Where Corporate Travel Money Falls Through The Cracks…
SmartProcurement was invited to the recent Association of Corporate Travel Executives (ACTE) breakfast at the Westin Grand Hotel, Cape Town on the 22nd of August 2008. The topic of this breakfast was the prickly question: “Where is the money falling through the cracks?”, with particular reference to car rentals and unused tickets.
Who is ACTE?
ACTE is a global representative body with over 2 500 members world-wide. Their website is a source of superb travel management content with some 3 000 white papers that are active and available to the public. Their immediate mission is to co-ordinate public meetings for the benefit of their constituency, the travel buyers, as well as keeping all their members at the rock-face of developments in their specialised business space.
From the SmartProcurement perspective it was interesting to note the commonality of subject matter relevant to our audience (general and commodity-specific procurement). ACTE’s membership of travel managers and corporate travel buyers furthermore clearly views the tailoring of education to the needs of the corporate buyer as being one of their more important responsibilities.
The Proceedings in a Nutshell
The breakfast’s proceedings were capably handled by Monique Swart (picture left), the Middle East and Africa ACTE Regional Director, and Cindy Nell, the Regional Manager, who kept the microphone roving for questions from the floor. These ladies saw to it that the subject matter, including questions and answers, was dealt with professionally and without long-winded delivery.
The topic for this travel industry gathering of 70 attendees fell squarely within the broader subject of “Cost Containment” and ACTE’s approach, not surprisingly, was very ‘procurement centric’ in that they are a disciplined organisation when it comes to the analysis of total cost of ownership.
The first session proceeded by way of a panel discussion around Cost Saving Opportunities with the focus on costs associated with car rentals falling under the spotlight. And what an interesting discussion it turned out to be! Believe it or not, but ACTE members recently reported a variance of between 2% and 739% on ‘mileage travelled’ vs. ‘refuelling charges’. This means that travellers in some instances were charged up to 739% more to refuel the rental car than the mileage they actually travelled!
The second panel of the session was called on to consider the thorny issue of Unused E-Tickets. It is estimated that 4% of global airline revenue lies in tickets not being used by travellers and then not being refunded, for various reasons. The advent of e-ticketing has also clearly added to, and not resolved, the challenges facing travel buyers. One of the important tools to utilise here is the education of the user who in many cases simply does not comply with the corporate policy and thus this issue quietly slips through the cracks. Travel buyers were advised by the panel that the only way to more effectively track unused tickets that need to be re-issued or refunded is to make use of technology solutions.
Last up on the agenda was a presentation on Gaining Control in an Out-of-Control Market by independent Financial Processes Consultant, Julian Curtiss. Curtiss is well-known in procurement circles as a specialist in ‘procure-to-pay’ technologies and, in having delivered several papers at various public forums including the World Purchasing Congress held at Sun City some years ago, he spoke about ‘Travel and Entertainment Expense Management’. Along with Maintenance, Repair and Operations (MRO), travel and entertainment falls into the procurement category of ‘indirect spend’, as opposed to ‘direct spend’ that is the goods and services that organisations require to fulfil their core business activities.
As an experienced writer, Curtiss was in top form and professionally walked the attendees through his presentation. Suffice it to say that from the procurement perspective, Curtiss was talking to the converted. He elaborated in his presentation that corporate cards are one of the most under-estimated tools in the hands of spend- and cost managers. They have now reached a new level of un-paralleled sophistication and are backed-up by some of the most powerful back-end technology available on the planet.
Bearing in mind that here we have to do with the larger picture of the management of vast acres of information, it seems incredible that so many managers still resist the compelling reasons to adopt a card solution to manage their travel and entertainment spend. Curtiss made specific mention of the fact that the next big thing would be the advent of the Prepaid Corporate Debit Card. And, he had no hesitation in putting the responsibility for ‘compliance’ firmly on the shoulders of the corporate traveller. The success of this step, nevertheless, remains the key responsibility of the corporate buyer who must clearly communicate and educate their policy throughout their organisation.
The breakfast finally adjourned for tea and a well organised rotating system of networking so that, if attendees failed to chat with one of their colleagues, it was certainly not the fault of the organisers.