South Africa has officially slipped into a technical recession for the first time since 2009, based on Statistics South Africa’s revelation of a 0.7 percent decline in the second quarter GDP figures. On the back of a poor Q1‚ when GDP shrank by a revised 2.6 percent, are businesses prioritising corporate travel and can they afford not to?

The rand has fallen as much as two percent against the dollar to its weakest point since May 2016. And, coupled with policy uncertainty around significant issues such as land reform, a further slowdown in economic growth and fewer job opportunities seems unavoidable.

Although a typical knee-jerk response is for companies to limit spending during an economic downturn, Oz Desai, General Manager of Corporate Traveller, a division of the Flight Centre Travel Group, believes South Africa’s recession could bring about other lucrative opportunities for companies, which he’s seen before.

“In spite of all the obvious negative consequences of a recession, it can also be a good time to expand and develop your business in neighbouring countries,” Desai says. “Inaction doesn't necessarily mean safety in difficult economic times. Instead, look at positioning yourself for growth when the economy recovers.”

Understandably, businesses that are heavily reliant on the local economy will probably not be forecasting any considerable level of growth, and will carefully manage costs and expenses, including travel. However, even if cost reduction is a priority, Desai says a well-managed travel policy is critical. Furthermore, he added: “Always keep traveller friction top of mind, as tighter rules around travel may reduce overspending but could also lead to unhappy and unproductive travellers.”

Traveller friction results from stringent policy, causing stress, exhaustion, and unhappiness. If employees have to settle for undesirable flights and hotels to save money, productivity and wellbeing often suffers, which can be costly, Desai reveals.

“You could start cutting all business travel on long-haul flights, but have you calculated the impact on the traveller and on your business? Will you really achieve any cost-savings if your top-performing salesperson arrives in London exhausted after a long economy-class trip instead of rested, showered and ready for the day?”

Desai explains that a Travel Management Company (TMC) is “without a doubt your greatest ally when it comes to navigating the impact of the recession on your corporate travels.” Why? “Because they have the expertise and insight to provide you with the most cost-effective options for your business,” says Desai.

“A TMC can help you put together a comprehensive travel policy, which will be the foundation for a well-managed travel programme, providing a standard for compliance and helping to control costs, deliver savings and provide successful risk management.

“Corporate Traveller’s data, for example, reveals travel trends that you could build into your travel policy to achieve savings. It shows that the cheapest time to book a flight within Africa is anywhere between one and three days before travel. When booking an international trip, the sweet spot is anywhere up to four weeks before travel, as this is the time when airlines generally offer reduced fares to boost load factors.”

What this information means for a company's travel policy is that it could be counterproductive to enforce a 21-day advance purchase policy for domestic travel, as booking 14 days before the travel date would provide similar savings, Desai explains.

A TMC will also be able to advise you on the best way forward when it comes to negotiated rates with providers, he says. “Although it tends to be advisable to negotiate rates with providers based on volumes, there can be some significant pitfalls to getting locked into a client-specific negotiated contract, including a high minimum spend which could be difficult to achieve.

“Rate discounts also only apply to higher airfares, not on cheaper rates. This means that you could be paying substantially more than the cheapest available ticket price.”

The same is true for negotiated hotel rates, Desai adds. “The way most hotels manage their yield these days means that a static corporate rate is not a great option as you cannot take advantage of lower last-minute prices.

“When you are reviewing your travel policy in light of the recession, it makes sense to approach your TMC and ask for their expert strategic advice. They have volume deals in place, access to data and the industry experience to help companies with these little-known tricks of the trade that can deliver real savings and shape a travel policy that delivers the best value even in the most difficult economic times.”

With more challenging economic times ahead, South African corporate entities could lessen the impact by sharpening their travel policy, not forgetting the vital role travel plays in growing and preserving their bottom line.