I have been puzzled by the way that corporate travel works. It seems to be a classic case of sub-optimization and I have never had a convincing story from corporate travel managers. I'll use some examples from my past to illustrate.
First comes from when I ran a consulting business. I figured that since my employees would often have to travel to the customer sites, I would quote rates to the customer that were inclusive of travel and then manage the travel down. I'd make some assumptions and then quote an all-in daily rate. Of course our rates looked higher than some of the competitions' rates, but the TCO was better. And then as a bonus to my employees, I would reward them at the end of the year with some percentage of the "saved" travel costs - assuming that they would normally have to pay $0.50 per mile on a trip for the airfare portion. Some of the more creative consultants were getting $0.20 or less, so there was lots to share. I typically bumped the hourly rate factoring in about $0.35 per mile. So all were happy. Except they weren't! This was very difficult for the bean counters at some of our customers. They needed to see expenses accounted for differently.
Fast forward a few years. I was walking with a large travel agency on some modernization projects. This involved some of us commuting to the customer site, and staying the week. Of course, since the customer was a travel agency, we had to use them for booking. Round trip airfare + 4 nights in hotel = $1300. We could book on Travelocity (and did a couple of times) getting the same flights, same hotel, same durations for about $700. We offered that to the customer - no deal. And then they had the gall to not renew the contract because "our expenses were out of control".
Fast forward to now. Texas education is in a budget crunch. There are important conferences that people need to go to - especially the people in Industry Studies kinds of programs. People have travel budgets to do these. How these budgets are calculated, I have no idea. What I do know is that accommodation and transportation have to be itemized. That's the policy, there's a travel department that does this. So, again, it is impossible to use the low cost mechanisms (like Travelocity) to book trips. Travelocity bundles airfare and hotels into a package, and is often a whole lot cheaper than booking the parts separately.
In corporations that I have worked for, it has almost never been acceptable to book the cheapest options - even when that is more convenient as well as cheaper. As a traveler would I prefer a package allowing a cheap non-stop flight or paying more and having to change planes in order to apply with (misguided) travel policy.
So given that there has to be some benefit to the current expensive, nonsensical approaches we have to ask where the benefits accrue. There are several candidates:
First comes from when I ran a consulting business. I figured that since my employees would often have to travel to the customer sites, I would quote rates to the customer that were inclusive of travel and then manage the travel down. I'd make some assumptions and then quote an all-in daily rate. Of course our rates looked higher than some of the competitions' rates, but the TCO was better. And then as a bonus to my employees, I would reward them at the end of the year with some percentage of the "saved" travel costs - assuming that they would normally have to pay $0.50 per mile on a trip for the airfare portion. Some of the more creative consultants were getting $0.20 or less, so there was lots to share. I typically bumped the hourly rate factoring in about $0.35 per mile. So all were happy. Except they weren't! This was very difficult for the bean counters at some of our customers. They needed to see expenses accounted for differently.
Fast forward a few years. I was walking with a large travel agency on some modernization projects. This involved some of us commuting to the customer site, and staying the week. Of course, since the customer was a travel agency, we had to use them for booking. Round trip airfare + 4 nights in hotel = $1300. We could book on Travelocity (and did a couple of times) getting the same flights, same hotel, same durations for about $700. We offered that to the customer - no deal. And then they had the gall to not renew the contract because "our expenses were out of control".
Fast forward to now. Texas education is in a budget crunch. There are important conferences that people need to go to - especially the people in Industry Studies kinds of programs. People have travel budgets to do these. How these budgets are calculated, I have no idea. What I do know is that accommodation and transportation have to be itemized. That's the policy, there's a travel department that does this. So, again, it is impossible to use the low cost mechanisms (like Travelocity) to book trips. Travelocity bundles airfare and hotels into a package, and is often a whole lot cheaper than booking the parts separately.
In corporations that I have worked for, it has almost never been acceptable to book the cheapest options - even when that is more convenient as well as cheaper. As a traveler would I prefer a package allowing a cheap non-stop flight or paying more and having to change planes in order to apply with (misguided) travel policy.
So given that there has to be some benefit to the current expensive, nonsensical approaches we have to ask where the benefits accrue. There are several candidates:
- Corporate travel can look like heroes because they have negotiated special airfares with preferred carriers. Except of course that's a false economy.
- Corporate travel gets all sorts of perks and inducements for the deals it does. Hmm, that doesn't look too helpful either.
- Travel policy can more easily be enforced up front. Well, that;s probably true, but employees who make unauthorized trips should not have the cost of those trips reimbursed.
- Fraudulent refunds - using an employee's own credit card, getting the trip changed, refund comes to employee and the employee makes some extra. That's really bad news and the employee should be fired for fraud.
- Being able to track travel independently of the travelers' own reporting. yes that might make a difference.
- No business class/first class generally available on packages booked on Travelocity. Well maybe there's a cheaper way around that.
