A sobering trend in business travel is forcing companies to re-evaluate their processes and systems for controlling costs.
A recent study by the Global Business Travel Association (GBTA), reveals that across the board employees are choosing to ‘do it themselves’ and go out-of-policy when it comes to reserving hotels, flights and land travel (train/car), as opposed to using their in company management service.
The study surveyed over 2,000 business travellers, from six countries around the globe including: The U.S., U.K., Canada, France, Germany, and Australia. Its findings clearly point to the fact that 'out-of-policy decision making is common among business travellers' with percentages varying depending on the country:
- France: 65%
- United States: 59%
- U.K: 52%
- Canada: 52%
- Germany: 49%
- Australia: 47%
So why are people choosing to ‘go it alone’?
“I booked out of policy because it was so much easier,” says Mallika Chaudhuri, former design manager at Hey Trends, a Turkish based fashion company. “It used to take ages and hundreds of emails to use the in-house system and I also felt that things got lost in translation. So I booked flights and hotels for me and the team on my own.”
In the on-demand age of globalisation, consumer online tools are winning out over preferred travel vendors, because for many, like Chaudhuri, it’s simply more efficient.
The backlash is that companies are losing out.
As more young, less experienced, tech savvy travellers working for smaller companies veer further away from the ‘dinosaur age’ of using in-house systems, companies are increasingly losing money and failing to ensure compliance.
The study shows that those who book out of policy often end up taking longer trips, staying at more expensive hotels and booking higher class air and train tickets. Out-of-policy travel choices are costing companies thousands.
France, for example, has an increased annual travel cost per out- of-policy traveler, of over 15,000 Euros with the U.K, spending an added 1,400 pounds (1,900 Euros) per person per year and Australia, at the bottom of the ladder, still spending 2,600 AUS (1,700 Euros).
Not only does going out-of-policy affect a company’s financial bottom line, it also plays a role in employees’ productivity. Those who ‘did it themselves’ using OTAs (online travel agencies), spent more time – usually company time – comparing costs and booking flights than those who went through the in-house system.
“I've gone out of policy on occasions where desired flight times weren't available or I could source a better rate myself,” says a senior manager at a leading software company based in the U.S. “I would also use it when I wanted to stay at a hotel that wasn’t part of the available inventory.”
According to the study, hotel accommodation tops the list for out-of-policy travel, followed by air/train tickets. When staying at a hotel, there are various ways business travellers go out-of-policy including:
- Ordering room service 24%
- Staying at a non-preferred hotel 13%
- Getting in-room entertainment 11%
- Staying an unnecessary extra night 10%
- Staying at a more expensive/higher-class hotel 8%
- 39% of these travellers state the choice is for personal reasons
Yet at the core of people’s motivations to go out-of-policy is the lack of fresh and agile solutions coming from their employers. When companies fail to keep-up-with advancing technology, problems arise. In this day and age, online travel technologies have not only driven greater transparency, but also more competitive shopping and pricing. OTAs and similar platforms are providing employees with the know-how to book, travel and spend the way they feel most comfortable, regardless of their employers' policies. Companies need to adapt to this world and offer new solutions that empower employees to make the right decisions independently that work for both the company and the traveling employee.
This post was written by Javier Suarez, CPO and Founder of TravelPerk. TravelPerk is an all-in-one travel management platform where companies can budget, book and manage all of their business trips in one place while saving 30 % travel costs and 80 % of your time.
They are looking forward to exhibit at the Business Travel Show, to meet old and new customers, partners and other innovators in the industry. Connect them via www.travelperk.com or Linkedin (www.linkedin.com/in/julianamendez and Javier Suarez)and meet at the Business Travel Show - register now at www.businesstravelshow.com