Financial Controls

Travel management plays a significant financial role and can contribute to a corporation's shareholder value. Since the cost of travel is a corporation's second or third largest controllable expense, having experienced travel management professionals manage and negotiate travel-related services provides measurable financial benefits to the corporation. In addition, monitoring and analyzing travel expenditures is essential for realizing cost-cutting opportunities.

In 2002, the NBTA Foundation conducted a survey of nearly 250 travel management professionals throughout the United States. The survey found that 33% of respondents reported to the Finance Department in their companies, more than to any other department, illustrating how strategically important travel management is to a corporation's overall financial strategy.

Traditionally, the corporate travel department works with each department to determine its travel needs and develop its travel budget, based on current spending and planned development. Then, with the consolidated travel needs of the corporation, travel managers negotiate discounts and preferred rates with travel suppliers based on their company-wide travel needs. Corporate travel management professionals are the essential elements to managing the negotiation and review of vendor relationships. By negotiating discounts up front with selected travel providers based on volume and price, companies can maximize the value of their travel spending by fulfilling more of their travel needs through these preferred vendors and negotiated agreements.

In the dynamics that now define the environment of corporate travel management, more corporations have developed preferred relationships with travel suppliers and have moved to negotiate direct discounts with airlines based on volume. Over 90% of NBTA members have negotiated agreements with one or more air carriers and over 87% of NBTA member companies have sought to negotiate with major airlines as a means to address rising airfares. Relationships are key to successful travel management.

The impact of cost avoidance and what can be accomplished under an effective travel manager is illustrated by an example given by one analyst, that $1.5 million in costs saved due to control of travel means $23.5M less in product sales that a company would have to realize in order to make up the difference. This can be viewed as a return on investment of 17%, contributing substantially to shareholder value. It puts travel management in a very different perspective.