How SMBs Could Save $39,000 in Business Trips
The truth behind GDSs’ travel management solutions
One of the main tasks of professional travel managers is choosing the best technology solution for the company’s travel management and expenses control. The main trend within large organizations is adopting sophisticated softwares, provided by GDSs systems such as Sabre and Amadeus, to standardize the operations and regulate the travelers’ performance. These softwares are tailored for structured organizations, willing to spend thousands of dollars of monthly licences and transactional fees, in order to control over the travel expenses and guarantee the implementation of the company’s travel policies. One of the main pains of these organizations is the content available on the GDS systems:
- No low-budget hotels available: a global distribution system can be a quite high investment for an independent property, or a small two or three stars hotel, and usually only big chains and hotel brands are able to pay for this distribution channel, limiting a lot the booking options of business travelers.
- High rates: GDSs’ hotel rates are usually the “rack rates” or “public rates”, commonly known as the maximum a property charges for a room, without any discount or promotion. One of the most frustrating experience for a business traveler is realizing that the same hotel she booked via GDS (using the preferred company travel management system), is available 30% cheaper on Internet. The reason why the hotels are not interested in going into a GDS system with a lower and more competitive rate is simple: high GDS pass-through fees make nearly unaffordable for an hotel to offer discounted rates to GDS clients.
SMBs’ lack of dedicated travel solutions
On the other hand, even most SMBs face similar technology challenges as large enterprises, most of them lack of dedicated softwares to better manage their business trips. This means that both the travel management and the procurement practices are basically manual, with a significant investment in time and money for the whole organization. Considering the case of small and medium enterprises in USA, only 8% of them are using a travel cloud-based software, the other 92% are using manually systems of booking and expense reporting, such as traditional or web-based travel agencies, spreadsheets and paper notes.
Why should SMBs switch to a cloud based technology?
In USA, travel expenses represents 8% of the overall operating expenses for SMBs. Every employee on the average invests 13 days per year in expense reporting tasks. 13 days means nearly 104 hours of productivity lost. If your company has 10 sales managers traveling all the time, it’s more than 1,000 hours in a year. Suppose that each manager earns an annual average salary of $75,000, it means 39 USD per hour, so a lost in productivity at the end of the year of 39,000 USD for the whole organization.
These numbers are really useful to estimate the effective ROI that your organization could benefit from switching to a travel technology solution. The key point here is changing completely the model of the existent SaaS, providing for small businesses with an affordable technology which could bring order and efficiency to their travel operations, with no need of investing on monthly or set-up fees.
I am co-founder at LastRoom, a travel startup based in Mexico City. LastRoom helps companies and business travelers cut their travel expenses with the first cloud-based software tailored to SMBs, combining the best hotel content available on the Internet with high levels of corporate control, such as invoices’ reconciliation, reports and analytics tools.
