Many people think that travel management is merely concerned with negotiating discounts and other incentives while purchasing travel related services. Wrong!
The Concept
What is then the concept behind “travel management”? It is concerned with optimizing resource allocation for business travel. This starts with identifying the need for business trips and evaluating costs and benefits of individual trips.
Travel Policies
Big and medium-sized businesses use a predetermined set of policies to evaluate and categorize proposed business trips. These rule sets are called travel policies. They speed up the decision-making process, provide transparency and a framework for effective delegation of booking decisions.
Data Collection
But every business, as small as it may be, should collect all information necessary for a meaningful cost-benefit analysis of business trips. This is only way to ensure the right resource allocation for business travel needs. The same information helps to detect waste and to plan for an increase of resources, if needed.
Cost Allocation
Another task for any travel management system is the allocation of travel expenses to projects or customer relationships. This is a must, because otherwise it would be impossible to determine with certainty customer profitability.
Purchasing Services
Only after these needs are satisfied, travel management has role in negotiating favorable terms and prices with service providers. The last step is then to book hotel rooms, air and train tickets, rental cars etc.
Day to Day Activities
Above is a very broad definition of the term “travel management”. Most travel managers will report that they neither develop corporate travel policies nor evaluate the need for business trips. In a narrow sense travel management groups trips into predetermined categories. The travel manager organizes the trip then according to the rules laid out in the policies for the respective travel category. The information for accounting and controlling departments are generated automatically and then transferred to accountants.
Controlling and Pricing of Services
Accounting alerts higher level travel management as soon as certain events occur. There may be a significant rise of costs or the danger to overrun a budget. Another reason for an alarm may a big difference of costs between departments, which should be fairly similar. A sudden rise in costs for a single service category like hotels or flights may also trigger an alert. In such cases a supervisor may analyze the reasons. He will check whether travel policies are correctly implemented and look into the need to adjust corporate rules. There is another important benefit provided by a professionally organized travel management process: Detailed and up-to-date information is always at hand if a need arises to evaluate the profitability of a project or customer relationship. The same data provide also a point of reference about travel related costs when the company prepares an offer for a new project or negotiates a new contract with a customer.