Procurement teams must view travel as more than a “cost-cutting exercise,” a business travel consultant has warned.
Ian Flint, managing director at corporate travel consultancy firm Inform Logistics, said: “Procurement has taken over [business travel], but procurement doesn't understand travel.”
Speaking at the Business Travel Show Europe 2021 held at London’s Excel, Flint said procurement managers thought travel was “a cost reduction exercise, when in fact it is cost reduction where it is feasible.
“It is getting the right level of service at the right price. And it's cost efficiencies as well.”
Despite business traveller enthusiasm for a return to face-to-face meetings, Flint said there was a “conformity of thought” across industries that “companies at this moment are looking to lower the budgets of their meetings and expenditure.
“Travel has always been contentious.”
He said one CFO had told him: “Covid did what I've been trying to achieve for a long time,” in terms of cutting travel expenditure.
He said he had witnessed CFOs use the limited travel opportunities due to the pandemic to clamp down on what is seen as unnecessary travel.
“Talking to CFOs, they want to cut the budget,” he said. “And it's a very high-level budget. They want to have accountability, travel has got to be justified. If everyone is going to a meeting, a large meeting or sales meeting somewhere in the world, what do they want to get out of it? And if they're going to attend functions, is it just a perk? Or is it actually important to the company?”
Despite this resistance, Flint said a survey found 79% of business travellers had a preference to holding meetings face to face.
Nine in 10 (86%) people said virtual meetings cannot fully replace in-person meetings, and the same proportion (86%) plan on attending meetings when safe.
While 82% said there are benefits to in-person meetings, this dropped to 79% when the same question was put to company decision-makers, according to the research, carried out by American Express.
“I think it's a human thing,” Flint said about people’s desire to hold meetings in person. “We love mixing and talking to people doing business in that particular way. You get more out of it, and it's more spontaneous.”
He said while virtual meetings are still important for small to midsize meetings, “when it comes down to strategic meetings, it's important that perhaps they see face to face”. He said in-person meetings were particularly important for suppliers who need to present and demonstrate products.
By reviewing a company’s travel policy, Flint said companies can save 5% on their travel budget.
He said he had found companies often might be able to get lower fares but don’t take these up due to a “loyalty card with a particular supplier”.
Companies can also cut back on travel budgets by introducing expense management programmes and corporate credit cards. The next step for companies looking to cut back on their travel expenditure is by negotiating supply deals with travel and accommodation companies, he said.
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