A well-executed managed travel programme can save a business approximately 15 per cent on its travel spend in the first year. Carlson Wagonlit Travel’s Akshay Kapoor identifies five steps to achieving this precisely-managed travel programme
Business travel is as expensive as it is essential as nothing is more impactful than a face-to-face conversation with a potential client.
As companies continue to grow their businesses and expand their operations overseas, their expenditure on travel will increase substantially. However, these companies can keep their travel expenses in check by adopting a managed travel approach – that is, having practices and policies to control the way employees book business travel.
Here are five best practices in managed travel that companies can follow to lower their business travel costs.
Keep your corporate travel policy clear and simple
A corporate travel policy is a set of rules or guidelines that your employees must follow when they travel for work – similar to an IT or HR policy.
Take a close look at your existing corporate travel policy and think about whether it covers every area of travel spend within your company. Focus first on getting the fundamentals in order – an appropriate approvals process along with guidelines on bookings and reservations, and on-site spending and expenses.
Then, communicate the policy to your travellers clearly. Keep the policy short, avoid jargon, and create a list of FAQs. Work with your HR department to have the corporate travel policy included as part of the induction programme for new employees.
Setting out clear procedures will help your business travellers make decisions that stay within your policy and don’t incur additional costs that hurt your bottom line.
Have a smart pre-trip approval process
One of the simplest ways to reduce your corporate travel spend is by having an approval system in place for bookings. By making it clear who needs to give approval for travel, you won’t have the problem of trips having to be cancelled after they’ve been booked, triggering wasted expenditure.
Technology is now available to automate and speed up these processes, which can reduce costs. You can also consider outsourcing this process to your travel management company.
When creating your approval process, ask yourself these questions: Do all trips require pre-trip approval? How many of your trips get disapproved? What are the lost savings if fares increased while a trip was awaiting approval?
Don’t look just at hotel room rates; look at the total cost of the stay
Being smart with hotel bookings can deliver big savings. The hotel room rate often comprises a relatively small part of the total cost of the stay once you factor in expenses such as meals, laundry and airport transfers. This is particularly true for longer stays.
When negotiating with hotels, try to have these additional expenses bundled into the room rate. From time to time you might also find promotional rates that include added benefits such as breakfast or room service.
Finally, companies should consider moving away from Last Room Availability (LRA) rates. These rates, which are typically higher than Non-Last Room Availability (NLRA) rates, give the company the right to buy a room at their contracted terms and prices even if the hotel only has one room left in that category. LRA rates have for many years been considered the gold standard for corporate hotel negotiations.
However, in generally low-occupancy destinations like Thailand, China and India, and where hotels rooms are aplenty, LRA rates often don’t make economic sense.
Reward your employees – and your business
Every time your travellers pick a more cost effective option, they’re saving the company money. Over the course of a year, that can really add up. So how about giving them an incentive to deliver further savings? It could be a voucher for their favourite store, a share of the savings, or time off – just some way of thanking employees for reducing your travel costs and encouraging them to keep doing it.
There are also savings to be had by ensuring your business makes the most of corporate reward schemes. These cost nothing to join and give your company points every time you make a booking. Once your points have built up, they can be redeemed against the cost of airline tickets, upgrades and often hotels and car rental.
In the world of corporate travel, it is always wise to book flights and hotels in advance as prices can dramatically increase nearer to travel.
CWT data shows that the average ticket price for a longhaul business class air ticket increases anywhere from 15 per cent to 45 per cent when booked seven days prior to travel as compared to 21 days.