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Results in of First-Ever, Industry-Wide Corporate Travel Policy Study
August 26, 2010
The NBTA Foundation, the research arm of the US-based National Business Travel Association, and Egencia, the corporate travel arm of Expedia, Inc., recently released results from its Corporate Travel Policy: Benchmarking and Insight study, evaluating travel management trends and policies across North American and European organizations and assessing travel policy effectiveness overall. One significant finding is that stricter policies requiring the purchase of non-refundable tickets and the lowest logical fair for air travel could equate to an estimated $29.8 billion in total corporate savings, the study says.
“Travel is fundamentally different than other products and services in that it can’t be standardized or commoditized. No trip is ever exactly the same, and that makes travel exceedingly difficult to control.” said Craig Banikowski, NBTA President. “To help the business community make informed travel policy decisions, this study evaluated widely varying travel programs and companies to expose the most successful practices of travel management and avoid lost savings.”
Based on best practices and insights from 689 North American travel buyers, the study takes a comprehensive look at policy mandates versus guidelines, consolidation, booking procedures, class of service, advance purchases, pre-trip approval, groups/meetings and emergencies, among other issues – all of which comprise variables that make travel difficult to standardize.
Key suggestions for lowering costs outlined in the study include:
- Enforcing stricter travel policies
- Requirements around non-refundable tickets
- Providing guidelines around premium-class travel
- Defining a ‘lowest logical fare’ requiring travellers to use departure windows and accept reasonable connections
- Using preferred suppliers, at least where they offer the lowest fares
- Working aggressively to increase the average time before travel that airline tickets are purchased since advance bookings are generally less expensive
“We know companies are updating their travel policies and working to reduce costs,” said Christophe Peymirat, Vice President of Global Marketing, Egencia. “But certain practices to dramatically reduce travel costs like driving travelers to non-refundable tickets are far from commonplace. Based on our research, companies could achieve significant annual savings using a lowest logical fare travel policy. For example, companies can save as much as 38 per cent on air spend by encouraging travelers to be flexible, book within a two-hour window of original departure time and use a connection when possible.”
With premium class air travel on average 223 per cent more expensive than coach fares, 54 per cent of Canadian companies are completely prohibiting business class travel over the past year.
The study also reveals that a company that spends $1 million each year on domestic flights could save $612,000 US annually using non-refundable tickets in combination with a lowest logical fare travel policy. The study surprisingly finds that only 35 per cent of travel mangers say their company policy is strictly enforced.
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