Case Study

Workforce Travel Cost-Savings

Jan 13, 2020

Learn how one energy services company increased their efficiency, saving time and money

The business travel industry is a big market.

January 11, 2020 - The value of global travel reached $5.29 trillion in 2017*, with the global business travel segment expected to reach $1.6 trillion by 2020**, making it one of the largest and fastest‐growing segments in the world.

Most leisure travel customers are served by online aggregating websites that provide them convenient access to the full gamut of vacation travel necessities; flights, hotels, rental cars, experiences, etc. Business travellers on the other hand, often work through travel management companies (TMCs) that provide a more manual service that involves coordinating with a customer service agent over the phone to arrange their travel and hotels.

These white-collar workers typically travel to major urban areas for meetings or conferences and have relatively simple travel itineraries, providing TMCs with a broad customer base. However, there is a sub-segment within the business travel industry that is being underserved by most TMCs due to the complexity of their travel, billing, and administrative requirements. This sub-segment is known as Energy, Resource, Marine (ERM), or simply put – work crews.

Work crew travel is a significant market and according to the Global Business Travel Association (GBTA), they make up roughly 20% of the $1.6 trillion global business travel market. That equates to $320 billion annually***. They are defined by their size (typically groups of 5 to 50), duration of stay, travel destinations, and type of work. They often work in secondary or tertiary markets, work on projects where commuting to and from home isn’t feasible, and maintain unconventional schedules. This segment of front-line workers in the energy, construction, infrastructure, and transportation industries are usually tradespeople, truck drivers, field engineers, surveyors - your non-briefcase travellers.

The Problems & Difficulties

The difficulty of crew travel is the many components that are involved, combining commercial bookings with lodges and dorm management, remote non‐commercial travel, and other highly variable factors.

In most companies, this workflow is disjointed: one person might be responsible for managing corporate business travel and hotel bookings, while workforce crew travel is managed by someone else, or by the crew members themselves. Often, this entire process may be managed manually, coordinating with several service providers over phone and e‐mail, or several different software systems may be involved.

This sector is distinct from corporate travellers in many ways, but one significant difference relates to how their costs are managed and analyzed. Usually, these crews are working together on a specific capital project that requires detailed analysis of schedule, budget, and cost tracking, whereas the average corporate traveller is coding their expenses to a general travel cost center. This means that data is vital to gain better visibility into their total travel spend so that companies can more effectively manage their project budget and timelines and have more informed and productive discussions with their suppliers and partners.

Fitting Square Pegs into Round Holes

With most systems and service providers of business travel geared toward the corporate traveller, many companies are trying to fit square pegs into round holes when it comes to their crew travel. They use booking websites targeted for leisure travel or call properties directly and complete multiple individual bookings. Separate invoices stack up quickly along with changes to over 40% of reservations and their internal teams are left sifting through the numbers to process the payments and allocate the costs to proper projects and budgets.

With companies looking for operational efficiencies and running as lean as ever, this model is not sustainable. One such energy services company began considering their options, crunching numbers to find the solution that would best suit their crew travel needs.

Gathering the Data

ABC Energy Services is based in Calgary. They have over 200 employees and work on multiple projects year-round. Their crews travel across North America and often require accommodations for multiple people at a time. The existing process for ABC Energy Services to manage workforce travel was to leave it in the hands of the crews themselves. Each crew member was responsible for finding appropriate accommodation and reserving their own stay using a corporate issued credit card. With a high degree of variability in the crew members shift changes, this often resulted in over 100 unique reservations being made each month to accommodate the crew's schedules. This became a headache, as most booking systems cannot accommodate multiple shift changes within one reservation. Not to mention the administrative work involved in applying, issuing, and managing corporate credit cards for hundreds of staff. The accounts payable team at ABC Energy Services had to sort through multiple credit card statements each month and then code them appropriately, ensuring they were allocated to the appropriate departments and budgets.

Creative Solution

Controlling the crews spending on accommodations became increasingly difficult, and as administrative time and cost spent reconciling corporate credit cards quickly piled up, ABC Energy Services decided to pivot away from this method. They began issuing purchase orders for each stay in order to reduce the administrative burden on crew members and eliminate the hassle of corporate credit cards. This ensured increased compliance with travel policies and gave the company the ability to certify that the proper budgets and projects were accounted for. Central dispatchers began booking group accommodations on behalf of multiple crew members and would issue an individual purchase order for each stay. Once the stays were completed, the invoices needed to be reviewed by the accounts payable team who then coded them to the appropriate cost tracking center. Eventually, this process also became costly, as ABC Energy Services calculated that the administrative cost of issuing an individual purchase order and having to collect and reconcile invoices for each reservation was roughly $150.

The Decision

Both options were highly inefficient, requiring a great deal of administrative effort and internal processing. John Smith, the supply chain manager for ABC Energy Services realized there was likely room for improvement in their current process. He wanted to consolidate their workforce travel expenses and create efficiency in their work. He knew that by looking at the bigger picture, taking into account both the direct costs of a hotel room night and the indirect cost to other departments, he could find ways to streamline and save time and money.

In order to decide which option would be best going forward, John began to review historical data to understand their situation. However, this in and of itself can often be a challenge when trying to untangle the various invoices, projects codes, purchase orders, and folios. After significant manual work to retrieve and clean whatever data he could pull from various systems, John determined that they have about 200 travellers, representing 5000 room nights annually that they needed to account for. Using this information and making general assumptions across the board, he began to compare their expenses.

Exploring the Options

TMC’s provide concierge-type service and allow for easy compliance with corporate travel policies. These organizations generally cater to both business/briefcase travelers and leisure travelers. Downsides include a lack of access to remote camps, and alternative accommodation arrangements (I.e. apartment-style rentals), and the fact that TMC’s are generally call center type operations, creating a highly manual engagement process for the customer.

This option provides a lot of flexibility for individual guests. Open to everyone, crews would be required to make their own reservations. Downsides include having to create and reconcile numerous expense reports, difficulty controlling costs, and lack of consolidated buying power leading to higher rates.

This provides more control and compliance with corporate travel policies and gives companies the ability to negotiate preferred rates with suppliers. Downsides include; having to maintain relationships with each property, timely booking process, and a lack of consolidated billing.

Customer Platform

LodgeLink provides the only self-serve platform dedicated to crew travellers that aggregates pre-negotiated rates at hundreds of lodges, camps and hotels on one online marketplace. Cost tracking code functionality makes it easy to control and track accommodation spend by AFE, PO, or project and the reporting platform gives increased visibility to track crew accommodation spend, reduces administrative hours compiling data, and helps manage, analyze and inform future workforce travel strategy. All of this comes with zero membership or customer service fees.

	LODGELINK	TRAVEL MANAGEMENT COMPANY	EMPLOYEE SELF BOOKING	DIRECT HOTEL GROUP BOOKING
Self-serve online	✓	✓	✓
Customer service and support	✓	✓	✓	✓
Access to hotels	✓	✓	✓	✓
Access to lodges	✓
Accommodations across North America	✓	✓	✓	✓
Crew list	✓
Custom scheduling	✓
Flexible cost tracking codes	✓
Interactive on-demand reporting	✓	✓

Doing the Math

Here are the estimated expenses based on the following considerations

Room Nights: 5000
Travellers: 200
Average number of rooms per transaction: 3
Administrative Assumptions
- Cost to issue invoice: $15
- Cost to issue purchase order: $150
- Cost to create an expense report: $60
- Time to expense, reconcile, process invoices: 120 minutes

Note: The cost to issue purchase orders varies anywhere from $50 – 200, depending on the labour rate and time it takes internally to process. This example uses a cost of $150, which is the rate given by ABC Energy Services

	LODGELINK	TRAVEL MANAGEMENT COMPANY	EMPLOYEE SELF BOOKING	DIRECT HOTEL GROUP BOOKING
Commissionable Rate	$100.00	$100.00	N/A	$100.00
Commission	12%	15%	N/A	N/A
Booking Fees	N/A	Per transaction - Online: $8 Call in $27	N/A	N/A
Invoicing	Bi-weekly, Monthly	Monthly (2 separate - 1 from BTA, other from TMC	Monthly	Per transaction
Booking Method	Online, mobile, phone	Internal designate through online platform and call centers	Direct	Direct
Hours of Operation	8am - 10pm M-F 8am - 9pm S-S	24/7	24/7	24/7
Number of Properties	1000+	Unlimited	Unlimited	Property set up on an as needed basis
Overall Room Spend	$560,000.00	$575,000.00	$500,000.00	$500,000.00
Number of Reservations (avg 3 rooms per booking)	1667	1667	1667	1667
Number of Invoices	24	1667	1667	1667
Cost to Reconcile and Process Invoices $15	$360.00	$25,000.00	$25,000.00	$25,000.00
PO cost of $150 per reservation				$25,000.00
Corporate Credit Card Reconciliation			$119,000.00
Commission	$60,000.00	$91,509.00
Total Cost of Transactions	$620,360.00	$691,509.00	$644,000.00	$775,000.00

Digging Into The Numbers

Based on the table, when it comes to strictly overall room spend, booking direct (whether as a group with individual properties or giving team members the ability to make reservations themselves), can be the cheapest option. However, part of the function of supply chain management is to look at solutions holistically, on behalf of the entire organization and understand which option best aligns with their business strategy. Once John factored in the administrative work associated with accommodation spend and began to look at the effect on other parts of the organization, the costs were compounded.

Less Workload for Accounts Payables

In the first crew accommodations management strategy that ABC Energy Services deployed, every crew member managed their own reservation using a corporate credit card, then accounts payable would reconcile credit card statements and code each cost appropriately. While an individual might get a decent price by going direct to the hotel, the work on the accounts payable team increases significantly. Additionally, this strategy doesn’t take advantage of the scale and buying power of the entire crew.

Time and Effort

Both of these approaches create a lot of manual work and unnecessary overtime dedicated to a task that is not core to the customer's operations. With their accounts payable team already spread thin across multiple branches, the administrative time and cost associated with these strategies became unbearable. As outlined in the table above, administrative time spent reconciling and coding costs from corporate credit card statements, or issuing purchase orders can become very expensive, very quickly.

Realizing that if their team could reduce the number of hours spent on the billing and administrative process related to crew accommodations, ABC Energy Services would benefit from hours of efficiency, saving time and internal labour.

Stay Organized

By using LodgeLink, ABC Energy Services would receive bi-weekly consolidated invoices already coded to the appropriate cost tracking code for all of their crew members' stays, eliminating tens of thousands of dollars in administrative hours spent reconciling credit card statements and issuing purchase orders for each reservation.

ABC Energy Services would also eliminate the need to maintain relationships with each vendor individually while receiving discounted rates by taking advantage of LodgeLink’s marketplace and the buying power of 800+ customers. In addition to these cost savings benefits, the ABC Energy Services would save time on each reservation by taking advantage of a self-service, online booking platform that is centered around crew travel and can accommodate complex shift changes within one reservation.

Along with powerful dashboards that provide near real-time visibility into their crew accommodations spend, LodgeLink enables better accommodations spend management and informed workforce travel strategy.

When it comes to managing the complex world of crew-based travel, there’s more to it than the published room rate.

Crew members on the road need flexible days of stay and accommodations close to their worksites. Accounts payable teams need accurate reporting, so clear invoices and precise charges coded back to the appropriate budgets and projects are important. Those looking at the bigger picture need to see the impact across all teams and departments to streamline their processes.

Choosing a system and partner that is uniquely positioned to serve this niche and account for the complexity of managing this segment is paramount to operating as efficiently as possible in this day and age.

Since partnering with LodgeLink, ABC Energy Services has seen significant shifts in their team's efficiency and their bottom line. Crews and dispatchers can easily find accommodations in both remote and urban centres at properties that accommodate their alternative schedules. Accounts payable receives one consolidated invoice, streamlining their payment process. ABC Energy Services complies with health and safety requirements, ensuring their workforce is as close to their site as possible, and reduces risk and cost by minimizing manual work.

The previous spend for their crew-based accommodations totaled in at $775,000 in one year. By utilizing LodgeLink, they’ve reduced their spend to $620,360. That represents 20% in cost savings and countless hours given back in administrative effort. To date, ABC Energy Services has saved $220,000 or 20-30% of their accommodations cost.

LodgeLink's powerful tools help companies, find, book, and manage crew accommodations, serving the diverse needs of workers and the organizations that employ them. No more trying to fit square pegs into round holes.

Workforce Travel Cost-Savings

The business travel industry is a big market.

The Problems & Difficulties

Fitting Square Pegs into Round Holes

Gathering the Data

Creative Solution

The Decision

Exploring the Options

That’s where LodgeLink comes in.

Introducing LodgeLink

Customer Platform

Doing the Math

Digging Into The Numbers

Less Workload for Accounts Payables

Time and Effort

Stay Organized

LodgeLink become their crew travel solution in 2018.

Partnering With the Right Solution

Seeing the Results

Want to Learn More?

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