The Factors Driving The Need For Travel Procurement

In the dynamic landscape of today's business world, mid-market asset managers and boutique investment banks are discovering that one of the most expeditious avenues to curtail expenditure and unlock substantial savings lies in reimagining their approach to travel spending. As our economies become increasingly interconnected on a global scale, the role of travel in driving a firm's success has never been more pronounced. However, realizing these savings in the realm of travel proves to be a more formidable challenge, especially for firms needing more purchasing power wielded by larger, more influential counterparts.

The escalating costs associated with travel exacerbate this challenge, making it a pressing concern for businesses of all sizes. This is where procurement-as-a-service companies, such as Concertiv, come to the forefront, offering an enticing solution. To comprehensively appreciate why this need has become more compelling than ever, it is essential to delve into the underlying factors that propel it forward, spanning the macro-environment, vendor considerations, and the unique dynamics within firms.

Macro Environment

Global airfares rose 72.2% and hotel rates 29.8% in 2023, surpassing an originally forecasted 48.5% and 18.5%, respectively. Rates are forecasted to climb even further in 2024 while travel budgets are significantly tighter than in 2019. This substantial increase can be attributed to various macro-environmental factors that profoundly influence the travel market. Among the most prominent factors are:

‍Rising Demand and a New Norm: The post-COVID era has witnessed a substantial increase in business travel demand, setting a new standard in the sector. This heightened demand is occurring concurrently with rising interest rates and labor shortages. 

• Fuel Prices: Often associated but not necessarily due to economic conditions, rising fuel prices impact air and ground travel costs.
• Regulatory Changes: Alterations in visa regulations, customs procedures, and security measures can potentially impact global companies' processes and cost structures significantly. Consequently, the need arises to allocate additional, often unaccounted-for resources to adapt to evolving regulatory landscapes.
• Exchange Rate Fluctuations: Companies engaging in international travel are susceptible to fluctuations in currency exchange rates, directly affecting the cost of accommodations. These rate changes can have both positive and negative implications on travel expenses.

Vendor Environment

In the realm of corporate travel management, companies grapple with various vendor-related factors that can significantly impact their cost-saving initiatives. These vendor factors include:

• Meeting Exorbitant Spend and Guarantees: Travel loyalty programs often necessitate commitments to specific levels of spending or room bookings with hotels and airlines. Meeting these guarantees can be challenging, rendering it impossible to achieve the promised cost savings.
• Lack of Purchasing Power: Negotiating lower costs on travel agreements becomes a formidable challenge, especially when companies lack the leverage of substantial purchasing power. Limited bargaining capacity can hinder cost-reduction efforts.
• Decline of Quality: Pursuing better pricing sometimes compromises the quality of accommodations, as lower-cost options may not offer the same level of comfort or amenities.

Unexpected Loyalty Program Changes: Even loyal travelers can face unexpected challenges in attaining status within hotel and airline loyalty programs. Companies frequently introduce new hurdles, reducing discounts and incentives for travelers.

‍Firm Environment

Decentralized Travel Management: Absence of a centralized contract management policy leads to a fragmented procurement landscape where employees may resort to various avenues, including travel agencies, airline websites, or aggregators like Expedia or Travelocity. This purchasing fragmentation hinders the attainment of optimal pricing.

Fragmented Travel & Expense (T&E) Policies: In the wake of the pandemic, many companies have yet to restructure their Travel & Expense policies to enhance visibility and achieve cost savings. The absence of well-defined policy guidelines, encompassing budgets for hotels, airfare, meals, and client expenses, can lead to a loss of control over expenditures within the firm.

‍Limited Peer Benchmarking in T&E Policies: Most companies lack the ability to effectively benchmark their Travel & Expense (T&E) policies against peers, which can hinder their capacity to attract and retain talent while ensuring employee satisfaction and appreciation.

‍Volume Challenges: Small to mid-market firms may encounter difficulties due to their limited size, which reduces their negotiating leverage and purchasing power. Outsourcing procurement can help address this issue by pooling resources with other companies for increased bargaining power.

Unlocking Efficiency and Savings with Concertiv's Procurement-as-a-Service

Procurement-as-a-service delivers a distinctive advantage by effectively addressing challenges that contribute to escalating travel expenses. At Concertiv, our mission is to ensure a seamless travel booking experience while providing comprehensive solutions and enhanced purchasing power to tackle your T&E needs head-on.

Our travel solution encompass expertise in navigating the intricacies of the travel industry, spanning air travel, accommodations, and ground transportation. We possess in-depth knowledge of Travel Management Companies (TMCs) and T&E policy best practices. This knowledge enables us to consistently deliver year-over-year savings with minimal disruption to the travel experience, all while optimizing administrative efficiency.

Macro Environment: Concertiv's unparalleled focus within the financial and professional services sectors positions them as seasoned experts in the travel market. Our foresight enables us to anticipate potential price fluctuations and proactively find strategies to mitigate these challenges before they impact their clients.

Vendor Environment: With a robust client list and nine-figure global purchasing power, Concertiv wields unmatched purchasing power on behalf of its clients. This allows us to secure maximum savings without compromising the quality of accommodations and services.

Firm Environment: Concertiv is committed to establishing internal standards and policies that enable firms to harness the full spectrum of available discounts without compromising the traveler experience or altering traveler behavior. These standards provide valuable insights into travel patterns and pave the way for year-over-year savings and enhanced operational efficiency. Moreover, Concertiv's dedication to streamlining policy management alleviates the administrative burden traditionally distributed across multiple stakeholders within the organization.

In a landscape where travel costs are a persistent concern, Concertiv is a trusted partner, offering comprehensive solutions to enhance efficiency and drive substantial savings for firms of all sizes.

‍How Concertiv Builds YoY Savings 

Concertiv, a leading procurement-as-a-service company, offers a strategic approach to building year-over-year savings on travel expenses. Here, we delve into the three key steps Concertiv employs to transform how businesses manage and minimize their travel costs.

‍Step 1: Group Purchasing Power Utilization

Concertiv capitalizes on its group purchasing power by integrating its negotiated rates directly into a client's TMC. This strategy ensures clients achieve savings of over 20% on hotels, airfare, ground transportation, and events.

‍Step 2: Behavioral Insights for Cost Avoidance

By analyzing each client's specific travel patterns, Concertiv develops tailored cost-avoidance strategies. Combined with optimizing existing policies and processes, these strategies lead to further savings and a more streamlined travel management process.

‍Step 3: Custom Contract Negotiations

With a deeper understanding of a client's travel habits, Concertiv negotiates personalized contracts with airlines, hotels, and transportation providers. These custom agreements are designed to maximize savings and efficiency, aligning closely with each client's unique travel preferences and requirements.

‍Beyond Savings: Concertiv is The Procurement Answer

Concertiv's true prowess lies in its immediate cost-saving capabilities and devising long-term strategies that consistently boost savings year after year. By centralizing, negotiating, managing, and optimizing procurement processes, Concertiv empowers companies to realize immediate cost savings and to chart a course toward sustained financial efficiency and growth. As the business world continues to evolve, Concertiv's commitment to delivering results remains unwavering, making it an indispensable partner for organizations navigating the complexities of modern procurement.

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