Guide to cutting travel costs
Aug 11, 2009
The simple but oft-neglected step of writing a travel
policy is the single most important step to managing a
corporation's travel expenses and cutting costs. Eddy Mok,
corporate sales manager for Lotus Tours Ltd, gave essential
tips on cutting travel costs at a seminar during the
Business Travel Expo in Hong Kong.
26 April 2002
Set travel management goals
Companies need to lay out their goals, taking into
account cost containment, traveller safety,
employee needs and administrative efficiency.
Appoint travel manager/coordinator
It is vital that someone be responsible for
developing and/or monitoring travel policy,
negotiating with vendors, analysing travel
management reports and controlling travel budgets.
This person should have a senior corporate position
to have real clout.
Write a travel policy
A travel policy is the foundation of company
travel management. It should contain procedures and
controls for travel activities, set out guidelines
on class of travel, grades of hotels and rental
cars. It is vital that both staff and the travel
agent understand this.
Consolidate travel purchasing through one or two
(maximum) travel agencies
The travel agent should share responsibility for
monitoring and enforcing travel policy. Choose
agents based on who is giving you the best deal in
terms of discounts, transaction fees and management
fees, taking into account their bargaining power
with airlines, ability to offer a large variety of
special tickets and their IT support. Two is better
than one - introduce some competition by appointing
two travel agents to battle over price and service
and review them annually.
Negotiate a corporate airlines programme
Given that airfares represent the highest
percentage of most travel budgets, controlling
costs here is key. Identify your key routes and
high-volume city pairs and use your documented
travel volumes to negotiate deals. Make use of
route deals, bulk air purchases and incentive
schemes. Limit the number of preferred vendors, who
will increase discounts in return for a large
portion of your company's travel dollars.
Negotiate hotel rates
Analyse hotel usage and identify savings
opportunities. Also identify key destinations,
volumes and other lodging patterns to prepare for
rate negotiations. Leverage your travel volume by
limiting negotiations to a small number of hotels
in key destinations and inform the travel agent of
your negotiated rates.
Use corporate cards
Minimise cash advances through the use of a
corporate charge card. These not only provide
detailed management info on T&E but provide
insurance coverage, itemised statements, emergency
cash and often 24-emergency assistance. Relying on
cash can rob you of T&E data and increase the
risk of expense over-reporting by staff.
Get agent to prepare monthly management
Get the agent to prepare a monthly management
report: this could be broken down into travellers,
destinations and types of service and can show how
much the agent has saved you.
Finally, keep all the above in mind and
remember: squeezing the travel agent alone is not
the best single method to reduce cost.
|A recent survey by AMEX has revealed
that just 54 percent of companies in
Singapore have a written travel policy.
Another study by VISA has shown that it's
getting staff to adhere to it that counts.
Companies with 99 percent compliance had
the highest estimated savings at 35
percent, while those with the lowest
compliance - just 60 percent - made savings
of just 10 percent. Given that
T&Eexpenses are widely accepted as most
companies' second largest controllable
expense, the difference between 10 percent
and 35 percent is nothing to be sniffed
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