In the wake of the recent federal budget, universities are more than likely going to become more commercially focused in the way they operate. In the procurement space, the travel category is one of the few areas where organisations can increase savings by being more strategic. In this paper Campus Travel reviews what strategies are going to deliver universities the highest returns.
Cutting cost without reducing the volume of your academic travel
The 2017 Federal budget will challenge universities to perform as well or even better despite government funding cuts to the tune of $2.8 billion. The changes include ‘efficiency dividend’ cuts of 2.5 per cent in both 2018 and 2019, as well as changes to the government’s performance funding plan, in which all universities will need to compete for 7.5% of higher education commonwealth grants to be withheld in a pool of funds.
Monash University’s President and Vice-Chancellor Professor, Margaret Gardner AO, says the changes effectively mean each university must factor in the possibility of a 10% cut to their funding in 2018 and beyond. Universities Australia Chief Executive, Belinda Robinson, adds there is a risk “students will pay more to get less, as cuts force universities to reassess the programs and services they can offer.”
The decline in funding makes it even more important for tertiary academic organisations to take a more commercial approach to major areas of spend such as travel. Consolidating travel programs and being more strategic with policy, processes and technology can boost hard dollar savings, which can then be funnelled into other operational priorities. Through our vast experience in managing travel for universities and other tertiary education providers across Australia, Campus Travel has identified the key ways in which your organisation can cut costs without reducing the volume of your academic travel.
Control cost with a travel policy
Organisations that are committed to operating efficiently need to commit to a travel policy. Your Campus Travel team can help you create a policy that suits the specific nature of your organisation’s travel and the needs of your academic travellers. They will focus on locking in more cost effective contracts with your preferred suppliers and setting a mandate around critical elements such as the use of preferred suppliers, booking channels, faster approval processes, hotel rate caps and reimbursement processes.
The cost benefits? A strategically focused policy will reduce the amount of money your organisation spends with non-preferred travel suppliers (i.e. ‘leakage’). It is the most important tool to implement to improve cost effectiveness and better duty of care processes across all your travel bookings.
Leverage your supplier contracts
Only with a travel policy and preferred supplier agreements do you have the leverage to negotiate with those suppliers for the best cost outcomes. A mandated travel policy allows universities to realise their true travel volume and more accurately monitor ‘loyalty’ to each supplier. Universities can use this information – together with your anticipated volumes for the year ahead – to negotiate rates and fares with hotel, air and transfer suppliers more effectively.
The cost benefits? Volume-based negotiations with preferred suppliers will consistently reward your organisation with lower rates and fares than you would achieve through ad hoc travel bookings with a wider range of non-preferred suppliers. While ‘last-minute’ rates booked through online travel agencies may seem cheaper, the devil is in the detail as those rates often provide no flexibility or refund for changes and cancellations, no traveller benefits, and no further customer service in the event of an emergency.
Prioritise suppliers who offer value adds
With the education sector now looking for value more than ever before, many of the leading airlines, hotels and car hire suppliers are responding with additional inclusions and traveller benefits in their rates and fares. Campus Travel recommends that you consider the benefits offered by different suppliers when developing your travel policy and contracts, as they can provide substantially greater value to your travellers and organisation.
The cost benefits? Through value-driven partnerships with the right suppliers for your needs, your travellers can potentially enjoy a range of exclusive deals, offers, benefits and perks – from complimentary room upgrades and hotel breakfasts, to bonus status points with airlines, and special waivers and favours on items such as excess baggage – at no extra cost.
Use benchmarking and reporting
Working with Campus Travel gives you access to benchmarking and reporting tools that provide a full view of your travel activity and spend, and can help inform your decision-making and supplier negotiations. We undertake quarterly benchmarking of your rates and fares against those of other similar organisations to help ensure your prices are competitive.
The cost benefits? The more consolidated your travel data is, the better placed you will be to make any necessary improvements or adjustments to your travel policy, suppliers, and rate negotiations with those suppliers – all of which work together to lower the overall cost of your travel.
Embrace travel technologies
Travel technologies make approvals, bookings, payment, reconciliation and reporting much simpler and faster. The right technology will significantly improve productivity, and the booking and reconciliation time can be reduced by as much as 85%.
The cost benefits? There are many hard and soft dollar savings that can be gained from technology automation. As well as providing direct booking access to your university’s negotiated rates and reducing transaction fees, the latest online tools help to prevent costly out-of-policy bookings, and save substantial time and cost in making bookings and managing all other aspects of travel.
Work with ONE travel manager
Academic organisations that haven’t yet taken the step to partner with a single Travel Management Company (TMC) rather than various agencies via a travel panel are missing out on the benefits of a more strategic and holistic approach to travel management which is now heavily evident in the corporate sector.
The cost benefits? Depending on the size of your organisation, volume of travel and how the different schools and faculties work together, universities have the opportunity to significantly reduce travel program spend through consolidation. The added benefits of having more visibility of travel program expenditure plus more buying power to negotiate volume based deals with suppliers can save universities hundreds of thousands if not millions of dollars.
For further information on the future of university travel please speak to an academic specialist today 1300 882 021