In the corporate cards sector the market is back to 2008 levels: for a large global customer based in Germany, Airplus reported that in the first 4 months of 2011 total travel expenses have risen 33%, compared to the same period last year.

Although individual flight costs have not yet returned to 2008 levels they are also on the up. The key to managing costs is access to good quality data that can be analysed and referred back to budget holders and, if the spend is large enough, used to negotiate with suppliers.

The other key to cost management is establishing how far budgeted travellers’ plans matched up with what was actually spent during a trip.

“Apart from the financial rewards of reducing expenditure, our work with Neill Summerfield and his team in securing service level agreements and key performance indicators from suppliers has encouraged people within the Academy to be more focused on working pro-actively to ensure that we receive the best possible service from our supplier base”

Importantly the decision to engage Neill Summerfield and his team of cost management consultants was supported by the Executive Management Board and the Board of Trustees. Progress in finding sustainable extra profits for the RAD is reported to both teams on a monthly basis.

1. Start by reviewing your direct energy costs, your travel costs and then your indirect supplier costs. You could even extend this further to consider carbon embodied in materials you use.

2. Review your direct energy use – electricity, gas and heating fuel. Identify the areas of greatest usage in your organisation and those which have the highest impact in terms of cost and/or carbon footprint. Use this information to determine the priority for a more detailed review.

3. Assess the usage patterns identified from this data and consider whether they pass the ‘make sense test’. Are seasonal/weekday/hourly/ day vs night variations as you would expect for your business? If not, why not?

a) Is equipment being left on unnecessarily?

b) Is start up and/or shutdown as you would expect?

4. Conduct a detailed site survey to determine which equipment or processes are the most energy-hungry. Consider the following questions:

a) Is that equipment turned off when not in use?

b) Is it energy efficient – by design, maintenance and how it’s used?

c) Is it fit for purpose?

5. Review your organisation’s processes:

a) Would it be possible to cut out any stages in the process without affecting quality?

b) Can the amount of re-work be reduced by improving quality checking?

c) How can your processes be redesigned to improve efficiency?

6. Consider your organisation’s culture:

a) Is your Energy Policy clear and understood by all employees?

b) Is this reflected in their personal targets?

c) Do you have Energy Champions to provide a readily-accessible source of expertise?

d) What do you need to do to encourage all staff to take this seriously and reduce energy consumption wherever they can?

e) Do you have a highly visible and well-used staff suggestion scheme? They will probably have some great ideas about where savings could be found.

7. Consider your organisation’s equipment maintenance and replacement policy:

a) Ensure that energy efficiency is a key element in decision-making regarding replacement kit.

b) Be aware of the whole-of-life costs of any piece of equipment. Do increased energy costs outweigh purchase cost savings?

c) Can existing equipment be made more energy efficient without having to completely replace it?

d) Ensure that equipment is well-maintained, which will keep it more energy efficient as well as prolonging its life.

8. Consider your travel policy:

a) How much do you spend on business travel each year? Include costs such as car leasing, parking, fuel, insurance, air travel and travel management costs.

b) How could these costs be better managed to generate cost reductions? Eg would it be better to have a pool car or company bicycles than company cars?

c) Are all journeys necessary? Could some face-to-face meetings be held using telephone or video conferencing instead? The supporting technology is improving all the time – if you were to reduce the number of business trips by 25%, how much difference would that make in terms of cost reduction and carbon emissions? This is exactly what Vodafone has done, resulting in double digit millions of cost savings. (Source: Tandberg case study)

9. Consider your distribution channels:

a) Do you need to distribute a physical product?

b) Can you reduce the number of journeys or organise them in such a way as to reduce the number of miles travelled?

c) Is the vehicle fleet fuel efficient?

d) Can you minimise packaging and the size of containers without damaging your goods?

10. Consider how you could encourage your suppliers to manage their energy use in a similar way. If this leads to cost reductions for them, they will be able to pass some of this on to you, creating a virtuous circle of benefit.

This is just a small number of suggestions to get you started. There are plenty of things you can action on your own, but if you would like some specialist help, please do give me a call.

The steady move towards widespread contactless card payments has been given a major boost as the government launches a public transport e-ticketing programme.  It could see England’s nine major urban areas go paperless within five years.

The Smart and Integrated Ticketing Strategy will see an infrastructure put in place based on the government-backed ITSO smartcard specification which will enable ‘tickets’ to work anywhere in the country.

Travellers could then use Oyster-style cards, mobile phones and bank cards equipped with microchips to pay directly for journeys by tapping them against readers.

The nine largest urban areas in England outside London – Greater Manchester, West Midlands, Tyne and Wear, Merseyside, South Yorkshire, and West Yorkshire, Nottingham, Leicester and Bristol – will implement the technology with the rest of the country planned to follow by 2020.

To incentivise bus operators to install smart ticketing systems, the government will also give an eight per cent increase in the Bus Service Operator Grant if they have ITSO smartcard infrastructure on their buses.

The government estimates that the benefits of ‘integrated smart’ ticketing, that allows travel across operators and across modes, could be worth over £1 billion per year.

A recent survey commissioned by the department of transport indicates that the technology could attract up to 25% more people onto the system and that a pre-pay smartcard with a daily ‘cap’ could increase some individuals’ trip rates by over 14%.

Andrew Adonis, transport secretary, says: “The benefits of smart ticketing to passengers are clear – quicker, easier and potentially better value journeys on trains, buses and trams, whichever company runs the service. We could even see the death of the paper ticket as direct payment and mobile phone technology picks up pace.”

Stephen Whitlam of Expense Reduction Analysts says that all the major card fulfillment providers will see this as a target area for volume growth. “I expect competition that will be backed up by innovation. Certainly we will enjoy the challenge of ensuring that our clients in this sector achieve not only competitive tariffs and cost-saving, but also reliable technology that enhances service levels.”

Price and convenience are seen as being far more important than the environment, according to the study by research company TNS-RI Travel and Tourism.

Whilst two thirds admit that they frequently discuss environmental issues, and 73% state that they are ‘very’ or ‘fairly’ concerned about what the future holds, only five per cent of the 2,090 travellers polled have made a payment to offset the environmental cost of a trip and only 11% are confident that plans made by the governments of major economies will be able to tackle climate change.

Only 13% of British travellers are sufficiently concerned about the environmental impact of flying to cut the number of flights they take, while 15% admit that they are likely to fly more in the next year than they have in the past. Ninety per cent of people are unlikely to change their holiday plans to reduce the environmental impact of their trip.

These figures contrast strongly to the general environmental attitudes, which show that the British public is becoming increasingly worried about climate change.

The company’s group director Tom Costley said:

“This research points to a ‘hands off’ approach to the question of travel and the environment.

“Even though we claim to be concerned about climate change, we prefer to consider our travel plans in isolation and avoid letting green concerns affect our flying.

“There seems to be a feeling that going on holiday is an escape from reality and everything that comes with it – including considering our role in the long-term health of our planet.

“Consumers are expecting the travel industry to take responsibility for implementing changes and improvements, rather than taking direct action themselves.”

European companies’ in 2010 are expected to still maintain a wait-and-see attitude on travel in view of the latest effects of the crisis, with only 20% anticipating an increase in their travel budget, 61% no change and 19% predicting a reduction.

The prediction came from American Express as it released its Business Travel 2009 European Barometer study showing that 66% of companies reduced their business travel budgets by at least 31% this year.

There are geographical variations: countries such as Germany (33% of companies) forecast an above-average budget increase, with the Netherlands at 28% and the UK down at 23%.  However, businesses in Belgium or Spain expect an above-average decrease of 22% and 24% respectively with France and the Scandinavian countries’ expectations lying close to the European average.

Almost three quarters of companies opted for using alternative ways to make travel savings, using in particular video conferencing, leading to an 18% fall in budgets reported on average. The study also found that 23% saw no change to their travel budgets while just 11% noted an increase (of +23%).

Amex senior vice-president and general manager business travel EMEA David Herrick said: “We’ve seen travel policies tighten up, purchasing controls increase and employee travel driven by client retention needs where as a focus was on driving new business.

Organisations have placed greater importance on using travel and entertainment spend for maintaining existing clients, the research shows.  57% of European companies’ travel budgets are dedicated to maintaining or acquiring clients and markets, ahead of trips for internal meetings (29%) and meetings with suppliers (8%), on average,.

This is a trend that affects small-to-medium sized enterprises (61%) more than companies with budgets exceeding €20 million (47%).

The Irish hotel industry needs to take out 25% of its 60,000 rooms as it is facing bankruptcy, according to a new report by the commissioned by the Irish Hotels Federation (IHF).

The industry is insolvent and, the report said.

The Over Capacity in the Hotel Industry and Required Elements of a Recovery Programme Report was from economists Peter Bacon and Associates,  confirmed hoteliers’ fears that the industry would collapse unless urgent action was taken.

It said bad investments in new projects had helped create the current situation, with the number of rooms in the Irish hotel industry having grown from 21,000 in 1989 to a current 60,000. Of these, 15,000 – 32% – had opened since 2005.

This overcapacity has caused a drop in average room rates from €57 in 2000 to €38 in 2008. They have since fallen by a further 26% in 2009.

The report said: “This supply growth was driven largely by a number of factors, in particular, accelerated capital allowances for developers, the ease of obtaining finance and the wishes of planning authorities to incorporate hotels into development schemes.

“In many cases the commercial viability of the hotel business was not sufficiently prioritised, despite warnings from the IHF.”

The report said:  This is the steepest fall of any major European country, making Ireland the cheapest Western European country for hotel accommodation. Demand had dropped and hotels with no long term viability were dropping rates simply to maintain a cash flow.

It said hotels were staying open because banks were reluctant to realise losses and write down loans granted to hotels that have no prospect of recovery. Consequently, the whole sector was being affected including hotels which did have long term future. The answer, says the report, was to take 15,000 rooms out and to decommission future projects.

Matthew Ryan, IHF president, said: “This Report is possibly one of the most detailed and comprehensive analyses of the sector ever undertaken and includes very serious measures to improve the viability of the sector.

“The Report calls for the urgent active participation of the stakeholders involved including the banks and financial institutions, the Government, the tourism bodies and the hotel sector itself to seek effective solutions.”

www.ihf.ie

The World Society for the Protection of Animals (WSPA) has been promoting animal welfare for more than 25 years. The largest alliance of animal welfare societies, WSPA has a vision of a world where animal welfare matters, and animal cruelty ends.

Chris Byron of Expense Reduction Analysts was managing the account and had already introduced his colleague, Derek Hodd, who was undertaking a print cost reduction project on a gain share basis. Derek consulted with Henry Bennett, Finance Director at the charity, on the travel project. Derek takes up the story: “My initial analysis showed clearly that WSPA did not have an optimal travel set-up for their travel bookings. The incumbent TMC was not providing a good service with the result that some members of staff were
booking their own flights and hotels online. This had led to a lack of managerial control over travel costs, losing the charity money.

Employers’ duty of care an important facet of travel policy “There was also the ‘duty of care’ dimension to consider. I explained to WSPA that, since the Hatfield rail disaster, the onus was now totally on the employer to ensure its staff’s safety whilst travelling and that consequently a travel policy should be put in place, covering everything from when and how to book travel, through to what to do in emergencies and rules on aspects such as not driving within 24 hours of an overnight flight. Without this policy in place, WSPA could be liable under both Health and Safety legislation and the Corporate Manslaughter Act.

“This meant that the travel project was quite a wide-ranging undertaking, but I have to say that, throughout, WSPA was a pleasure to work with because they were very open-minded and receptive to my input. From the start, it was decided that I should act on a consultancy basis, rather than earning a percentage of their savings. This is slightly less usual practice for Expense Reduction Analysts than the gain share arrangement but it allowed me to spend the time I needed in developing WSPA’s travel policy and procurement channel.”

Step-by-step, Derek implemented the systems that WSPA needed. At the heart of this was the concept of traveller tracking. Every piece of communication and every booking could now be tracked so that management could easily see the location of staff in the case of any emergency and also that staff were acting within the requirements of the travel policy. In order to achieve this, all online booking was outlawed and a new payment method, via a virtual credit card, was introduced so that every transaction was visible.

Complete visibility delivers significant savings Derek Hodd explains the significance of this: “If a staff member repeatedly refuses to accept the best deal on flights and insists on travelling on a more expensive airline, this is now immediately apparent to WSPA management.” Once the policy was written, Derek created and distributed a tender document to select a new TMC. The short-listed companies were asked to cost several sample routes, and this exercise showed that savings of 20-30% could be expected from a new travel partner, when compared with the prices offered by the previous TMC.

The benefits of the new policy, systems and TMC are manifold for WSPA. Complete visibility enables tighter management and therefore reduced costs. The new TMC itself offers better prices and the policy protects WSPA from liability and their employees from harm whilst travelling.

The next phase of the project is to automate the entire travel expenses system, to give WSPA an end-to-end picture of any trip – from initial request, through managerial authorisation, budgetary allocation and booking through to the capture and integration of incidental expenses occurred whilst abroad. This will give WSPA a hugely valuable database of travel information.

Derek Hodd summarises, “Travel procurement is not easy to control. It’s not  like selecting a telecoms provider with clear set of unchanging tariffs. The purchase of every flight and every hotel room is a separate operation and, as such, is subject to inefficient handling and uncontrolled spending. WSPA’s openness to change means that they now have a set of watertight policies, which will save them money, time and the risk of liability.”

Henry Bennett, Finance Director at WSPA, comments on the project so far, “We knew that we needed a travel policy, but without Derek it would never have happened. We were very happy to retain him on a consultancy basis, because, right from the outset, his knowledge of the whole area was obviously superb. In addition, his tenacity in making sure that each process was implemented is to be commended. He has transformed this vital part of our expenditure.”

The SITA Airport IT Trends survey, unveiled at the Airports Council International world conference in Kuala Lumpur has found that IT budgets for airports in 2008 were largely unaffected by the global economic downturn and the majority (80%) of the world’s leading airports aim to make passenger self-service the primary channel for check-in

The sixth annual survey had a record 106 responses from airports and airport groups representing 172 airports from around the world including 56 from the Top 100 in terms of revenue and passengers.

More than half (52%) rated the introduction of “electronic documents” as the technology which will have the most significant impact at airports in the near future, according to a new global survey.

This will initially be driven by the adoption of bar-coded boarding passes sent directly to mobile phones – a key enabler for paperless travel.

The world airport IT industry is estimated to be worth $3 billion and 45% of this year’s survey respondents expect an increase in budget in 2010 while only 14% expect a lower budget.

SITA vice president for airports Catherine Mayer said: “Airports are also recognising that passengers bypassing check-in counters may be faced with new bottlenecks and queues at baggage drop-off and security screening areas.

“As a result, airports are turning to various automation tools to track wait times at different checkpoints such as security and immigration.

“Of the respondents who said they will monitor wait times in the future, 60% will use video analytics, 43% will use RFID and 27% plan to use Bluetooth technology.”

The high priorities for airport IT investments are:

*Passenger Processing & Services” (61%);

*Passenger Security (56%); and

*Airport Operations” (51%).

Baggage processing and management also remain among the highest ranked investment areas for the Top 100 airports (51%) but is a lower priority for less congested, smaller airports.

Fifty two per cent of airports rated the use of “electronic documents” as the technology with the most significant impact on IT & telecom systems at an airport.

Half of all airports believe providing solutions on mobile devices for passengers or staff at airports will have the highest impact on their IT infrastructure, with more than 60% of airports already having check-in kiosks which will further increase to 90% by 2012.

New usage areas receiving the highest interest are:

*Common bag-drop locations –                                           12% today to 48% by 2012;

*Automated boarding gates –                                               8 % today to 42% by 2012;

*Self-service kiosk for passenger transfer services – 11% today to 39 % by 2012;

*Self service kiosk to report lost baggage –                    5% today to 36% by 2012.