Question Time WHY SPOT BUYING IS DANGEROUS TERRITORY
Tom Stone of Sirius Management sourcing specialists answers an anonymous buyer’s query over how best to incorporate spot buying into a ‘managed’ travel programme
Q.
Tom Stone MANAGING DIRECTOR, SIRIUS MANAGEMENT Sirius founder Tom Stone has specialised in corporate travel since the mid-1980s. After starting out as a business travel agent, he switched to a career in travel manage- ment procurement for Sony Music Entertainment, followed by SmithKline Beecham, Seagram and Universal Music International. In 2003, he set up Sirius Management, providing fixed contract outsourced travel management and project based consultancy for all areas of the travel category.
EVEN though our business turnover has increased by almost
£4bn in five years, the pressure on our departmental and divisional budgets is greater than ever before. This is primarily because we need to maintain the continued growth over the coming years and position ourselves sensibly to achieve this. One of the consequences of growth is a flood of new people into our business, some of who want to adopt an approach used in their former employer, where a travel programme didn't necessarily exist. I agree with ACTE's Ron Di Leo that corporates may have to accept lesser compliance because of the greater opportunity to spot buy, but what Ron doesn't suggest is how to overcome the challenges of spot buying from both a procurement, programme management and duty of care perspective. Any ideas?
A.
THERE are two primary issues here, which are compliance to a
" By not insisting that travellers utilise the approved TMC, control, MI and duty of care are all absent and hence there is no 'managed' programme"
corporate travel programme and the flexibility to benefit from spot buying. The two issues are not necessarily incompatible with each other. Firstly, let’s establish that a managed travel programme exists for the benefit of the organisation, not the individual, and should be clearly communi- cated so that the processes and rationales for selecting preferred suppliers are understood. The travel programme needs to retain the flexibility to adapt to change in circumstances – or
indeed new ideas that may be introduced – so that the organisation can benefit. Every travel manager will recognise
the corporate colleague who “had a better deal at their last company”,
whose mother/brother/dog/tennis partner/nephew owns a travel agency that can do things cheaper/faster/better than the corporate incumbent. By not insisting that travellers utilise
the approved TMC, control, MI and duty of care are all absent and frankly there is no 'managed' travel programme. However, the goal should be to challenge the appointed TMC to deliver spot buying opportunities – even if they are not with preferred suppliers – to the benefit of the company budget. In today’s environment, where TMCs
are desperate to prove that they add value and are not merely order takers, most professional agencies can administer programmes utilising spot buying, including sourcing fares on low- cost carriers). Due to the dynamic pricing that takes place, if they miss a fare that is spotted online by the traveller, they can still book it on their behalf. This way, duty of care, being able to track traveller location in an emergency, and the all important MI data are still achieved. I would paraphrase Ron’s comments slightly and say that it is carriers (and indeed other suppliers) that potentially
have to accept lesser compliance to corporate route deals. Indeed, there is plenty of evidence to indicate that as suppliers have become more canny in grading their inventory and closing out cheaper fares or rooms, they also accept that when they need to dump distressed inventory in the market place, that buyers will take advantage of this. Remember that an airline seat and a hotel room is a perishable commodity. An empty seat or hotel room yields nothing once the flight or night has gone. Again, the pro-active TMC will check reservations made in advance with changes to pricing closer to the departure date to see if an improvement can be made on the original fare or rate. For corporations, the opportunity
exists as never before to buy dynamically and successfully without negating corporate governance stipulations; the challenge is working from a robust and senior management supported travel programme.
IF YOU have a business travel issue you would like advice on from an expert, email us at:
help@thebusinesstravelmag.com
26 I THE BUSINESS TRAVEL MAGAZINE
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