From policy to compliance – ‘visual guilt’ delivers savings
Occumen helps transform a global hotel operator’s travel policy into one that really flies.
In order to address the issue of escalating company travel costs, a global hotel operator recognised that it needed to improve its expense management capability and work more effectively with its travel providers. In addition, it understood that it had a duty of care to ensure the needs of all its travellers across the organisation were well met. The organisation already had a preferred travel provider and a company-wide travel policy in place, but decided to seek external procurement expertise and so turned to Occumen, the procurement management consultancy, to provide specialist knowledge to help transform its business processes.
Our first step was to look at what was being spent on what and by whom to establish the current situation and practices. We discovered that hardly anyone was adhering to the travel policy and in many countries people were booking their own flights via the internet or through other travel agents. The policy itself was fairly generous (especially for senior executives) and had many exceptions and loopholes, which meant that anyone could argue that they were working within the policy guidelines.
Benchmarking of travel policies within other Fortune 500/FTSE 100 global organisations was undertaken and the results were used to help the board to agree a more streamlined approach. We also identified the actual amount which was really being spent on travel, which turned out to be much more than anyone had realised, and we were able to pinpoint key routes and hotels where volume discounts could be negotiated.
We interviewed travellers and budget holders about what they expected and needed from a travel provider, and then conducted a detailed tender process. The travel provider who won the contract was not the cheapest, but they had the most experienced staff, could supply very detailed management information, and provided the most comprehensive service in terms of 24 hour care and backup. This was exactly what our client wanted.
We managed the entire process of moving from the old to the new travel provider, including setting up an intranet booking system, organising training for PAs and travellers, and communicating the new travel policy to the whole organisation. Crucially, reporting and compliance processes were tightened up, so that if people booked travel that was outside the policy, their line manager was notified, and if they booked through an alternative supplier, they risked not being reimbursed for the cost. The effective of ‘visual guilt’ i.e. simple making expenditure visible to others reduced spending by a measurable amount.
You have made a really important contribution to the business as you said you would. I am looking forward to another big year
Chief Executive OfficerGlobal Hotel Operator
The result was a substantial saving in travel costs due to changes in the policy, better compliance and lower pricing. The biggest bonus though, was the increased level of service received from the travel provider. When European airspace was closed down for a number of days, the client was immediately able to see that over 40 members of staff were stranded around the world. The travel provider swung into action, contacting each one, ensuring that they were moved to more convenient locations, upgrading them to first class so that they were at the front of the queue when flights were available again, increasing credit card limits where people were running out of money, and even organising to feed someone’s cat.
It had been a difficult decision and required considerable effort for the client to change travel provider, and although the cost savings were most welcome, the level of service from the new travel provider, which enabled the company to look after its stranded employees, has been the biggest benefit.
This was a small part of a bigger programme for this client, but demonstrated that good procurement can add much more than just a reduction in costs
Simon AtkinsonManaging Partner, Occumen