Controlling Leakage in a Managed Travel Program

» Posted by on Dec 26, 2014 in Travel Management Centers, Travel Professional Resources | 0 comments

In order to manage business travel efficiently and maintain conformance with policy regulations, companies issue travel procedures that govern travel planning and cost reporting.  Owing to the many available travel options, the travel procedures provide detailed instructions for compliance. When making travel arrangements, employees are obligated to give primary consideration to the best interests of the company and any sponsors. The company expects employees to apply good judgment and professional integrity when planning business travel, in accordance with a code of ethics and to make travel plans at the lowest available cost.

However, all corporate preferred travel programs experience some leakage at one point or another.   The loss of transactions through the corporations recommended reservation system or the loss of spend and performance with the contracted suppliers proves difficult for both the buyer and supplier side.   Controlling slippage to achieve contracted terms and policy compliance is fundamental to effective travel management.   The most important key is to communicate to travelers the emphasis on policy and reasons for compliance.

Most travelers do not understand loss of market share or loss of transactions, they care about seeking the better deal and perhaps doing the company a favor.  Travelers are not realizing the company is losing the ability to track spend which weakens future negotiations with vendors, much less the program benefits associated with preferred rates.   A common argument for employees using an alternative website or alternate TMC for booking air is they are perceived to be booking a cheaper airfare or avoiding a transaction fee.  What they may not know when using an alternate website is the pricing does not include taxes and other up- front fees.

Hotels seem to be the largest area of slippage for many companies.  According to recent publications, only fifty percent of hotel bookings are captured through travel management companies.    This is attributed to hotels offering rates through leisure sites and frequent stay membership perks that employees feel they will not receive if booked through their travel management company (TMC).   Employees also think they are getting better deals with car rental companies whose leisure rates may be lower – but they do not include the insurance coverage that should be required for all renting employees.

The answer to the problem is measuring the extent of the leakage and implementing a plan to control it.   The first step is to find out the percentage of leakage through the company’s expense reporting tool.  This will show, through original receipts, how much of the travel was purchased outside of the travel program.  For example, all hotel folios can be matched up with passenger name records (PNR) history, the airline receipts will show the dedicated airline reporting corporation (ARC) information indicating the airline ticket was purchased through the TMC and the rental car will show the designated corporate ID on the receipt.  All these elements will give you an excellent indication of who is following processes and procedures.  Or, if original receipts are not required by the organization, using available data through the TMC, credit card and vendors to find the source of purchase is necessary to track and educate.  This provides the ability to measure travel policy compliance by aggregating and comparing credit card data against your travel data.

Once the offenders are determined, the second step to reduce or control leakage is to develop a well thought-out communication program between upper management and the employees.  By showing upper management the negative impact to the program, you have better buy-in and the support you need.  When word comes from the top, employees will listen.   The employee must understand that they will forfeit his/her right to the following benefits provided through the company’s managed travel program:

  • Insurance Coverage - Travel Accident Insurance is typically provided by the TMC in addition to the corporation’s own insurance.
  • Profile Information - Specific profile information (i.e. frequent flyer, special requirements, etc.) on file with the TMC will not automatically be available to the travel vendors.
  • Reservation Assistance - Flight cancellations, changes and refunds must be processed by the traveling employee through the channels in which they purchased their travel, as the TMC or the travel department are unable to assist travelers with reservations made outside of the managed travel program.
  • Receipts - Ticket receipts, itineraries and copies of either, will not be available from the TMC.
  • Employee Tracking - Employees will be responsible for advising managers, corporate security and the travel departments of their travel plans to ensure safety and security of the employee.
  • Reconciliation Assistance - Due to lack of insight into travelers’ records, reconciliation assistance provided by TMC and/or the travel department is diminished.
  • Unused Tickets - Employees will be responsible to ensure unused tickets purchased through alternate websites are used towards future business trips.  Reimbursement of unused tickets can be delayed.

In addition to the communication plan, restrictions can be applied to both on-line bookings and off-line bookings and reinforced when rules are broken.  When employees are educated on the benefits of their company’s managed travel program, they are more likely make better decisions and in turn, improve compliance and cost savings.

by Stefanie Tretola



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