Insight
Nail cost containment in travel and save
According to figures from the Australian Bureau of Statistics, the price of overall building materials increased by 12% in 2021 representing the strongest annual increase since 1981. With the building and construction industry under increasing pressure from supply chain fragility and the rising cost of materials, cost containment has never been so important.
Throw into the mix, rising airfares and hotel accommodation rates, and travel programs are now being heavily scrutinised – line item by line item. Companies impacted by rising supply chain, operational and travel costs are looking at every opportunity to save.
With business travel sitting in the top three spend buckets for construction firms, it’s fair to say this expense needs to be managed strategically.
But rather than stopping travel to reduce costs, category and procurement managers are focused on cost avoidance and cost containment strategies. While some are taking a more conservative approach to the travel category others are implementing measures throughout the sourcing and buying cycle to mitigate price hikes.
Cost containment for construction companies
The focus on smarter travel sourcing has put accommodation in the spotlight, according to Felicity Burke, APAC General Manager for FCM Consulting.
“For companies with large or global hotel programs in the construction sector we have taken a few different approaches to deal with the current market challenges,” Felicity said.
According to FCM Consulting cost avoidance strategies for hotel programs include -:
- Changing up hotel options in high demand locations to reduce accommodation costs
- Using a ‘continual sourcing’ approach to ensure rates for companies in industries such as construction and building where projects and teams are regularly on the move, remain competitive
- Reviewing rates in cities when new hotel properties come online or where supply is steadily increasing
- Consideration of the total cost of trip and reviewing value-adds through rate inclusions such as breakfast, parking, food and beverage discounts, early check-in or late check-out
- Working with hotel chains to come up with flexible hotel pricing strategies and extending traveller coverage, and using options such as Accor’s new global chain discounts for corporate clients.
Felicity added that cost avoidance strategies could be factored into the entire travel buying cycle not just accommodation.
“Despite the added pressure the travel industry and travel budgets are facing right now, businesses still need to travel, and for many category or program managers it’s about recreating or redesigning programs to suit new conditions,” Felicity said.
If containing costs is a focus for your business now, contact the team at FCM to see where the savings opportunities for your program are.
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