Optimizing Compliance to Corporate Travel Policies

The sharing economy is no longer firmly rooted only in leisure travel; it is now gaining momentum within the corporate travel space. It has effortlessly integrated into the lives of business travelers by enabling greater choice and flexibility while mitigating costs. From additional lodging to ride-sharing and office-sharing services, this new business model has undoubtedly disrupted the travel industry.

Santosh Kumar, Director of Corporate Solutions, HRS, India

 

Despite these benefits, travel managers hold lukewarm attitudes towards sharing economy options, according to research by the Association of Corporate Travel Executives and American Express Global Business Travel. 39 percent of respondents say sharing economy options for ground transportation are not on their agenda, and 56 percent rule sharing economy accommodation options out altogether. Travel managers cite security as their biggest concern with sharing economy options, particularly for accommodation. These concerns are well-founded, and are at the forefront of the fight against corporate travel policy leakage – travel bookings that are made outside of Travel Management Companies (TMC) channels.

 

In India, this concern is particularly jarring with the country witnessing escalating growth rates in corporate travel, according to an article on MICE Business Travel News (BTN). The corporate market segment is currently valued at $25 billion, and is expected to attain a compound annual growth rate (CAGR) of 11.5 percent through 2019, to reach $45 billion, reported Businessworld India.

 

Various factors have contributed to this occurrence, including an increasing millennial population, improved infrastructure, rising income levels and the government’s focus on Digital India – which lends a hand in shaping the market by facilitating seamless booking of travel online. While there is tremendous potential arising from this fast-growing market, such steep growth emphasizes the need for policy leakage to be properly addressed.

 

Leakage from corporate travel policy is a major issue across the supply chain, and the most frustrating aspect of corporate hotel programmes for 26 percent of procurement professionals and 19 percent of travel managers, according to HRS’ data. The main reason for having a travel policy is to minimise travel spend, but when leakage occurs, it deters corporates from achieving their key objective. Addressing leakage thus becomes an absolute priority.

 

Why Complying with Corporate Travel Policies Matters

Compliance with travel policy is every corporation’s objective. It is key to making the most out of preferential rates with chosen suppliers in exchange for fulfilling contractual obligations. For TMCs in particular, policy leakage negatively impacts their future negotiating position with hotels; amassing lesser data reduces influence over securing competitive rates and guaranteeing availability.

 

A typical travel policy covers platforms travelers should book on and recommendations of suitable hotels with the right facilities, in the right location, at the right price. This adds value for the customer, who would otherwise have to sift through a glut of information in search of the best deal.

 

Apart from saving cost and time, other strategic benefits include giving corporations some control over the employee’s travel experience and safety. Travel options served up by in-policy bookings often comply with certain safety and security constraints, creating a win-win situation for both the corporation and employees: corporations are able to fulfill their duty of care obligations, and employees have greater peace of mind. Conversely, the impact of policy deviations is clear. Travel managers risk not knowing where the travelling employee is at any one time – a situation that can have serious repercussions on the reputation and profitability of the corporation.

 

The frequency of catastrophic events worldwide in recent years has provided a clear impetus for corporates to be proactive about getting employees to comply with corporate travel policies. Optimizing compliance reduces leakage, so corporates need tools containing the right content that can drive compliance, as well as measures that are essential to educating employees about their travel policies.

 

Increasing Compliance to Travel Policy

In companies where travel policy is not mandated, travelling employees book outside policy when the options available do not fully satisfy their needs, therefore ‘forcing’ them outside policy, on the search for better options. For instance, leakage happens when the channels provided by the corporate do not have hotels instantly bookable in the right location, or because the rates are too high. While direct hotel bookings happen because they often appear cheaper, employees fail to factor in auxiliary booking conditions such as cancellation policy, payment criteria, duty of care from their employer and lost personal productivity into their calculations – amongst others.

 

The breadth and depth of information provided by hotels can have a major impact on the conversion of searches to bookings, because that content enables bookers to make immediate decisions by removing the need to look elsewhere for a suitable match. For hotels available on HRS’ booking channel, which uses algorithms to match booker behavior with bookable hotels most suited to them, content is the range of information provided on the channel. In other words, the better the content provided by the hotel, the more likely it is to be featured on the platform.

 

Corporates may be unfamiliar with the locations they book, so content is crucial in driving bookings. According to HRS’ research, good content includes having room and advance booking availability, guests’ comments and reviews, professionally translated multi-language descriptions, and professional photos or videos that reflect the personality and features of a hotel and its different room types.

 

It is important for both corporates and travel managers to educate employees about corporate travel policies, how existing programs in these policies enable their employees to book efficiently and travel safely, and their responsibility in making it a success.

 

Whatever the future holds for the travel industry, one thing is clear; as sharing economy suppliers continue to develop services specific to business travelers, corporates and travel managers will need to navigate around these developments as they redesign their corporate travel policies.

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