Corporate travel procurement: Best practices for cost-effective business travel

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Travel procurement is more than just booking the cheapest flights. When approached strategically, it can significantly enhance organisational operations, save money, keep employees happy, and improve your overall programme. Whether you're new to business travel procurement or looking to refine your approach, we've compiled the essential insights you need to secure the best conditions at the best rates, along with the support and tools you need. 

Understanding procurement in business travel

Procurement in business travel refers to the strategies that manage all activities related to corporate travel, to ensure efficiency and cost effectiveness. It's typically procurement specialists or a travel manager who take charge, working with a travel management company (TMC) and other partners to ensure the process is seamless and aligned with the company’s goals.

Types of procurement in business travel

 

Travel managers usually employ different types of procurements to support their overall business operations. Procurement can typically be split into the following 4 main categories. 

Indirect ProcurementServices ProcurementDirect ProcurementGoods Procurement

Acquiring services that support a company’s operations, but do not directly contribute to its core product. In the context of business travel: flights, accommodation, car rentals, and train journeys. 

Engaging and managing service providers, contractors, or vendors that support various business functions. For instance, hiring a business travel agency to handle your organisation’s travel needs. 

Acquiring of raw materials and products necessary for a company’s end product or service. Does not typically apply to business travel.

Acquisition of tangible items and software subscriptions. This might include subscribing to an online booking tool, however goods procurement is not usually associated with business travel. 

How does corporate travel procurement differ from other procurement verticals?

 

Corporate travel procurement is unique in that it requires a strategic approach to manage various components effectively. The first stop is to source or consolidate how you are booking travel in the business, and which travel management company (TMC), or companies, to use. By selecting the best TMC, you can negotiate better rates, save money, enhance operational efficiency, improve compliance and risk management, and provide a better travel experience for employees.

Here are some key aspects that differentiate travel procurement from other procurement verticals:

Supplier Sourcing 

The foundation of effective business travel procurement lies in sourcing the right travel management companies (TMCs), airlines, hotels, ground transportation services, and other travel service providers. This involves thorough market research to evaluate suppliers based on their ability to meet your company’s needs, budget, and service quality. Key factors to consider include the supplier's reputation, reliability, technological capabilities, and global reach, especially for organisations with international travel needs.

Negotiating Contracts 

Negotiating contracts with airlines and hotels involves leveraging data on travel patterns to secure favourable rates, consolidating spend with preferred suppliers for better terms, and focusing on value-added services beyond just price. With your TMC, setting clear service level agreements (SLAs) ensures quality, while negotiating flexibility accommodates market fluctuations. Regularly reviewing and renegotiating contracts, along with building strong relationships with suppliers, assures you always have access to the best deals.

Ensuring Compliance 

Adherence to company travel policies and regulatory requirements is crucial for controlling costs, maximising supplier leverage, and managing risks. Ensuring employees book through approved channels and contracted suppliers supports savings and traveller safety standards. Utilising a TMC and its tools that integrate policy guidelines and real-time tracking helps monitor compliance effectively, reducing risks and ensuring an efficient travel programme.

Maintaining Relationships 

Strong, long-term supplier relationships are vital for successful travel procurement. They foster trust, enable quick issue resolution, secure better negotiated rates, and ensure preferential treatment during disruptions. Regular check-ins and open communication enhance these relationships, uncovering opportunities for savings and service improvements, making procurement more effective and resilient.

Business travel procurement process

 

The business travel procurement process can be broken down into six key stages:

  1. RFP and needs assessment: Identify specific travel needs such as destinations, preferred suppliers, and budget constraints. Read our guide to rewriting the RFP here.
  2. Market analysis: Compare potential travel suppliers based on cost, reputation, quality and breadth of service, and the technology they use. This stage helps ensure the selection of the most suitable travel management company.
  3. Negotiation and purchasing: Once a supplier is chosen, negotiate the terms of the contract, including price, duration, and service conditions, to ensure the best possible deals.
  4. Integration: Seamlessly integrate the chosen supplier into the company’s workflow, ensuring that all internal processes align with the new travel arrangements.
  5. Payment: Manage payments efficiently through an invoice-processing system that tracks orders, invoices, and payments, ensuring transparency and accountability.
  6. Performance review: Regularly review the performance of suppliers to evaluate the quality of services provided and identify areas for improvement.

Developing an effective business travel procurement strategy

 

Developing an effective business travel procurement strategy hinges on the right partnerships and technology. Whichever travel agency and accompanying specialised tools you opt for, your choices significantly impact the efficiency and cost-effectiveness of your travel management. Explore the options below to ensure your current solutions are the best fit for your company’s needs.

Choosing the right business travel services and tools

 

Travel management companies are vital for centralising and automating travel arrangements. Here’s what to consider when selecting a travel management company:

  • Quality, consistent service and support including accurate and relevant travel information, security alerts, and health and safety guidelines.
  • Expertise, network and their supplier contacts that can secure favourable terms and discounts.
  • Booking tool/s that work seamlessly with consultant support, as well as wrap-around technology that enhances the travel programme, such as approvals flows and analytics features.
  • Integration with existing systems such as risk management, expense management or HR.
  • Travel policy optimisation so there's minimal surprise travel expenses for business trips.

Discover the top 20 questions you can use to unlock your perfect partnership. 

 

Challenges in travel procurement

Compliance and risk management

Strict adherence to company policies and supplier agreements is crucial for optimising cost savings and enhancing negotiation leverage in corporate travel procurement. Utilising partners and tools that align with contracts and ensure policy compliance helps streamline bookings, increase visibility, and consolidate expenses. Holding suppliers accountable to service levels and performance metrics, while regularly monitoring compliance, strengthens supplier relationships and secures favourable terms in future negotiations.

Navigating dynamic travel market conditions

Travel pricing is complex and influenced by fluctuating market conditions. To effectively manage these changes, procurement professionals should leverage technology and data analytics to monitor spending, assess program success, and make informed decisions. Real-time information and swift communication with stakeholders are essential for staying agile and responsive.

Balancing cost and traveller comfort

While cost management is key, focusing solely on cost can impact employee satisfaction and business outcomes. A holistic travel procurement strategy should prioritise traveller productivity, health, well-being, and sustainability. Satisfied travellers are more productive, engaged, and willing to travel, contributing to the overall success of the travel programme.

The future of business travel procurement

As technological advancements continue to evolve, their impact on travel procurement is undeniable. The integration of AI and machine learning in travel management tools is set to revolutionise how companies manage bookings, optimise costs, and ensure compliance. These technologies can already offer predictive analytics, personalised recommendations, and enhanced data security measures, making procurement more efficient and responsive to changing needs. 

Additionally, sustainability and corporate responsibility are becoming central to corporate travel procurement strategies. Companies are increasingly prioritising eco-friendly practices, such as selecting suppliers with strong environmental credentials and implementing carbon offset programmes. This shift not only aligns with corporate values but also meets the growing demand for greener business practices.

FCM as part of your team 

At FCM, we're more than just a service provider. Our expertise lies in our deep and functional understanding of the travel industry and our ability to suggest changes that are based on your unique programme objectives. Say hello to better compliance, better contract performance, and better travel experiences. 

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