Corporate Travel Best Business Practice
Posted: Tuesday, June 30, 2009
by Donald Marikovics
MyInHouseTravel.com, Inc.
The Need to Travel
There are reasons business travelers don't say things like "I get to go to Dayton next week" or "I only got to spend two days in Scranton last month." Business travel is neither cheap, easy nor fun, so anyone who does it needs to travel because they have to be somewhere.
The reason behind the need for a business trip will vary depending upon the individual specialty or talent that travelers bring with them to their destination. One thing is certain: since their skills set is most probably not that of a travel agent, a decision must be made regarding how to most efficiently book the required flights, hotels and car reservations.
Cost reduction programs are a must in today's economy. Of course, cost reduction should be an important goal for a company in any business climate, but when things are going good and profits are sound the cost side of the equation is often overshadowed by a nice bottom line number. When times turn tough companies began to "trim the fat" that has accumulated from ignoring unnecessary or constantly rising operational costs. Often a blanket cost reduction policy is implemented that attempts to cut budgeted expenses by a fixed percentage across the board.
Those companies that must travel on business for administrative, sales or technical reasons face tough choices when faced with the need to reduce their travel budgets. Of course, if Business Class and 4 star hotels have become the norms then cutting costs isn't going to be too hard. But for many companies and most business travelers this is not the case. Travelers already flying coach and staying in 2 or 3 star hotels have fewer options open to them.
At a time when the so called primary air carriers are increasing fares while cutting routes and in flight services and imposing fees on anything imaginable (and some things heretofore unimaginable), savings in the air are tough to come by. Likewise, downgrading to a 1 or 2 star hotel may save some money but only at the expense of the traveler's image (both to himself and to his customer).
The unavoidable conclusion reached by most business travelers is that a fixed percentage cost reduction in the travel budget can only be accomplished by a similarly fixed percentage reduction in the amount of travel undertaken. This in turn can have the undesired effect of a reduction in customer contact/service and eventually negatively impact the bottom line.
Depending upon the methods used to book the travel, it may not be necessary to cut back on actual travel while reducing the travel budget.
Travel Booking Options
There are four methods of booking corporate travel arrangements; three of them are fairly well known while the fourth is relatively new. They are listed here in descending order of cost together with their advantages and disadvantages.
Travel Agencies Travel Agents (including large corporate travel services such as AMEX Travel) are a convenient source for air, hotel and car bookings. Corporate travel was once a lucrative source of income for travel agencies but when airlines changed their commission structure and stopped paying TA's anything at all for booking flights a large part of their incentive income disappeared. TA's now typically charge a fee for making a flight reservation ranging between $25 and $45 per ticket. They do not charge for making hotel or car reservations as they still receive commissions from those suppliers.
Some travel firms will offer to position a full time TA on the premises of their important clients to give the appearance and feel of having an In House Specialist on hand. Regardless of where the TA physically sits, they will act as a TA, not an In House Specialist.
From a service perspective TA's offer a quick response using their sophisticated on-line air, hotel and car reservation systems. They cannot always be counted upon to check outside their system for discount air carriers or special offerings from hotels and car companies as the time required for doing can sometimes be considerable.
Hotel and car reservations made through a TA are most often at the full, or rack, rate and can be cancelled or changed without penalties up until the day of arrival.
Since a TA can earn far more from booking a vacation cruise than from a business trip they may not always take the time to dig for savings for the business traveler, knowing that most companies will just accept whatever rates are presented to them as an unavoidable cost of doing business.
In House Travel Departments Whether a fully staffed travel department or a single, part time administrative aide, In House Travel Departments offer their company's corporate travelers on site support without having to pay for the services of a Travel Agent. Of course, the salary and benefits of the individual(s) engaged in travel service support must be accounted for and built in to the total cost of booking somewhere and, depending upon the dedication and ability of those making the reservations, the cost per ticket, room or car may or may not be less than that provided by a TA.
In house travel specialists whose only responsibility is to support the travel needs of company travelers can spend the hours needed to research the Internet for the lowest available flights, hotel and car rates. When travel reservations are only an added responsibility, they are likely to book "the usual" or quickest itinerary ignoring the possibility that less costly alternatives may exist.
Individual Business Traveler
In many companies the task of making flight, hotel and car reservations is left to the individual traveler and/or their assistant if they have one. The theory being that since there is little to save in available flight costs and hotel and car rental rates are pretty standard, the company will save the expense of hiring a TA or paying for the services of an in house specialist.
Overlooked is the fact that the traveler himself is least likely to take the time to research the lowest available fares and that the time they spend doing so is done at a much higher cost per man hour than a TA or in house specialist would charge. Additionally, business travelers are frequently called upon to justify their choice of air, hotel or car charges at a later date, adding to their discontent and making them feel it necessary to constantly downgrade the quality of their trips (and, in their eyes, how the company perceives and values them).
Most individual travelers would prefer not to have to make their own reservations and will typically select full fare, non-discounted flight, hotel and car rates when booking. On the other hand, some individual travelers prefer to make their own reservations as it guarantees them reservations at airline, hotel and car chains which offer them club points or frequent flyer miles regardless of higher prices. Some airlines, knowing this, offer the person making the reservation the opportunity to "earn" extra club miles by increasing the cost of their ticket.
Travel Service Providers
Relatively new to the scene are Travel Service Providers who combine the talents of a TA, an in house travel specialist and a virtual assistant and are able to present the business traveler with full service, low cost options. TSP's are IATAN accredited travel professionals but they cannot issue paper tickets the way a TA can. TSP's will often make their clients aware of low cost Internet fares that a TA cannot take the time to research.
Some TSP's operate like a TA and only charge a few for flight reservations, taking commissions from hotel and car companies.
A new breed of TSP recognizes the importance of passing on the lower cost Internet rates to their clients, resulting in a significant savings to the corporate traveler. Since special Internet rates typically are not commissionable, those TSP's that research and pass on the savings from the Internet will charge a fee for flight, hotel and car reservations. TSP's that specialize in Internet researched rates offer the greatest potential savings to companies seeking to minimize travel costs.
Best Business Practice
The definition of a "Best Business Practice" depends upon the objectives of the company or individual traveler. Executives who insist upon specific flights, airlines, hotel chains and car companies, whether out of personal preference or for the perks offered by them, will have different values than a company interested in lowering, or keeping low, their overall travel budget.
TA In House Individual TSP
One Stop, Full Service Reservations : TA & TSP
Full fare and/or Discount Rates: In House, Ind., & TSP
Overall Cost (1=least expensive)
With high volume travel * TA=4, In House=2, Ind.=3, TSP=1
With low volume travel* TA=4, In House=3, Ind.=2, TSP=1
*The above chart is based upon the net cost of corporate travel to the company (air fare, hotel and car costs, plus agency fees, less Internet discounts).
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Top-level comments on this article: (3 total)Informative and comprehensive. Thanks for the article.Mark
Donald, lots of information here. All of it is valuable, but it may be a bit much for one article. I might suggest breaking it up so you don't lose readers with the sheer volume. Keep it up!
HI Donald, very informative. Thanks for sharing your expertise with us, I know it will be of value to many searching the internet for helpful hints. Your title will draw these people for sure! Just my opinion, but I think it would be nice to break this down into a part 1 & 2, as it is a on the longer side.Good stuff, though, so please keep sharing. Blessings! Teresa
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