2011 Cost Avoidance Strategies for Corporate Travel ... - Egencia

Fast Fact The top three ways travel

2011 Cost Avoidance Strategies for Corporate Travel Managers

managers drive policy

Egencia predicts that many suppliers will implement price increases in 20111

compliance to their travelers

coinciding with the increase in travel demand based on improving market

is through: • Traveler Education/Policy Communication • Policy Enforcement

conditions. Because air and hotel prices are expected to be slightly up in 2011, it’s now more important than ever to focus on cost avoidance strategies to control corporate travel spend.

• Approval Process(es) Source: 2011 Egencia Cost Avoidance Survey of North American (Canada, U.S.) Travel Managers

The following paper offers several tips and strategies that managers can use to circumvent and protect against the growing corporate travel costs related to air and hotel.

Review and Enforce Your Corporate Travel Policy • Establish and enforce a comprehensive corporate travel policy – the heart of any successful corporate travel management program. According to a recent joint Egencia/NBTA Foundation study2, a carefully conceived and consistently enforced corporate travel policy allowed companies to reduce annual travel spend by at least 45% or more. • Designate traveler groups3 and establish specific policies based on the responsibilities, roles or functions of a designated team. For example, different business units may have access to specific hotel tiers – mid-level hotels for employees and premium properties for billable travel and/or travel with client executives.

1 2011 Global Corporate Travel Forecast and Negotiability Index, Egencia, September 2010. 2 Corporate Travel Policy: Benchmarking and Insight, Egencia and National Business Traveler Association (NBTA) Foundation, August 2010. 3 TMC’s such as Egencia allow the placement of specific travelers who adhere to the same policy into a group on the site.

2011 Cost Avoidance Strategies | February 2011 For more information, call 1.866.328.0110 | www.Egencia.com

1

©2011 Egencia, LLC. All rights reserved. Expedia, Egencia, and the Egencia logo and Get Ahead are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries. Other logos or product and company names mentioned herein may be the property of their respective owners.

Fast Fact To promote spend accountability within their company: • 49% of North American travel managers cited the establishment of pre-trip approval systems • 40% cited the identification and follow-up of rogue travelers • 34% cited regular travel spend updates to company leaders Source: 2011 Egencia Cost Avoidance Survey of North American (Canada, U.S.) Travel Managers

• Make it easy for employees to identify in-

• Proactively communicate to and educate

policy travel options at the time of purchase

all travelers on the importance of following

by:

corporate travel policies:

• Highlighting the best in-policy travel

• Executive support – gain endorsement

options available • Displaying alternative in-policy options when out-of-policy selections are made • Requiring employee justification for outof-policy purchases • Providing email notification to the travel

from the top and have them communicate the benefits of policy compliance • Hold a ‘travel day’ seminar • Ask each department to manage a specific and accountable travel budget • Support them with detailed reports to

or employee’s manager if an out-of-policy

help them manage costs and stay within

purchase occurs

policies

• Identify and follow up on rogue travelers;

• Make the company policy easily

provide email notification to the travel

accessible online or on an internal intranet

manager and employee’s manager and

site

require employee justification for outof-policy purchases. Clearly outline the consequences for repeat offenders, and the impact to the bottom line for booking out of policy. • Also be aware that many ancillary charges won’t immediately show up during initial booking, but only after the POS purchase is complete. Educate your travelers to carefully

• Ensure that new updates to the policy are regularly communicated, as well as providing regular reminders about hotel benefits or amenities negotiated into rates • Review and edit travel policy to ensure adherence to goals of cost avoidance. Best practice calls for an annual review and/or modification of policy.

compare and examine all extra fees before they complete their travel booking.


2


Fast Fact 69% of travelers fail to book far enough in advance. • Set a 21-30 day advance purchase policy - A recent Egencia study showed that lastminute business travelers in North American destinations saved up to 46% by booking tickets in advance. • Consider the value of purchasing

How To Save Money on Air Travel • Purchase non-refundable tickets. A recent

travel insurance for your program;

joint Egencia and NBTA Foundation study

in many instances the costs

found that non-refundable tickets cost 49%

outweigh the benefits if only a

less than refundable tickets on some U.S.

small percentage of trips are

domestic routes, and 56% less on some

cancelled. • Know travelers’ most important (most widely traveled) routes and focus your negotiations on those, not the “one-offs”. Source: 2011 Egencia Cost Avoidance Survey of North American (Canada, U.S.) Travel Managers

international routes. In most instances, these savings more than make up the loss from the small percentage of cancellations. • Require travelers to consider a minimum 2-hour window between connections; this was shown to reduce fares by up to 65% in 8 out of 10 tested North American city pairs. • Book online. The more your travelers book online, the lower the average ticket price. In a 2010 study comparison of European flights, Egencia clients saved an average of 16% on point to point tickets booked online compared to offline purchases. • When comparing options online, travelers gravitate to lower-priced fares. Leverage this well-known effect of Visual Guilt – ensuring all employees treat company money spent on business travel as they would treat their own. • Negotiate status matches. Most airlines will allow for a number of status matches, but

each traveler. Elite status provides ease of travel and cost savings for travelers, such as waived checked baggage fees, priority check-in, and priority boarding.

Hotel Discounts and Amenities • For 2011, hotels may be more resistant to further lowering their rates. However, there are still opportunities to negotiate for additional amenities and benefits that reduce your bottom line. Additional amenities and benefits may include: • Last room availability • Last day cancellation (up to 6 p.m. on day of arrival) • No blackout dates • Free Wi-Fi, breakfast and parking • Educate travelers on the availability of these benefits through targeted communications – either verbally or by pointing them to a corporate travel intranet or other corporate website. • Reduce costs by “tiering down” hotel choice by even as little as ½ star (e.g. 4-star to 3.5). The money saved can be substantial while the services/room the traveler receives is often perceived to be the same.

will require proof of the level attained for 2011 Cost Avoidance Strategies | February 2011 For more information, call 1.866.328.0110 | www.Egencia.com

3


• Create lodging caps (hotel rate limits) that sets a specific limit or per diem for the maximum

Fast Fact Nearly half (47%) of travel managers were focused on negotiating additional amenities or better terms and conditions into their 2011 hotel contracts: • 66% negotiated free breakfast • 75% negotiated free Wi-Fi • 55% negotiated free parking Source: 2011 Egencia Cost Avoidance Survey of North American (Canada, U.S.) Travel Managers

allowable nightly rate. Review and update these regularly so they reflect changing market dynamics. • Many organizations today have established rate caps for an entire geographical region (Europe, North America, APAC), but have not yet taken advantage of city-specific per diems. Adjust hotel per diems – and reduce costs – by basing per diems on the city’s specific economic and supply environment as well as your company’s policy on class (mid-tier, luxury, etc.). • If you are applying price caps for cities/regions, you may wish to look at what the hotel ADR (Average Daily Rate) has been in the last 12 months for a specific city/region, and then apply a price cap 5% below this rate. This represents an effective way of incrementally reducing spend. • Once city-specific per diems are set, travelers may be tempted to book up to the hotel limit. As a result, it’s important to communicate to travelers their critical part in driving company savings and to educate them on the meaning of the lodging caps.

Consolidate Spend with a Travel Management Company (TMC) • Consolidating spend with a TMC represents one of the most important ways for controlling costs today. Simply put, without consolidation, it’s difficult if not impossible to manage travel spend and to know whether airfares and hotel rates are optimized at the best price. • The consolidation of spend helps reduce costs by ensuring that employees are always subject to company policy and can always access available corporate negotiated rates at the time of purchase. • Combined with strong reporting tools, consolidation provides complete spend visibility required to effectively manage a travel program, increase compliance, and maximize negotiating power with suppliers. • Organizations can take advantage of powerful discounts and perks negotiated by their travel management partner. In many cases, TMCs like Egencia can consolidate the buying power of a broad range of clients and offer benefits that companies may not be able to achieve on their own. • For example, the Egencia Preferred Rate (EPR) program for hotel spend offers additional discounts of 10-25 percent off rack or published rates and amenities such as free Internet and breakfast.

Summary Airline and hotel prices continue to increase. By establishing a solid corporate travel policy foundation, continually educating travelers, and adhering to a few tricks of the trade (some known, some not so well known), organizations can meet the challenge of rising prices – and even reduce their yearly corporate travel spend – without reducing service, comfort and safety for their corporate travelers.


4
