Framing a Travel Strategy

Even less costly is the option of booking travel online, through dedicated small-business programs offered by the major online travel agencies: Expedia, Travelocity, Travelport, and Orbitz. All four systems produce monthly spending reports for your firm or company and can be configured so that when travelers say they need a hotel in Phoenix, for example, the Hyatt with which you have a negotiated discount will be highlighted. Shifting traveler behavior so that they book their own trips online instead of calling Mary at the agency down the block may take some doing, however. A clear policy from top management is imperative; even then, expect about 50% compliance unless your top executives are prepared to not reimburse travelers unless they comply.

Beyond the fees you can save, letting travelers self-serve by making their own reservations invariably results in lower costs. Perhaps the biggest surprise travel managers have realized from online booking is that when travelers are offered a wide range of options on their computer screen, a surprisingly high number do the right thing and change their plans slightly to take advantage of lower-priced options. In fact, if we had to offer a single piece of advice for cutting travel costs, it would be this: Get as many travelers as you can to book their travel online as fast as you can.

Note that many small companies report that they are being inundated by offers from Southwest Airlines' SWABiz program. The savings there are real, as travelers are entering their own information directly into Southwest's computer system and saving the agency transaction fees. But, travelers will see only flights and fares for one carrier, and lose the ability to comparative shop.

The travel industry is built on discounts and market share bonuses. No matter what agency or online system you are using, opt to pay them flat fees for services rendered and have any discounts you earn flow back to your firm. The point is to underline to both the agency and the suppliers that your firm is the customer here, not the travel agency.

Trains, Planes, and Automobiles
While larger companies are often best served by pushing all their travelers to use one airline and then negotiating discounted rates, small companies generally fare better allowing travelers to just pick the airline or hotel with the lowest fare on each trip. Remember that every dollar not spent falls right to your bottom line; saving a few thousand dollars in expenses may be as valuable as ten times as much in additional sales.

No matter how hard you try, though the need for some high-end travel will not go away. These are where the airlines derive their biggest profit margins. Track them and try to negotiate a discount for all first- and business-class tickets with a single major airline that offers frequent flights from your home city.

Virtually every airline, hotel and car-rental company offers discounts to business customers; make it someone's formal responsibility to negotiate on your behalf and then to nudge travelers to use these vendors. Airline programs typically offer small-business programs that yield free tickets with the purchase of a given number; take advantage of them. Beware the prepaid miles programs, however, which generally cost about 53 cents per mile; firms that let travelers choose their own low-cost flights online report that they average about 22 cents a mile.

When employees are traveling on client business and billing their expenses back, there is a fiduciary responsibility to travel at the same level as the client would. Many firms follow client travel policies in such cases, and sometimes use the client's travel agency as well. Be careful about how you handle negotiated discounts in such cases; KPMG and PricewaterhouseCoopers in 2004 paid $17 million and $54.5 million, respectively, to settle a class-action lawsuit that charged them with billing clients for full fares and then keeping corporate discounts they got back from travel suppliers.

Checking in with a Hotel Program
While it's possible to push your travelers to use one or two major airlines without inconveniencing them much, hotels are a different story. Location really does make a difference. Staying in a particular hotel often offers tangible and intangible benefits: saving cab fares and wear and tear, keeping you close to the action at a conference or meeting, and allowing for mingling with important contacts or potential new customers.

Rather than insist that everyone always stays at a Marriott or a Holiday Inn, a best practice is to focus on the five or six cities to which your firm travels most frequently, and negotiate discounts with a hotel or two in each. If your travelers or their assistants are using a corporate Internet site, set the system up so that these properties appear first and are highlighted as your preferred properties.