How Leakage Affects Your Travel Programme
Posted on January 24, 2015 by FCm Travel Solutions UK
Despite a travel management company’s (TMCs) daily efforts to create the best possible travel programme for your business some bookings still go astray;
Sometimes travellers won’t book through your preferred channel or they’ll book their own choice of hotel over the internet. When this happens, gaps start to appear in your data and your reporting.
While many corporates with managed travel programmes have mandated policies in place, leakage from loss of transactions through your preferred booking channels or supplier can cost your company significantly over the long term.
The Travel Landscape
Almost all corporate travel programmes, no matter how large or small, will experience leakage at one point or other. With so many channels now available for travellers to book their flights, accommodation or car hire through, there is always the risk of non-compliant bookings.
At face value, airline or hotel websites can be appealing to a traveller with simple travel needs. There are the perceived benefits of convenience and simplicity, and of course, the perception of ‘lowest rates’. Employees may think they are doing the right thing for their company by bookings themselves if they spot a cheap deal. But by booking outside of policy, the overall cost consequence for a travel programme can be significant if leakage is widespread among employees.
What are the Impacts?
Leakage affects the overall performance of your travel programme in many ways starting right from the booking stage.
You’ll Pay More in the End
An in-policy booking consisting of flights, hotel and car hire made with FCm, would attract a single booking fee with your travel manager. However a traveller who books flights through FCm, books their own hotel over the internet and then calls a car hire company direct to organize a rental car would more than likely attract three different booking or service fees. And with online travel websites charging anywhere from $4 up to $30 per booking and some suppliers also charging service fees, corporates with leakage to non-preferred booking channels often face a higher fee structure than those customers using a single supplier as part of a consolidated TMC-managed travel programme.
If you have booked over the internet and your travel plans change, you generally not only forego flights and room nights, but incur the cost of having to book and pay for them all over again. At the very least, you will probably have to pay penalty fees. And don’t forget the soft cost of your time spent trawling the Internet to find what you believe to be the best rates. Time is money and it all adds up. Book with a TMC or a TMC-provided online booking tool and there is less room for error. FCm has the ability to hold seats, which is generally not an option if you book via the Internet, itineraries are then audited by our consultants before your booking is confirmed and payment made.
There are also cost implications for your future hotel or airline negotiations. If your company has not met volume agreements with your preferred hotel supplier or airline, rate discounts may not be as forthcoming or generous in subsequent contract negotiations.
If leakage is occurring because employees are booking through non-compliant channels (i.e. over the internet or direct with suppliers), spend data is more challenging to reconcile and use for big picture programme analysis. It is far easier to control what you can see and capture. If you’re lacking insight into traveller records and spend patterns, your knowledge of your travel expenditure can be compromised.
Supplier Negotiations are Affected
The more knowledge you have of your data the more power you have to negotiate with suppliers for competitive deals. Suppliers look favourably on companies that not only have volume to offer but are able to prove loyalty to their preferred suppliers. If you’re experiencing 30 percent leakage on your hotel programme, a company with a total of 11,000 room nights per annum is in effect negotiating a discount for only 7,700 room nights which would have a significant impact on your contracted rate deals.
Expense Reconciliation takes Longer
Bookings made through non-compliant channels mean your accounts department is spending more time manually chasing traveller receipts, itineraries and copies of either, as well as processing receipts from different suppliers. A consolidated travel programme with a TMC provides enhanced data in a consolidated format.
Traveller Safety and Security Compromised
If you don’t have visibility into your traveller bookings, it can make it difficult to track where your employees are quickly. If 100 percent of your bookings are made via your TMC or a TMC provided online booking tool – you’ll have one point of contact in an emergency. Speed and efficiency are critical during a crisis so it’s essential you have a full understanding of where your employees are at all times.
Enhancing the way you book travel, improving compliance, as well as your attitudes to travel will help mitigate booking leakage. There needs to be a common mindset, and educating employees is a crucial part of this. TMCs help you proactively inform your travellers and travel bookers regarding:
- your travel policy and how it affects them
- your company’s travel goals (e.g. What savings you are trying to achieve)
- the benefits of your travel policy, both company-wide and for individuals
- what non-compliance measures will be taken if people do not adhere to your policy
- the savings (i.e. the ‘wins’) that are achieved as a result of compliant travel behaviour. Keeping your people informed at all these levels is your key to productive and cost saving travel activity.
Control Leakage by Curbing Rogue Bookings
Zero in on hotel Bookings
If leakage is occurring because travellers are booking hotels over the web as a last minute decision, ask your TMC if they have an online accommodation website your travellers can use, which offers integrated reporting. If leakage is occurring regularly in a particular city find out if there are broader issues such as inadequate accommodation standards or availability issues.
Make it convenient
According to a Global Business Travel Association study, the most often-cited reason for not using approved channels was inconvenience (36%), followed by the hotel being a last-minute decision (30%). Almost as many out-of-policy travellers (25%) said booking through preferred hotel channels took too long.
Keep an eye on key offenders
Pay close attention to new recruits (they may not be across company policy), tech savvy travellers (tendency to book over the web) and managers (who think they’re above company policy) to stem leakage problems.
Focus on technology
Utilise the latest technology for travel apps, online booking tools and expense reconciliation. This ensures your systems are quick and easy, which is what most travellers are looking for.