Follow our step-by-step guide to ensuring that you are doing the right things to get a tighter grip on travel spend. Gillian Upton has the detail

OVER the last five years Ken Moncrieff has had to make some difficult decisions. As Head of Procurement at THUS, one of the UK’s leading telecommunications service providers, he has redefined the travel management programme, switched major suppliers in the process and embraced fundamental change. In doing so, he has taken a far tighter grip on travel spend for the 1,700 THUS employees that travel largely domestically.

Being wise with hindsight he says: “You must never compromise the objectives of the business. Travellers need an hotel near where they need to be for business rather than doing a deal with a hotel that happens to be online.”

The process of change began with a company-wide mission to cut costs, and was put into sharp focus by a call from the CEO to Moncrieff in 2001 stating that the company was spending too much on travel. “That gave me the remit to look at it,” recalls Moncrieff. At that time the annual travel spend was £2million.

Travellers were using a travel policy inherited from former owners Scottish Power, which gave them a relatively flexible choice on flights and hotel accommodation. The good news was that there was a lot to go for in order to rein in spend. Read on to find out how THUS turned it all round and reduced its travel spend.

STEP 1: Get good Management Information. The first step is always the same: spend time compiling base data. It will be the basis of everything you do. “It’s the most important thing,” says Moncrieff. “You have to find out where the money’s going. Understand where that total price is, work out individual elements, identify best practice, then tackle it.”

STEP 2: Use the data to leverage supplier deals. Moncrieff drove volume and consolidated suppliers to leverage better rates. “We didn’t have many ‘deals’ set up so I started to do that. The average room rate came down to £80.02 in 2005, from £93.56 in 2001.” Sadly, it’s nudged up to £118 on average, in London for 2007, and the trend is upwards. Moncrieff reckons for 2008 his average London hotel B&B rate may well be anywhere between £120-£130, despite having on-board lodge-type accommodation and brands such as Holiday Inn Express. On the airfares front, the majority of the spend was going on BA shuttle services between Glasgow and London. In 2006, it started shifting business to easyJet and some 50 per cent of volume went that way.

STEP 3: Consider pre-trip approval. Moncrieff had started to question the need to travel. “There wasn’t a freeze on travel, but we started to ask lots of questions about why people were travelling.” Consumption was above the level expected in a company of this size but by 2005, for example, the total number of bed nights had been reduced by more than half. Appropriately for a telecomms company, the use of teleconferencing has taken up much of the slack.

STEP 4: Create focus or user groups to gain ‘buy-in’. Drilling down into the data revealed who the most regular travellers were. Just three THUS bookers accounted for 50 per cent of spend and became the nucleus of a user group of 60 bookers, across all departments, to help get buy-in. For the same reasons, THUS ran workshops, showing them the direction the graphs were going in.

STEP 5: Update the policy to underpin the new strategy. The existing policy was not mandated but relied on the support of bookers and travellers to control how much they were spending. The updated version was driven entirely by cost, listed preferred suppliers – such as the City Inn and the Novotel in Glasgow – and the booking agencies used were given the authority to question bookings out of policy. THUS chose not to mandate it. “It’s about reasonableness,” says Moncrieff. “Three of our company’s corporate behaviours are ‘boldness, simplicity and speed’ and we wanted to stay within that.”

STEP 6: Don’t underestimate the power of supplier relationships. “We developed a strong commercial bond with the two Glasgow hotels and invested a lot of time building relationships. We managed to negotiate extras such as last room availability in Glasgow, something we haven’t got in London,” says Moncrieff.

STEP 7: Monitor results. Compliance has been good, says Moncrieff. “It’s been one of the key things and we’ve thanked our bookers and staff for that. It’s been everybody pulling together.” Initially, there was some resistance to change “but gradually this has been eroded,” he says. “But if it begins to appear again we can pick it up and check it very easily.”

STEP 8: Are your suppliers fit for purpose? THUS switched to Gray Dawes in 2005, primarily because of the latter’s more sophisticated online capability at that time, which provided better quality management information. “We had already achieved a lot. We had reduced total spend, average cost of flights, so the next thing to do was increase the use of low-cost carriers, as the cost of shuttle flights on British Airways was still too high. We wanted to push for lowest total trip cost and for that we needed a booking tool where we could specify all London airports, for example, and move the decision to a search engine.”

Adoption rates at THUS for the new online booking tool were staggering, perhaps not surprising, considering the tech-savvy nature of THUS employees. “We had a 95 per cent adoption rate within two months of starting in 2006. And in one subsequent month we achieved 100 per cent, which I gather is a miracle,” says Moncrieff.

More recently, it has settled at a steady 88-93 per cent on airline bookings. “Gray Dawes has told us that they have never heard of such a high figure.” Average UK airfare is down to £78 but the target is to get it down further, to £69.

Improved functionality was behind the move to BSI for accommodation. “Our previous accommodation booker didn’t stay up to speed with the online booking market and we left them in March 2007,” says Moncrieff. Adoption rates here haven’t been quite so startling, although they hover at a perfectly acceptable 50 per cent. “We struggle to get above 60-65 per cent because many hotels don’t yet have online capability” explains Moncrieff. “We’ll never reach 100 per cent but it’s our ambition to get to 75 per cent.”

STEP 9: Look at your rail spend. The decision to move to Gray Dawes was also influenced by its offering of an online rail booking tool. “I knew rail was going to get bigger and I needed an online booking tool,” says Moncrieff.

Rail spend in 2005 was £60,000 and this year it has shot up to £180,000. Glasgow-Manchester is its big volume route, as well as Manchester-London. “Our pricing has dramatically improved,” says Moncrieff. It’ll get even better when THUS reduces the cost of ticket distribution with the installation of three ticket printers, in its Glasgow, Manchester and London offices.

“It costs £10 to process and handle a rail ticket and we’ll pay back the capital expenditure on the printers within a year,” says Moncrieff. He was hoping to use the barcode reading system on mobile phones, instead of buying ticket printers, but this launch has been delayed until 2009.

STEP 10: Keep the communication channels open with travellers. THUS holds quarterly meetings to show travellers and bookers historic statistics. “We concentrate on the top ten bookers as they are attuned to the business,” says Moncrieff. “The non-compliant ones are very few in number now.”

STEP 11: Don’t halt the evolution of change. One of Moncrieff’s next missions is to sell more strongly, the idea of advance booking to save even more. “It’s currently at 12 days on air, which is excellent, though slightly shorter on hotels. “One of the secrets to low cost is to book early,” he says.

His other mission is to go green. “It’s very much on the agenda. We’re promoting heavier use of alternatives to travel, such as tele- and video-conferencing and we’ve already made a big switch to rail.“ He continues, “Gray Dawes can give us retrospective carbon emission reports and we’ve already reduced our carbon emissions by flying to Stansted and picking up the Stansted Express, instead of flying into Heathrow, and by using easyJet with its younger fleet, rather than British Airways.

Car parking costs at airports and taxis have also come under the THUS spotlight and Moncrieff has started the ball rolling by stopping all expense accounts for taxis. A taxi request now needs sign-off. “We’re making it a little bit more difficult,” he says.

One surprising benefit of all the belt-tightening at THUS has been the reduction in the company’s corporate insurance premium, as it demonstrated that THUS had good knowledge of its travellers whereabouts in case of emergencies.

“Within minutes of the London bombings we knew who had gone to London that day and we sent texts to them to check they were OK. We demonstrated that we had a strong, capable system,” says Moncrieff.

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