take several measures to ensure they minimize travel risks and provide the right duty of care to all business travelers. These include safety and security services offered by travel management companies: Destination intelligence: detailed destination information, including risk assessment, that enables companies to make informed decisions on how best to protect travelers Alerts: automated notifications to travel managers and travelers of urgent events impacting travel Trip-specific intelligence: destination information and alerts automatically pushed to travelers based on their booked itineraries Access to safety and security experts Medical and health information: alerts regarding health warnings, immunization needs and other health-related information Other risk mitigation services: security and health evacuations, expatriate services, intelligence newsletters and monitoring of key sites Traveler tracking: reporting systems that enable companies to quickly locate travelers in an emergency and get them out of harm s way Crisis management: SMS and/or s from an emergency center to travel managers, with response teams ready to identify, locate and assist travelers affected by the crisis Increasingly safety and security services are provided by mobile, with a growing number of applications helping companies ensure their duty of care to travelers. For additional support, companies can also strike agreements with security specialists, either directly or through the travel management company, for benefits in terms of coordination and volume discounts. Specialists like i-jet can offer enhanced services such as: Proactive employee communications: services enabling travel managers to communicate immediately and efficiently with travelers potentially impacted by an event

85 Emergency service centers: a key role in traveler safety and security Emergency service centers deal with reservations, changes and enquiries outside normal working hours, both during crises and in other situations when travelers require urgent assistance with bookings. The following assistance is typically available: Arranging alternative travel after flight disruptions, cancellations, re-routing and overbooking Reserving accommodation through the appropriate global distribution system and/or directly with hotels using best available rates Handling crisis communications: after approval from an incident management response team, the emergency service center can initiate the crisis communication process (e.g., running specific reports by flight number or airport code) Usually an emergency service center manages same-day travel bookings that cannot be handled by the traveler s regular travel counselors outside working hours. Where necessary, regular travel counselors may complement the emergency service center s efforts by working outside their normal office hours. A good example was during the Icelandic volcano in April 2010, which caused unprecedented disruption to global air travel some 7 million passengers were impacted when more than 100,000 flights were cancelled. Immediately after the European airspace was closed, CWT teams worked around the clock to provide information, assist stranded passengers and help find alternative transportation to get them home. This meant teams liaised closely with suppliers (airlines, hotels, rail and car-rental companies) and stayed in constant contact with the impacted travelers and their companies. During that time, CWT travel counselors handled 10 times more incoming telephone calls than usual. 83

86 Social media Social networking and user-generated content are increasingly appearing in the workplace and opportunities abound for travelers to use them to their advantage. Social media can be used at every stage of a trip for example, to obtain information on destinations, share recommendations on hotels, track flights, draw attention to service issues and to socialize with friends and colleagues who might be nearby. According to the CWT survey, searching for or sharing information and networking with peers are by far the most important features of social media for business travelers, before monitoring and receiving travelers feedback, obtaining market intelligence and communicating with suppliers. (See Figure 55.) Figure 55: Benefits travelers expect from social media Travelers ranking of social media benefits by importance Average ranking Look for and/or share information Network with peers Monitor and receive other travelers' feedback Obtain market intelligence Communicate with suppliers Respondents (%) Least important Most important Based on a survey of travelers (1,678 responses) This said, social media ranks low in importance for travelers, scoring an average of only 3.9 out of 10 and coming bottom of a list of service features travelers expect today. (See Figure 54 on Page 80.)

87 In fact, only a minority of travelers use social media for business travel: 35 percent according to the CWT survey. North America leads the way, with 38 percent of the travelers saying they use social media, compared with 29 percent in Asia Pacific and 27 percent in Europe. The differences by company are more striking, with the share of travelers using social media ranging from 17 to 53 percent. (See Figure 56.) Unsurprisingly, usage is higher among younger age groups: 42 percent of under 35s, compared with 39 percent of travelers in the age bracket, 30 percent in the bracket, and 23 percent of over 55s. Figure 56: In a sample of 14 companies, percent of travelers use social media for business travel Trips (%) 100 Travelers use of social media for business travel in a sample of companies Type of company Based on a survey of travelers (1,791 responses) Media and education Consumer goods Consumer goods Consulting Banking Biotechnology Agriculture and chemicals Logistics Food and beverage Service Retail Manufacturing Aerospace and defense Energy and environment At the same time, nearly a third of travel managers (31 percent) say they do not know if employees in their company use social media for business travel, showing a need to better understand the stakes. (See Figure 57.) 85

88 Figure 57: 31 percent of travel managers do not know whether their travelers use social media for business travel Travelers use of social media for business travel according to travel managers Don't know 31% Yes 15% No 54% Based on a survey of travel managers (169 responses) It is likely that social media will be used more often by corporate travelers as specific business travel applications come onto the market and a new generation of media-savvy employees join the workforce. Travel managers will also use social media increasingly to facilitate communications with travelers, especially in emergencies, and to access valuable information. For example, feedback from travelers can be used to improve the travel policy and support supplier negotiations. employees reputation and security. With such a policy, employees are encouraged to use social media responsibly. In order to best leverage social media for the business travel program, travel managers may conduct an audit to find out what can work best for travelers in their company. For the moment, many organizations are still learning how to effectively make the most of social media, with the different communications practices and risks implied. Some companies have introduced a social media policy to explain to employees how to best manage the risks, which cover not only corporate image but also

89 VIP and end-to-end services Companies may identify traveler segments with specific needs that require different service configurations. Such needs typically include VIP services and end-to-end trip coordination. VIP services typically include 24/7 reservation assistance, meet-and-greet at airports, and a whole range of concierge services. No doubt reflecting the small minority of VIPs within organizations (a mere 2-3 percent of all travelers on average, according to travel managers), few travelers consider VIP services important. When asked to grade VIP services on a scale of 1-10, 1 being irrelevant and 10 being extremely important, travelers give an average grade of 5 (neither important nor unimportant). Only 21 percent consider these services to be very important (a score of 8 or higher). Travel managers value VIP services slightly more than travelers: on average they rate them 5.8 out of 10 for importance, with 34 percent rating them at least 8 out of 10. The results vary by company, however, with the share of travelers considering VIP services very important ranging from percent, indicating that this type of service is more appropriate in some company cultures than others. (See Figures ) Figure 58: VIPs represent only 3 percent of all travelers on average Respondents (%) Average: 2.6% Don't know <1 <3 <5 <10 Estimated VIP population (% of all travelers) Based on a survey of travel managers (173 responses) 87

90 Figure 59: 21 percent of travelers and 34 percent of travel managers consider VIP services very important Importance of VIP services according to travelers and travel managers Travelers (%) 25 Average: Irrelevant Extremely important Travel managers (%) Average: Irrelevant Extremely important Based on a survey of travelers (2,069 responses) and travel managers (197 responses)

91 End-to-end trip management. Integrated, end-to-end trip services (including taxi and restaurant reservations, parking and evening events) do not seem to be a high priority for now: travelers rate their importance at 5.6 out of 10 on average (1 being irrelevant and 10 being extremely important), with 29 percent rating them 8 or higher. Again, results vary greatly by company: the share of travelers considering this service important (with a score of 8 or higher) ranges from percent, showing that this type of service is more appropriate for some companies than others. Travel managers attach slightly more importance to end-to-end services, rating them 5.8 out of 10 on average, with 33 percent rating them 8 or higher. (See Figure 60.) Figure 60: 29 percent of travelers and 33 percent of travel managers consider VIP services very important Importance of end-to-end services according to travelers and travel managers Travelers (%) 25 Average: Irrelevant Extremely important Travel managers (%) Average: Irrelevant Extremely important Based on a survey of travelers (2,015 responses) and travel managers (168 responses) When deciding whether to implement VIP or end-to-end services, an internal audit can help companies to strike the right balance between costs and travelers needs. 89

92 Unused-ticket management solutions When travelers miss flights or change their plans, their tickets can often be redeemed in some way, through exchanges or fare/tax refunds. To avoid eligible tickets going to waste, companies can use unused-ticket management solutions, the best of which are fully automated. Exchanges vs. refunds In North America, exchanges are more common than refunds, representing 12.8 percent and 3.4 percent of tickets respectively in (See Figure 61.) Latin America follows a similar trend, with 12.3 percent of tickets exchanged and 2.4 percent refunded. This reflects carriers policies: most coach/economy fares can be exchanged before departure or within a specified time limit afterwards, and many lowcost airlines also allow tickets to be transferred to other passengers. In fact, 91 percent of organizations unused documents can be exchanged in North America, according to CWT client data. In Europe, the Middle East and Africa, unused tickets are more frequently refunded than exchanged, (13.2 percent vs. 6.2 percent). In Asia Pacific, unused tickets are managed similarly, more often refunded than exchanged (6.7 percent vs. 4.4 percent), with the exception of Australia, where many tickets are exchangeable but nonrefundable. Figure 61: The proportion of ticket exchanges and refunds varies between regions, depending on carriers policies Share of refunded and exchanged tickets % tickets By region Asia Pacific Based on CWT transaction data 0 Europe, Middle East and Africa Latin America North America Total Exchanged tickets in 2009 Exchanged tickets in 2010 Refunded tickets in 2009 Refunded tickets in 2010

93 % total ticket value By ticket value Based on CWT transaction data 5 0 Asia Pacific Europe, Middle East and Africa Latin America North America Total Exchanged tickets in 2009 Exchanged tickets in 2010 Refunded tickets in 2009 Refunded tickets in 2010 Available solutions Three main options are available for managing unused tickets: Manual. This approach requires travel counselors to cancel a ticket in the global distribution system (GDS) by hand, typically several days after the scheduled departure time or once the counselor receives notification from the traveler. The travel counselor also notes the unused document in the traveler s profile for future use when applicable. The counselor must later retrieve the unused document information to apply the value to a future trip. Semi-automated. These systems provide ticket information via the GDS and free travel counselors from manually searching through traveler records. Manual processing still occurs, however, when tickets are reused or refunded. Fully automated. The most advanced unused-document tracking solutions are integrated not only with agent desktops and GDSs, but also online booking tools and other processes to drive automation and higher redemption rates. Regular updates on unused documents are provided, along with reminders of ticket availability for travelers, travel arrangers and travel managers. When a new reservation is made, these systems either prompt the traveler to apply the value of unused documents to current travel, or do so automatically. Another benefit is comprehensive data, which includes, for example, the reasons for cancellation. 91

94 CWT research shows that only percent of eligible tickets are exchanged or refunded with manual tracking. Semi-automated solutions results in redemption rates of percent, while the most advanced solutions rise to more than 90 percent. Benefits At the same time as producing savings, unused-document management tools benefit travel programs by streamlining processes and enhancing reporting capabilities that can be used to drive a variety of program improvements, including: Efficiency gains. Automated solutions improve accuracy and bring efficiency to the unused-ticket management process, freeing up time for travelers, travel counselors and travel buyers. Enhanced compliance. When unuseddocument tracking is linked to a messaging tool, companies can encourage travelers to redeem unused tickets while promoting the use of preferred suppliers and booking channels. Improved negotiations. The visibility provided by unused-document tracking systems also enables companies to improve negotiations with preferred suppliers. For instance, a company may be able to share their current unused volume with an airline partner, and discuss options for making these credits easier to use, such as waiving name change fees or extending expiration dates. Travel managers clearly see the value of unused-ticket management solutions: while only a minority (24 percent) use best-in-class automated solutions for the moment, the remainder say they would be interested in doing so when such services are available in their key markets. (Their average interest level is 8.2 out of 10, and 71 percent rate it 8 or above.) (See Figures ) Figure 62: 64 percent of travel managers say they do not implement an automated unusedticket management solution Share of companies implementing an automated solution to redeem unused tickets Don't know 12% Yes 24% Based on a survey of travel managers (173 responses) No 64%

95 Figure 63: 71 percent of travel managers who do not implement an automated unusedticket management solution say they would be very interested in doing so Respondents (%) Travel managers' interest in implementing an automated unused-ticket management solution Average: Not at all interested Very interested Based on a survey of travel managers (106 responses) Surveyed travelers also show an interest in unused-ticket management, rating the ability to redeem tickets 8.1 out of 10 in importance on average. (See Figure 54 on Page 81.) The fact that so few companies manage unused tickets in an optimal manner is partly explained by reliable, fully automated systems only just becoming available on the market. Case study: redeeming 98 percent of unused tickets through an automated management solution An energy services company took action after discovering that 24 percent of its total tickets were going to waste. After implementing an automated solution provided by CWT, the company reduced this figure to 12 percent to achieve a stronger return on its travel program. In effect, the new solution increased the ratio of redeemed tickets by 50 percent, and the reuse ratio of eligible tickets by 98 percent, bringing savings of US$5 million on its US$60 million travel spend. Among the key features that helped drive this improvement were: introducing automatic tracking, increasing opportunities to redeem unused tickets by making them available in the system less than two days after scheduled travel, integrating the relevant information into on- and offline points of sale, and delivering automated reports on unused-ticket patterns and traveler behavior. 93

96 SUMMARY A wide range of services help improve the traveler experience: A Web-based traveler portal helps reduce costs and enhance safety and security by providing travelers with easy access to practical information and tools. Profile management tools make booking more efficient by ensuring up-to-date traveler information is systematically available, while increasing touchless online bookings (i.e., automated bookings made successfully without assistance) and facilitating the use of other travel management tools. Mobile services such as itinerary information, flight status updates and electronic boarding passes are highly valued by travelers wanting to save time and stay informed while on the go. 24/7 emergency assistance, usually provided through special teams, ensures that travelers can always receive help as required. In addition, traveler tracking and other risk management services help ensure that companies provide the right duty of care to travelers. Social media can be used at every stage of a trip for networking and sharing information, although travelers currently consider them low in importance for business travel. VIP and end-to-end services can be important for clearly defined segments of travelers in some organizations. Unused-ticket management solutions are of growing interest to both travelers and travel managers, given the high proportion of tickets that can be exchanged or refunded instead of going to waste when travel plans change.

97 4. Improvements in travel and expense management can bring considerable cost savings, while increasing policy compliance and reducing fraud. T&E management is a major focus area for companies, especially in view of the recent economic downturn and increasingly strict regulation on corporate governance. With the right policy, processes and systems in place, significant gains can be made in terms of efficiency and savings, as well as improved compliance. Companies have two main objectives when tackling expense management: Increase compliance with regulation on corporate governance. A strong T&E policy and enhanced reporting capabilities improve visibility and reduce system abuses or outright fraud. These improvements help companies meet regulatory requirements while supporting strategic objectives. Reduce costs. Direct savings are possible when improvements are made in a number of areas, such as T&E policy, negotiations with suppliers, and reporting. Indirect savings can be achieved by implementing more efficient processes, both in terms of the technological systems used and the way expense management teams are organized. For example, an automated expense management system can reduce the cost of processing expense claims by more than percent, according to industry experts. This means tackling three main areas: Policy or clear rules that let employees know which expenses are acceptable, whether or not they need to seek prior approval for expenses, how they should pay, and when and how to file claims. Processes for filing expense claims, collecting invoices, approving and reimbursing expenses, reclaiming VAT and auditing. Many of these processes can be outsourced to third-party specialists. Systems, which can be either manual or automated, stand-alone or fully-integrated into other IT systems (e.g., online booking tools and payment card solutions). Companies can choose between Webbased solutions managed by service providers, or hosted solutions, where the software is managed inside the company. Best practices in each of these areas are discussed in this section. 95

98 Figure 64: Expense management involves policy, processes and a system Policy Authorized expenses and amounts Employee s roles, cost centers and hierarchy in the expense approval process Expense management Processes Filing of expense claims and invoices Processing and reconciliation of expense claims Approval and reimbursement of expense claims VAT reclaim and reimbursement Auditing System Web-based software, hosted software or manual spreadsheets

99 Expense management: a growing market CWT estimates the addressable expense management market at approximately US$49 billion globally, split into US$4 billion for expense management systems and US$45 billion for outsourcing services. (See Figure 65.) These figures refer to market potential as opposed to actual revenues realized by providers. Figure 65: CWT estimates the value of the global expense management market at $49 billion Total expense management market (2010) System market Outsourcing services market Major assumptions Scenario Low case Base case Major assumptions Total business travel market (Europe + N. America + Asia Pacific) US$725bn Total business travel market (Europe + N. America + Asia Pacific) US$725bn Average cost per business trip US$1,062 US$1,328 Ratio ofdirect travel costs/ indirect travel costs 20:1 Ratio of trips to expense reports generated 1.08:1 Share of travel costs within total business-related indirect costs 40% Average price per expense report US$5.3 US$6.6 Share of expense claims costs within total business-related indirect costs 52% Total system market US$3.2bn US$4.9bn Total outsourcing market US$45.1bn This market is likely to expand by 6-9 percent in North America and 5-8 percent in Europe in , thanks to a combination of economic growth (hence greater expenditure) and increased penetration (more systems in use in companies): Economic growth. GDP should grow by 10.9 percent in Asia, 4.4 percent in North America and 3.4 percent in Europe annually for the period according to the International Monetary Fund. Correspondingly, business travel spend is expected to grow by 10.3 percent, 6 percent and 4.5 percent annually in these three regions. Increased penetration. There is plenty of room for growth, as expense management systems have penetrated only a small corner of the market up until now mainly larger corporations. The estimated penetration rates in companies of more than 50 employees range from less than 1 percent in Asia and 2 percent in Europe to 8-9 percent in North America, as shown in Figure

100 Figure 66: Penetration of expense management systems is low Estimated penetration of expense management systems within companies of more than 50 employees (2010) % North America 2 <1 Europe Asia These differences are largely explained by the regions varying levels of maturity in three main areas that drive penetration: Cost-cutting programs. Given their ability to streamline administration as well as facilitate data tracking and auditing, expense management tools are naturally seen as a way to reduce costs. And, according to a report by McKinsey, 9 cost cutting is by far the top priority for organizations procurement (identified by 46 percent of survey respondents), well ahead of supplier relationship management (18 percent) or gaining control of more spend areas (14 percent). Adoption of corporate payment cards and online booking tools (OBTs). To bring more efficiency, companies already equipped with corporate payment cards and OBTs often add expense management systems and penetration rates for both are rising, especially among mid-sized European companies. Increasingly, organizations are opting for integrated travel and expense management solutions, which can cost significantly less than separate systems, especially when bundled with payment card solutions. According to CWT research, an expense report costs percent less when the expense management system is bundled with corporate cards. 9 Five ways CFOs can make cost cuts stick, McKinsey Quarterly (May 2010)

101 Regulation on corporate accountability and responsibility. National and international regulation drives the expense management market by requiring companies to adhere to strict standards of accountability that require stringent reporting and compliance measures. In the United States, all publicly listed companies must abide by the Sarbanes Oxley Act (2002), while in Europe, EU and national regulations impose even tighter restrictions in some areas, as well as complex VAT reclaiming processes. Automated expense management solutions play an obvious role in meeting those obligations. Figure 67: The expense management market is driven by economic growth and increasing penetration of expense management systems Driver Future growth North Europe America Sources Volume Economic growth Penetration rate driver GDP annual growth forecast (2011F-15F) Business travel market annual growth forecast ( F) Trend for cost cutting programs Increasing use and penetration of payment cards and online booking tools 4.4% 3.4% IMF 6% 4.5% World Travel & Tourism Council Interviews Compliance and reporting regulation Estimated annual growth ( F) 6.9% 5.8% CWT estimates Based on data from the International Monetary Fund and World Travel & Tourism Council, interviews with industry experts, and CWT estimates 99

102 Policy Once a company has asserted the need for an automated expense management process, it usually sets up a project team to define new rules and processes. This typically takes 3 to 12 months, depending on the organizational complexity. In addition to the best practices described earlier, the following are worth considering: Include expense management in a broader T&E management policy. (See Pages for best practices in policy and compliance.) Ensure that the policy covers payment methods. For example, employees can be asked to consistently use corporate payment cards to assist data tracking and help make the reconciliation process more efficient. Set up expense management tools to reinforce the policy. For example, online expense claim tools can show out-of-policy spend items to send a reminder to travelers, while flagging non-compliance to auditors. Enable senior executives to access realtime data, in order to track traveler compliance (e.g., overall rate of compliant bookings and compliance with specific policy items, such as the use of preferred suppliers). Ensure non-compliance is followed up. According to surveyed travel managers, only 60 percent of companies require travelers to justify out-of-policy bookings, leaving 26 percent who do not or are unlikely to do so. This is confirmed by travelers: 16 percent say no real action is taken, while 34 percent do not know the consequences of out-ofpolicy bookings. (See Figures ) Figure 68: A quarter of travel managers say travelers do not have to justify out-of-policy bookings Requirement to justify out-of-policy bookings No 15% Don't know 1% Unlikely 11% Probably 13% Yes 60% Based on a survey of travel managers (178 responses)

103 Figure 69: 50 percent of travelers say out-of-policy bookings are not followed up or they are unaware of the consequences Consequences of out-of-policy bookings for travelers Booking appears on exception report with no further action 12% Non-compliant expenses are not reimbursed 12% No consequences 4% Don't know 34% Booking appears on exception report and travel management team sends policy reminder to traveler 19% Booking appears on exception report and traveler's direct management sends policy reminder 19% Based on a survey of travelers (2,875 responses) 101

104 Processes Effective expense management goes beyond selecting a suitable expense management provider. Companies need to work closely with their provider to ensure that the right processes are in place and fully operational. Select an efficient expense management system. Typically five steps are involved in selecting an expense management system: defining an expense management strategy, setting a budget and specifications, organizing a request for proposal, evaluating the different offerings, and negotiating with providers. (See Figure 70.) Figure 70: Five key steps in supplier selection Purchasing process Define expense management strategy Issue budget and specifications Organize request for proposal Evaluate offers Select and negotiate with suppliers Key decision makers Finance/ accounting (CFO) and travel departments Finance/ accounting and travel departments Finance/ accounting department Finance/ accounting and travel departments, and business line managers Finance/ accounting department The finance/accounting department and more specifically, the chief financial officer is most often the key decision maker in the choice of expense management providers, usually working closely with the purchasing department, which leads negotiations with suppliers. Ideally, the travel department also takes part in the process, given the synergies between travel and expense management, and in some organizations the travel department has the lead. According to market feedback, the most important criteria for an expense management system are return on investment and adaptability i.e., its ability to be integrated into existing systems and across multiple regions if required, and updated as necessary in line with an evolving T&E policy or other parameters. Small and medium companies also look for simplicity or ease of use. (See Figure 71.)

105 Figure 71: Key criteria when selecting an expense management supplier Key purchasing criteria Large companies Relative importance Small-medium companies Return on investment Adaptability and flexibility Ergonomy Simplicity New features Price Implementation Contracts are generally signed for 3-5 years and cover access to the expense management system interface, implementation, support and maintenance services. Options may include integration with the company s existing IT systems (online booking tool, enterprise resource planning tool and corporate payment card system), auditing and analysis services, e-scanning services, and a custom VAT reclaim program. In addition, special clauses may include discounts based on the volume of expense reports generated, or further customization for an additional fee. Ensure that the expense management system is user-friendly and efficient. As a general rule, the more automated and integrated the system, the greater the savings since employees spend less time filing their expense claims, and the administration is lighter downstream. Among the features worth considering are: Mobile applications for on-the-go processing of expense claims an increasingly popular feature, according to the CWT survey (Figure 72) Easy-to-use categorization of spend items Currency conversion Pre-populated claims forms, integrating data from online booking tools and corporate payment cards Automated policy checks to warn employees of any breaches and flag the relevant items for managers and auditors Integration with finance systems Automatic reimbursement Short and simple electronic submission, including scanned receipts 103

106 Figure 72: On-the-go expense reporting is already used by 11 percent of companies and 7 percent plan to in the next 12 months Companies using a mobile application for expense reporting Currently use 11% Plan to use in the next 12 months 7% Researching options 24% Don't know 58% Based on a survey of travel managers (132 responses) Case study: making in-house expense management more efficient A multinational producer of high-tech materials and devices found its employees were unhappy with its manual expense management process, which required time-consuming report filing and long waits for reimbursement. At the same time, the management wanted to better manage the risks of fraud and out-of-policy expenses as travel spend, in particular, was becoming more complex (up to 5,000 employees were traveling every year, making 20,000 trips to 400 different destinations, and accounting for US$131 million annually). The company did not want to outsource its expense management after a negative experience with payroll outsourcing that raised a number of issues and did not bring the expected return on investment. Instead, the company decided to introduce an automated system in-house, working with a supplier who would develop a customized system in Sweden, the company s home market. It took a year to build a well-configured system, but the results were convincing: increased visibility on T&E spend; improved productivity thanks to employees saving time when filing expense reports; and lower costs through improvements such as policy adjustments, renegotiations with preferred suppliers and reduced fraud. The company now intends to roll out the system across its subsidiaries worldwide and also integrate an online booking tool through the same provider.

107 Find the right balance between pre-trip approval and post-trip expense auditing. Pre-trip approval processes can mean that less post-trip auditing is required. Often, however, pre-trip approval can be avoided when employees are required to use preferred booking channels that are set up to reinforce compliance, as described above. A good compromise can be simplifying the pre-trip approval process as far as possible (e.g., by enabling electronic approval for a trip or reducing the number of hierarchical levels involved) or limiting it to some exceptions (e.g., long-haul or business class travel). Ideally, out-of-policy items are flagged in the expense management system, and auditors investigate these, as well as the most expensive claims and a random sample of percent of claims. A further audit might be conducted of employees known to have breached the policy previously. Consider fully outsourced expense management. Outsourcing can help reduce expense management costs while providing expertise that may not be available in-house. Yet few companies outsource expense management today: under 5 percent of companies served by large IT service organizations, according to CWT research. Companies that outsource successfully tend to share a number of characteristics. First, to make return on investment possible, they must have a high volume of expense claims (at least 50,000 per year). Then, automated expense management software and a centralized organization allow efficient implementation. Previous outsourcing experience (e.g., in payroll management) also helps ensure that the process brings benefits. Ask specialists to manage VAT claims. Exhaustive, accurate data is essential for managing VAT claims effectively. In the most advanced companies, VAT specialists process cross-border claims, relying on an efficient, unified expense management system to do so effectively. 105

108 Figure 73: Four key characteristics for successful expense management outsourcing 4 Previous outsourcing experience 1 High volume of expense claims 3 A centralized organization 2 An automated expense management system Requires a high level of maturity Case study: from manual to automated, and in-house to fully outsourced expense management A large global conglomerate successfully switched from manual expense-claim processing to fully outsourced expense management, reducing costs and gaining flexibility in the process. To do so, it enlisted the support of its travel management company, CWT, from A to Z. This support covered setting up and administering a customized, automated expense management system with a technical hotline and day-to-day administration; processing expense claims (e.g., invoice collection, data reconciliation/analysis, and auditing); and managing payment cards.

109 If managing expenses in-house, consider shared services. A slightly more common option is for companies to consolidate expense management for different business units within a shared service center, which is usually housed at a single location. Streamlining and standardizing internal processes through shared services typically reduces costs, while providing greater visibility and control. Consider locating service centers in low-cost labor countries (e.g., China, India, Ireland or Poland). This solution enables the company to either keep expense management tasks in-house or to externalize them to a company in a best shore location. Roll out the system. This involves the project team consulting with business units and getting buy-in from executives and training employees before the system comes into use. The full implementation process usually takes a few months, but can last up to a year. A step-by-step approach can facilitate major changes, such as switching from a manual, decentralized organization to a fully automated, centralized and outsourced one. Generally, companies implement the system in one region before replicating the process worldwide. In the past, major organizations tended to have one expense management system per region or even one per business line to adapt more easily to specific needs, but increasingly they are taking a global approach to enable data consolidation, assist auditing and better manage the risk of expense fraud. This in turn has a direct impact on supplier selection as companies seek out global providers. Systems Broadly speaking, expense management solutions are available as either Web-based software or hosted systems: Web-based software (or software as a service SasS) provides service on demand through Web browsers. These systems represent percent of the market. Pricing is based on upfront implementation costs and ongoing transaction fees (typically a monthly payment based on the number of submitted expense reports) to cover report processing, as well as technical support services, system maintenance and upgrades. There also may be additional fees for features such as importing corporate payment card statements or online booking tool invoices, scanning receipts and conducting comprehensive audits. Hosted systems, sold under license, enable companies to install the software in-house so that users access the system directly from their computers. This pricing model combines upfront implementation costs and user fees (i.e., payment based on the number of licenses, rather than the volume of processed expense reports). 107

110 Figure 74: Two main pricing models for expense management software Type of system Description Pros Cons Examples of suppliers Market share Penetration trend Web-based The software is hosted by the supplier and accessed by users through a web browser Accessibility from remote locations Reduced need for expert IT teams Easier installation and implementation Loss of control since data hosted by third party Expense management specialists 70-80% Scalability across platform Constant automatic software updating Hosted The software is hosted by the customer and accessed by users directly from their computers Higher security (the data is stored on own equipment) Possibility of direct and immediate customization if needed Accessibility limited to the office Longer and more difficult implementation Need for IT expert teams ensuring installation, updates and maintenance Enterprise resource planning providers 20-30%

111 On average, an expense report costs US$4-7 for standard service and US$9-12 when additional features are included. (See Figure 75.) Figure 75: Typical pricing of an expense report A Typical scope B Optional scope (excluding outsourcing) Type of system or service offered + System configuration and implementation + Expense report treatment + Support (hotline) = Maintenance (upgrades) + Total (A) Estimate EM growth p.a (2011f-15f) = Price depends on chosen Free for additional features features and supplier Total (A + B) Upfront cost About 6 months of transaction (depending on implementation complexity) Pricing Transaction fee (often monthly) Unit expense report price varies according to volume generated US$4-7 per expense report Price depends on the feature chosen and the supplier US$9-12 per expense report The market can be further broken down into five main types of players with different positioning across the value chain: Pure players. These specialists tend to focus on simple, affordable expense management solutions for small companies, as well as bundled solutions in cooperation with payment card companies, online booking tool providers, travel management companies and other partners. Pure players offer strong technological expertise and often have solid reputations, but their offerings tend to be limited geographically, focusing mainly on national, and sometimes regional, markets. Providers of online booking tools and/or corporate payment cards. These players partner with expense management specialists to offer bundled solutions focused on travel, usually addressing travel managers. Enterprise resource planning (ERP) providers. These companies provide integrated software to manage information across business functions within organizations. They focus mainly on large, multi-regional and global companies, and have begun providing expense management as part of their offering. 109

112 IT service companies and outsourcing companies. These companies provide customized bundles of expense management and IT services, offering both competitively priced standard features and more expensive optional features. Their core target is large companies looking for a more standardized and cheaper offering than the solutions offered by ERP providers. Travel management companies. TMCs offer end-to-end solutions combining travel management and expense management. They may have proprietary expense management tools or act as resellers for third-party providers. Figure 76: Five main categories of expense management providers Pure specialists Type of players Online booking tool/corporate card providers Estimated share of expense management within total sales (2011) 90% 15-30% Enterprise resource planning providers IT services and outsourcing companies Marginal Travel management companies Figure 77 shows how these different suppliers fit into the landscape of interrelated systems and services, and how they have moved into expense management from their core service offering.

113 Figure 77: How different players are positioned across the value chain Pure players B OBT specialists Systems OBT Enterprise resource planning Expense management Payment card Systems OBT Enterprise resource planning Expense management Payment card Services Travel services Implement -ation Outsourcing Help desk Payment back office Services Travel services Implementation Outsourcing Help desk Payment back office ERP providers IT services and outsourcing providers Systems OBT Enterprise resource planning Expense management Payment card Systems OBT Enterprise resource planning Expense management Payment card Services Travel services Implementation Implementation Outsourcing Help desk Payment back office Services Travel services Outsourcing Help desk Payment back office Travel management companies Systems Services OBT Travel services Enterprise resource planning Expense management Implementation Outsourcing Help desk Payment card Payment back office Core positioning Positioning extension Partnerships 111

114 Bundled solutions are increasingly in demand as companies favor a single interface to cover all their T&E management needs, including online booking and corporate payment cards. In fact, 47 percent of surveyed travel managers say TMCs should include expense management in their offerings, no doubt reflecting the fact that travel expenses make up the bulk of expense claims. (See Figures ) Figure 78: 47 percent of survey respondents say TMCs should offer expense management services Travel managers who consider TMCs a valid player in expense management Don't know 23% No 30% Yes 47% Based on a survey of travel managers (170 responses) Figure 79: Travel expenses make up the bulk of expense claims Type of business expense Example Share of T&E expenses Transportation (airfares, rail travel, etc.) Travel Hotel accommodation Car rental Restaurants Other Taxis Other (parking, public transportation, etc.)

115 CWT s survey of travel managers shows that more than a third of companies (38 percent) are equipped with the expense management module of broader enterprise resource planning systems. This figure is likely to be artificially high, however, since the survey sample included a large proportion of major companies. Slightly fewer (32 percent a mix of large multinational companies and more local players) have an independent expense management tool, while 19 percent have a combined tool for expense management and online booking. Figure 80: More than a third of surveyed companies have expense management tools integrated into a broader enterprise resource planning system Breakdown of companies by type of expense management system Combined with an online booking tool 19% Don't know 11% One module of a broader enterprise resource planning tool 38% An independent tool 32% Based on a survey of travel managers (134 responses) 113

116 SUMMARY Effective expense management can help companies reduce direct and indirect costs, while improving compliance with corporate governance regulation. Web-based expense management solutions are increasingly bundled with online booking tools and corporate payment cards, providing a single interface for all expense management needs. Three main areas need to be tackled: policy (including which expenses are acceptable, how to pay, and how to file claims), processes (many of which can be outsourced), and systems (which ideally are automated and integrated into other IT systems). Companies can often gain in efficiency and flexibility by reorganizing the way expense management tasks are handled, with in-house shared services and outsourcing, and/or operations housed in low-cost locations.

117 Conclusion Ensuring that companies service their travelers in the most effective way involves a fine balancing act between different priorities in particular, finding ways to streamline processes and optimize costs, while providing travelers with the convenience they need. Travelers rightly have high expectations of corporate travel services, but they also distinguish between those that are most important to them and those that are simply nice to have. Travel managers should be aware of these needs, while taking into account the company s unique context, which makes certain service configurations more suitable. An evolving market offering means that the choice of available tools and features is growing fast, underlining the need to arbitrate carefully and take a tailored approach. The opportunities have never been greater for companies to find the right fit with their goals. 115

118 Glossary Fulfillment service center: a back-office team that intervenes to process air, hotel, car, rail and ground transportation reservations made onor offline that could not be processed through automation. This service configuration is usually centralized at a country or regional level. Expense management solution: Web-based or hosted software used with an appropriate policy and processes to manage corporate expense claims. Increasingly, these solutions are bundled with online booking tools and corporate payment cards, providing a single interface for all travel and expense management. Full-service center: a team serving one or several companies, often using client-specific processes. A key strength of full-service centers is the provision of local content such as rail and ground transportation. Global distribution system (GDS): a reservation tool used by corporate travel counselors for air, hotel, car or other travel services. The four main GDS worldwide are Amadeus, Galileo, Sabre and Worldspan. Other computer reservation systems are available in specific markets (e.g., TravelSky in China). Multinational service center: a team of travel counselors who employ standardized processes to serve several countries. These centers are usually based at near-shore locations that offer competitive labor and office costs. Offline transaction: a travel booking made by contacting a travel counselor by phone, , fax or order requisition system (e.g., Oracle or SAP). Online adoption: online transactions divided by all transactions, online and offline, in companies that have an online booking tool. Online booking tool (OBT): a customized, online interface allowing automated booking of trips within company policy. Online penetration: total transactions (online and offline) made by companies that have an online booking tool installed, as a percentage of the transactions made by all companies regardless of OBT availability. Online penetration is a theoretical measure of the percentage of online bookings and hence a good metric for understanding market maturity, in terms of the acceptance of online booking tools. Online transaction: a travel booking initiated through a corporate online booking tool. The transaction may be either touchless (completed without manual intervention), touched (completed by a counselor without traveler intervention after an automation failure) or assisted (where either the traveler initiates a manual change or the fulfillment center needs to contact the traveler to process the transaction, typically to make changes after ticketing or to settle payment if a payment method is declined, etc.). Online usage: the percentage of all transactions made online (vs. offline) [online transactions divided by all transactions]. On-site service center or implant : a dedicated team of travel counselors located on the company s premises who deliver a customized service.

119 Profile management tool: a database for traveler information (e.g., personal data and information on preferences and loyalty programs), aimed at making the booking process more efficient. Unused-ticket management solution: a system for redeeming tickets through exchanges or fare/tax refunds, using manual processes or automation. Standardized service center: a team providing highly standardized services adapted to local languages, cultures and content. These centers are usually located in best-shore locations (i.e. countries offering optimal conditions in terms of costs, etc.), in line with the goal of keeping offline transaction costs to a minimum. Technical service center: a help desk for online products and tools provided by the travel management company or online booking tool vendors. It is the single point of contact for customers using online tools (e.g., booking tools, Web-based portals for travel program information, etc.) Traveler portal: a Web-based gateway to a wide range of practical tools and information for helping travelers prepare for travel and stay informed while on the road. 117

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121 All research published by the CWT Travel Management Institute is available on co Scan the QR code for direct access to our online section