I’ve written numerous times about the importance and issues regarding corporate travel compliance. Studies show that even well managed programs still suffer from between 25-50% program “leakage” across air, car, and hotel bookings. For corporate travel business owners, managing “leakage” becomes part of their program strategy – how can we convince the traveler that booking through the approved channel is better, more beneficial to himself and the company? That answer varies by traveler, status in the company, and travel habits. And if we can uncover what drives booking behavior and can satisfy her needs, the entire program benefits even in ways not directly apparent to the traveler.
We know based on studies by leading consumer travel brands, our understanding of how Millennials purchase products and services, and the sheer volume of purchasing choices available in the marketplace today, that driving 100% compliance will only become more elusive in 2021 and beyond.
The problem is that we find ourselves at a point in time where compliance has never been more important.
Compliance is Critical for Risk Management and Duty of Care Programs
When a traveler books his air, car, and hotel reservations through the Travel Management Company, the pertinent booking data is electronically “handed-off” to a third party risk management company or is housed with the TMC’s database for future use or reporting. In either case, in the event of an emergency, the TMC can quickly communicate or effect impactful change for that traveler. The types of services that can occur in these situations can be as benign as schedule changes or as serious as medical emergencies, hostage situations, terrorist attacks, hotel fires, or airplane crashes. With all, companies have both a fiduciary and legal responsibility to the traveler to ensure that reasonable precautions are taken to ensure this duty of care. Assuming the client does not have access to off-channel booking technology, duty of care is lost when the traveler books outside of the approved TMC.
COVID-19 has brought compliance once again to the forefront. The industry struggled with this issue after the terrorist events of 9/11 and other international emergencies and again today. This time, the impact that the pandemic has on risk management programs will be long lasting. Varying state, federal, and international laws governing travel and traveler points of origin have already become critical elements for well-run risk management programs.
Here are some of the questions that need to be addressed when considering corporate travel compliance and risk management.
- How compliant is your program?
- How do you handle non-compliance?
- Is the data hand-off between your suppliers, your TMC, and your risk company sound?
- Who internally is responsible for your risk program and how do they quality control process and technology?
Compliance Saves Money
All of us know that guy in the office down the hall who books outside of the TMC because he found a better deal elsewhere. In some cases, this may be true. But for those who have taken the time to analyze their company’s booking data and have negotiated preferred supplier contracts, these one-off examples do not offset the long term benefit in corporate discount programs. In fact, in many ways this rogue habit is harmful to the program. In addition to a duty of care failure, a client’s relationship with its suppliers is driven by both data and a demonstration that it has the support of its senior management as it relates to corporate policy. This becomes critically important when the client finds himself in a bind, needs a favor, or comes back to the negotiating table as circumstances change that require preferred contracts to be re-negotiated or restructured.
Compliance Helps your Travel Management Company
Travel Management Companies (TMCs) need the help right now. TMC’s are largely compensated under a variable transaction model which means if the client isn’t booking trips, they aren’t making money. We are seeing the impact of this now as a result of the pandemic. TMC’s will start to see transaction revenue return as travel comes back but will also get the added benefit of the incentives they receive from the airlines, hotels, car rental companies, and GDS’s. When travelers make changes to reservations or use the TMC’s online booking tool, they see revenue and frankly they deserve it. TMC margins are thin and the service they provide is valuable. Compliance helps our TMC partners recover more quickly.
Compliance Helps your Travel Manager
Corporate travel tends to be one of the largest discretionary spend categories in companies today but also tends to be one of the most under-staffed. While you might think that just because travel volume is diminished that Travel Managers are finding themselves with a lighter workload, the opposite is true. Travel Managers have to re-examine every aspect of their program including risk management, supplier agreements, modifications to travel policy, new technology, and more. In addition, for every move she makes, a communications and change management plan has to be put in place with the intent to permeate the entire organization. Chasing down non-compliant travelers makes her job much harder.
Compliance Helps your Entire Company
Corporate travel impacts the company’s entire supply chain. Best in class organizations tie travel and entertainment expenses to every aspect of their organization in an effort to understand return on investment for everything including sales efforts, account management activity, and direct costs associated with the running of the business. Compliance provides a level of visibility that provides critical information that gives companies a competitive advantage no matter their industry.
CapTrav offers some support for corporate travel compliance by allowing the travel manager to see all travel bookings no matter the booking source. Learn more about CapTrav and how it can help your corporate travel program maintain visibility and compliance. Request a Demo here.