Travel management in a Small, Medium and Micro-sized Enterprise (SMME) is complex. Taking into account the lack of buying power these entities have as well as access to best practice information and the limited time available to perform tasks, it comes with big challenges. Liesl Venter finds out how SMMEs can negotiate better rates and up the stakes.
If there is one certainty in the SMME market, it is that there is no one-size-fits-all solution. While some SMMEs strive to implement solutions resembling those of their large counterparts, others consider it a task best ignored.
“Often SMMEs don’t have the resources internally to manage their MICE portfolio effortlessly, or the way that resources are utilised might not always be very effective,” says Monique Swart, founder of ABTA. “For instance, you might find within an SMME that there are several PAs or department heads that work in silos when it comes to travel and MICE. Instead of pooling their resources, knowledge, suppliers, they might all ‘do their own thing’. This often also means there is no one point of contact to manage these processes, which also means there is no streamlining of how things are done – i.e. which preferred suppliers are used, what internal and external processes are required, etc. This can lead to a big waste of time and money.”
Heidi Kratochvil, company travel co-ordinator for Air LIquide Southern Africa, says in the SMME market it is more often than not all about budget “and most definitely finding the right supplier to meet the needs of all and the tight budget”.
More often than not, the person performing the travel management operations is tasked with getting the best value – no matter about anything else.
Whilst the sector has undoubtedly come a long way in recent years by introducing more sophisticated practices, including travel management policies, the sector is still hampered by its inability to negotiate low rates, impacting on the most important aspect of it all – cash flow.
How to negotiate lower rates
When volumes are not high enough for decent spend-based discounts, there are a few things that companies can do to try and drive savings as much as possible, says Swart.
“Firstly, make sure your data is in order – you can’t actually know how much you are spending if you don’t have visibility over these figures. If you do accurately know how much you are spending and with which suppliers, ask about corporate rates and discounts anyway – you won’t know until you ask,” she advises.
When ‘how much’ travel you are buying is not going to help you (i.e. you don’t have the volumes), the next important step is looking at how you are buying travel.
“Purchasing behaviour is a vital element that can cause a lot of wastage if not managed effectively and by this, I am talking specifically around travel lead times. If you or your travellers are booking the day or a few days before departure, you will be paying far higher fees than if you book well in advance,” says Swart. “In this instance, companies need to put strict mandates in place for travel lead times and what levels of trip approval are needed before a trip is signed off.”
Also consider consolidating trips, clustering meetings, travelling less or sending fewer staff on the same or similar trips. Unless there is a fairly clear return on investment for the trip, question whether it is needed and whether other options might not work just as well, such as Skype or video conferencing.
“Another option is to think about purchasing travel under a buying consortium. Just because you are not able to get discounted rates doesn’t mean that you can’t get access to them by ‘pooling’ your travel spend with companies of similar size and spend to you,” she says.
According to Kratochvil, building relationships with suppliers is another key element. “This goes a long way as you know they will do their best for you,” she says. “At the same time, keeping them on their toes is just as important to ensure they do not take advantage.”
Training makes a difference
Regardless of who is managing travel or the MICE portfolio in an SMME, it is crucial they are empowered through some form of training.
“It is very important, as many of the elements around travel are often not understood by a personal assistant or other person who has been tasked with these duties. This way, one ensures that duty of care is adhered to at all times,” says Kratochvil.
“I also think that training impacts on the rates negotiations as it ensures one has the right information and it is not just a thumb suck. You have to know the market and you have to have a personal relationship with suppliers to get the best deals for your company.”
According to Swart, training is vitally important. “Sadly, it is not always a priority in the SMME industry as the people tasked with travel management have so much on their plates (PAs especially!) and are the least able to attend training.”
She advises SMMEs try and consolidate their processes better as their first goal.
“This assists in establishing a central point of control for travel, meetings and MICE and this central person would be the one ensuring that the company is following best practice by attending industry training and seminars. Sending one or two PAs out of 10 will help those PAs – it won’t help the company as a whole.”
Like Kratochvil, she says there has to also be a core focus on developing supplier relationships.
“For any supplier, their income is based on yield. How much business they are getting from a certain place at a certain time of the day, week, month or year,” she says. “In order for SMMEs to be able to take advantage of potential savings that are not volume based, they need to speak to their suppliers and find out where their ‘slow’ times are and aim at hosting conferences etc. during these times, as you are then more likely to be able to negotiate favourable rates. Trying to host something or travel and book hotel accommodation during the busiest time of the hotel’s week or month is not going to help you keep prices down, as this is when their rates will be highest.”