Given that the growth of business travel shows no signs of slowing down, it’s time to start looking at what 2020 will bring the travel expense industry as a whole.
As a company leader, I know that travel is crucial to my company’s growth – in fact, 60% of finance professionals agree – but the internal and external challenges that naturally come with this essential but costly business function can be hard to manage.
So here are three areas I predict senior business leaders will not only focus on – but drive action around – in the need to better manage spend across their organisations:
A move from transaction to subscription-based pricing
Fluctuating travel costs are an annual challenge, but they will become especially significant in 2020. Transaction-based pricing will, therefore, come under increased pressure as a result of unpredictable airline and accommodation expenses causing unease amongst finance teams. We can expect to see an industry shift to subscription-based pricing with organisations adopting this model to benefit from greater control of their employees’ spend through real-time visibility of changing travel costs.
Travel management companies (TMCs) will feel the effects of this as a result, with the value they bring to an organisation questioned. When considering actual spend, TMCs are only involved at the transaction phase. They’re not involved in spend decisions before the transaction, or reconciliation of that spend after the transaction and so how can company leaders understand whether the relationship is financially beneficial? Netflix knows more about your employees than your travel management company – this can’t continue – and so employers will only engage system vendors offering subscription pricing in order to drive predictable growth and retain employees.
Economic uncertainty will drive the need for better spend management
New factors arising from the changes to the global political climate have already been reported as impacting sales representatives’ ability to travel and close business. Companies will be forced to open new locations and adapt their policies and procedures in order to remain compliant and maintain profitability. As a result, finance teams will need to be laser-focused on employee travel spend. Kneejerk reactions will see some companies impose blanket travel bans but this will only further hamper growth. Those that use intelligent expense management tools to control and prioritise spend, will get ahead of the game and be able to justify business travel as a revenue driver, not drain.
Sustainability is a moral imperative that no organisation too small can ignore
As climate change continues to be a major global risk and discussion point, the business travel industry will double down hard on environmentally conscious travel. Businesses will always need to stay on the move – you can’t replace the value of face-to-face meetings – and so companies will demonstrate action on how to better their approach to managing employee travel. Using corporate travel technology that measures carbon footprint, offers eco-friendly hotels and electric car hire will become widely adopted.
What’s set to define business travel at your organisation in 2020?