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A study, initiated by Egencia, has indicated that companies risk tremendous annual budget losses through unmanaged travel activity.

Published: 19 Feb 2010

A study, initiated by Egencia, has indicated that companies risk tremendous annual budget losses through unmanaged travel activity.

The study, “Hotel Cost Control: Savings and Opportunities,” examines common areas of loss, ways to prevent leakage and emerging opportunities for cost savings.

A global survey of 433 travel executives revealed missed opportunities for corporations managing hotel spend, including that 30 percent said their companies did not have a hotel policy in place. Supporting data confirms other gaps including:

• • 65 percent do not have city-specific hotel per diems
  • 33 percent use expense reporting to monitor compliance
  • 34 percent require pre-trip approval to monitor compliance
  • To encourage compliance: 32 percent proactively inform all employees who book travel of the policy; 29 percent verbally reprimand those who book out of policy, 12 percent send email notification to those who book out of policy; and 12 percent do not enforce compliance at all.
• • 65 percent do not have city-specific hotel per diems
  • 33 percent use expense reporting to monitor compliance
  • 34 percent require pre-trip approval to monitor compliance
  • To encourage compliance: 32 percent proactively inform all employees who book travel of the policy; 29 percent verbally reprimand those who book out of policy, 12 percent send email notification to those who book out of policy; and 12 percent do not enforce compliance at all.

• • 65 percent do not have city-specific hotel per diems
  • 33 percent use expense reporting to monitor compliance
  • 34 percent require pre-trip approval to monitor compliance
  • To encourage compliance: 32 percent proactively inform all employees who book travel of the policy; 29 percent verbally reprimand those who book out of policy, 12 percent send email notification to those who book out of policy; and 12 percent do not enforce compliance at all.
• • 65 percent do not have city-specific hotel per diems
  • 33 percent use expense reporting to monitor compliance
  • 34 percent require pre-trip approval to monitor compliance
  • To encourage compliance: 32 percent proactively inform all employees who book travel of the policy; 29 percent verbally reprimand those who book out of policy, 12 percent send email notification to those who book out of policy; and 12 percent do not enforce compliance at all.

These statistics, according to the company, are significant because defining hotel per diems by city or actively enforcing a policy once in place can help make a travel programme more fiscally sound. Likewise, requiring pre-trip approval can boost compliance and deter unnecessary spending by palpable amounts.

Oversight and policy management

Cecilia Routledge , managing director - Asia-Pacific and head of global business development, mentioned that oversight and policy management are two important strategies which yield strong returns for travel buyers.

They offer the opportunity to capture valuable data and reporting and help immensely with negotiating discounts and amenities.

This issue was further underscored by the results of a global survey of 1,000 travellers and arrangers. Fifty-five percent of those that responded noted that their company does not enforce or simply encourages them to follow a hotel policy; and 32 percent said that their company does not have a hotel policy at all.

The “Hotel Cost Control” study also takes a deeper look at the benefits of proactive policy management and reducing leakage.

For example, for Egencia clients with an average travel spend of $15 million or more, those actively enforcing policy savings saved roughly 17 percent on average daily rates (ADR) versus those companies that do not enforce hotel policy. Companies that enforce hotel policy also see 14 percent greater policy compliance and a 33 percent greater hotel trip attach rate versus un-enforced programs, meaning they are reducing leakage in their programme.