In response to the economic downturn, a growing number of business travel managers are turning to procurement strategies in order to save money. That's according to American Express Business Travel, which released today the results of its third annual Procurement Practices Survey.
Completed in partnership with Successful Meetings and MeetingNews, Incentive's sister publications, it found that 55 percent of companies say they're using procurement practices to measure the return and impact of travel on revenue objectives.
"Travel managers are turning to a wide variety of strategies, including influencing traveler behavior and managing relationships with suppliers," said Frank Schnur, vice president, Global Advisory Services, American Express Business Travel. "Record numbers of companies are using real-time and regularly updated data to help make quick and precise decisions based on a wider range of key performance indicators and benchmarking categories."
Other key findings:
• Sixty-eight percent of companies saved between 5 percent and 15 percent of their annual travel spending in 2008 by applying procurement techniques, and nearly 80 percent expect to save between 5 percent and 20 percent in 2009.
• Seventy-five percent of companies believe procurement helped tighten their travel policy last year.
• Fifty-five percent of companies value service as an equally important element to cost, while 11 percent say service is more important than cost.
• Fifty percent of companies consider travel a commodity, down from 58 percent and 66 percent in respective previous surveys.
• The most popular procurement strategies among business travel managers are managing demand for travel services (73 percent), mandating the use of preferred suppliers (65 percent) and enforcing restrictive pre-trip approval processes (37 percent).
• In pursuit of savings, companies are employing third-party vendors (46 percent), service-level agreements (51 percent for hotels, 47 percent for car rentals and 20 percent for chauffeured cars) and outsourcing travel-related tasks (65 percent for tasks related to hotels, 51 percent for car rentals, 63 percent for air and 46 percent for meetings).
vWhile half of companies plan to increase their use of videoconferencing this year in order to control meetings spend, 60 percent are not currently applying strategic sourcing practices to meetings.
"While the survey shows that respondents expect to spend less on fewer trips in 2009, we've found that travel managers are also seeking more sophisticated advice, tools and tactics to strategically cut costs while protecting the value of their travel program," Schnur said. "Procurement practices, which now include compliance and demand management, are an effective complement to traditional savings efforts. The survey results underscore the continued success of these tactics at maximizing the return generated by travel investments."