There’s much more to business travel than simply buying an airline ticket, renting a car and staying in a hotel. Especially now, with travel costs expected to increase 10 to 12 percent over the next 12 months, says Rob Turk, the executive vice president of Professional Travel Inc.
“Travel typically represents the third largest controllable expense that a company has behind payroll and IT,” Turk says. “However, many companies don’t properly manage it. They need to create strategies to overcome and adapt to its escalating costs.”
Smart Business spoke to Turk about what companies should pay attention to in order to rein in their travel expenses and positively affect their bottom lines.
How can companies manage rising travel costs in today’s economy?
Companies have to develop a consistently communicated travel policy. This will provide the framework and foundation of expected travel behavior as far as utilizing certain providers and certain suppliers. Many companies also provide per diems for guidance as to the types of hotels employees should book or cars they should rent.
A key issue today is the managed utilization of unused nonrefundable tickets. Failure to do so creates thousands of dollars of loss, as organizations have a significant investment in these types of purchases. On average, there are three changes made to each booking, so when travelers make changes, many times the original purchased ticket has to be reused. So you have a credit of an unused nonrefundable ticket; how do companies manage those credits? To address this, establish a database of unused tickets, which should be managed by your travel management partner. The process of utilization can be quite complex because different carriers have different policies with several variables, for example, how long after purchase you can utilize those credits.
How does a business know when its travel needs to be formally managed?
There isn’t really a benchmark of expense, like you need a policy if you spend more than $50,000 a year. Simply, companies with traveling employees should have a managed process. You can’t manage what you can’t measure, so it’s key to measure travel expenses and both monitor and manage travel activity. One way to do this is with a pretrip approval process. It’s trip justification; the employee says, ‘I need to travel here for this benefit for the company. Here’s my estimated costs; is it approved?’
