Skip to main content Skip to Footer

LATEST THINKING


Six ways you’re wasting money on corporate travel

Procurement BPO travel market insights: Your firm is wasting money on corporate travel—find out why.

Overview

Travel may not be the largest budget line-item, but at 1 percent of revenues for the average company, it’s a significant area of spend. However, travel is an extremely difficult area to manage well because it’s highly fragmented, requires expertise across many travel sub-categories and local markets, and is complicated by the personal preferences of travellers.

Learn about six ways your travel dollars are being wasted, and some of the steps you can take to stop travel waste and drive savings to your company’s bottom line.

Key Findings

Travel is one of the hardest cost areas to control because it is fragmented, requires expertise, and is personal. This report discusses six ways travel spend is being wasted, and how to overcome these challenges.

  1. Loose Travel Guidelines (or no visibility): Travel guidelines should provide a clear set of expectations for employee travel behavior and decision making, supported by visibility that allows managers to evaluate the decisions their teams are making and enforce compliance if necessary.

  2. Focusing too much on the “big ticket” item: Focusing on more visible categories like air—with discount potential tied to travel patterns and airline pricing decisions that change hourly—can leave a lot of money on the table, while less obvious/visible areas can yield much larger savings in the range of 20-40 percent.

  3. Planes, hotels and automobiles—assuming certain common fees are non-negotiable: The big mistake here is assuming that the smaller items beyond the base hotel room rate or rental car daily rate are non-negotiable. This is incorrect and can result in wasting money by overpaying ancillary fees that inflate total costs and erode the well-negotiated savings on the headline rate.

  4. Taking rebates instead of signing bonuses: Upfront bonuses or discounts given at the time the expense is incurred are far better. Aside from the time value of money, there is an additional cash flow benefit to an upfront signing bonus, not to mention that a rebate on already spent money does not account for the taxes paid when the money was spent.

  1. Taking rebates instead of signing bonuses: Upfront bonuses or discounts given at the time the expense is incurred are far better. Aside from the time value of money, there is an additional cash flow benefit to an upfront signing bonus, not to mention that a rebate on already spent money does not account for the taxes paid when the money was spent.

  2. Ignoring mistakes made in planning corporate meetings and events: You should be thinking about the most efficient meeting locations (least travel required for most attendees and travel accessibility), managing the agenda to minimize the number of lodging nights required, and taking a TCO approach to balance the facility costs and services with lodging and other travel costs.

  3. Turning a blind eye for fear of upsetting the executive suite: Visibility, compliance, fairness and transparency should be hallmarks of an effective travel management program with policies that are enforceable and reasonable, while recognizing that policy needs to support executive efficiency and effectiveness without leading to extravagance.

Recommendations

Corporate travel spend is a substantial expense area, but most firms don’t realize how much travel waste is costing them because they are ignoring the six areas discussed above. However, at 1 percent of revenue for most companies, travel expense is significant, and effectively managing it can drive results straight to the bottom line and support continuous improvement and sustainable results.

An optimized travel management program based on reducing travel waste rather than simply limiting travel from taking place is a real win for the corporation, its employees, and often its clients.