SME survey results
26 June 2008
One in three do not actively negotiate to secure preferential terms and rates
One in two do not set a specific budget and stick to it
One in three admit that having a robust procurement process isn’t a priority for them
One in ten believe that employee duty of care is not relevant to them
Small and medium size enterprises (SMEs) – those with between 10 and 250 employees - are following outdated and ineffective procurement practices when booking overnight business accommodation, leading them to waste time and money.
These are the findings from a new survey conducted among SMEs nationwide, which points to a distinct lack of purchasing control and worryingly laid back attitudes.
Questionable financial controls
The survey undertaken by Teamsearch, an independent research agency, and commissioned by BSI, Europe’s leading specialist business accommodation provider, uncovered the following evidence of questionable financial control:
One third (33%) do not actively negotiate to secure preferential booking terms and room rates
Nearly one half (48%) do not set a specific budget for accommodation and stick to it
One third (34%) admit that operating a robust procurement process isn’t a priority for them
One in three (29%) do not evaluate the true cost of their overnight accommodation spend by taking account of incidental expenses such as taxis, meals, telephone and Internet services
More than one in ten (12%) believe it is not relevant to track and evaluate all their expenditure
More than a half (53%) book accommodation mainly last minute
Over half (53%) have no idea – even as a rough guess – how much they spend per annum on overnight accommodation for business purposes
More than a third (35%) do their own thing when booking accommodation. Of those that didn’t have sole responsibility within their company for making bookings , 39% confirmed that everyone else organises their own bookings
Employee duty of care not top priority
Now that businesses are required to adhere to tougher corporate manslaughter regulation, astonishingly there were signs that not all SMEs are taking the issue as seriously as they should:
One in six (16%) have no way of knowing in an emergency where employees are staying or located
More than one in ten (11%) believe making employee duty of care a paramount consideration is not relevant to them
This is of particular concern as employers have a legal duty to ensure the security and welfare of the travelling employee because it is inextricably linked to both Duty of Care and CSR responsibilities. It is essential that companies include in their purchasing decisions criteria that demonstrates chosen suppliers, such as hotels and accommodation providers, meet the highest standards for security and care.
A frustrating and arduous task
A large number of respondents complained about the impact of the booking process. More than a third (38%) described booking business travel and accommodation as a frustrating process with the search for hotels (54%), determining the proximity of business venues (45%) and trawling the Internet for price comparisons (41%) earmarked as extremely time intensive activities.
The toll on staff time and resources was also evident. One in five (21%) estimate that to make and manage a booking can take anything from 30 minutes to two or more hours. Considering one in three confirm that they make upwards of 10 bookings per month (20% make 20 or more bookings per month), this activity can therefore become a significant drain on resources in real terms.
Limited understanding about best practice
There is still a large contingent of SMEs who seem unaware of the best practice solutions open to them when buying overnight accommodation, meetings and events. Proven options include using a specialist booking agency or online booking tool, and establishing a company policy and spend limits.
64% do not use either a specialist booking agency or online booking tool with two in every three (68%) agreeing that it was not company policy to use an online booking service. Of these non-users, one in four (26%) believe mistakenly that they are too small and do not make enough bookings, while one in four (26%) believe they get better rates by negotiating for themselves.
Those respondents with the experience of using a specialist booking agency tell a different story; two in every three (66%) believe a key benefit is convenience due to the savings gained on internal time and resources. The other benefits recognised included providing a wide choice of hotels and venue properties (41%), lower prices and better savings (40%), live availability (38%), handling amendments and cancellations (37%), providing a 24/7 service (34%), enabling the company to provide the highest duty of care to employees (33%), streamlined invoicing (31%) and management information (MI) (28%).
Responding to the findings, Trevor Elswood, managing director of BSI, commented; “With margins tightening, SMEs are facing even greater budgetary and resource pressures. Our research shows that, due to limited understanding, apathy or misconceptions, a large number of SMEs are not following best practice procurement when buying and booking overnight accommodation, meetings and events, a fact that is likely to be causing them to waste significant time and money.
“No matter what the size of company, proven solutions are readily available that will deliver significant benefits via increased savings, the highest standards in Duty of Care and a streamlined, efficient booking process which will alleviate historical frustrations and complexities.
“One essential recommendation for all SMEs is to use an online booking tool. This will enable them automatically to tap into the best, pre-negotiated rates; enforce a corporate booking policy; direct bookers and travellers to preferred accommodation providers; set caps on spend; access valuable management information; and, instantly access richer content about the property, facilities and surrounding location without the need for time-consuming Internet searches.
“For example, BSI Direct – our online booking tool - monitors all available rates including the Internet and special promotions to track down the lowest price. This means the rates we secure and pass on to customers are typically 25% below those published by the Hotel.”
The Business Travel Magazine