Monthly Archives: September 2014

Rethinking the managed travel program

Travel and Entertainment spending is one of the largest controllable costs for most businesses. The typical Fortune 500 company negotiates discounts with suppliers,  has formal policies limiting how much a traveler can spend, and requires its travelers to book all of their flights, hotels, and cars with a travel agency hired by the company. The programs work for the bottom line. However, a study by travel market research group PhoCusWright found that only 30% of US business travelers work for companies with a managed travel program. Among companies with fewer than 50 employees, the number was just 12%.

The managed travel program creates an inherent conflict between the traveler, who would prefer to book whatever arrangements they like, and the people responsible for managing them. “My company trusts me to negotiate big deals or advise important clients,” the traveler says. “Why can’t it trust me to decide which hotel to stay in?” Executives considering the adoption of a managed travel program weigh how it will affect their company culture and morale. “I’m already asking my team to spend the night away from their families. Should I be leaning over their shoulder too closely to see what they spend while they’re on the road?” As a result, companies which have adopted managed travel programs are still seeing, on average, 50% of their hotel bookings taking place outside of the program.

On the other hand, a blank check means that travelers have an incentive to spend the company’s money in a way that they would never do with their own. It doesn’t make sense to book a flight a day in advance when the trip had been planned a week earlier. Nor is it worthwhile to stay in a four star hotel without needing any of the premium facilities that the hotel offers. Renting a car from the most expensive company just to collect the points isn’t a good use of funds either.

At Clarcity, we believe that the solution requires the alignment of incentives between the traveler and the company.  This is why we created the only software as a service travel management and rewards program which gives business travelers more points, miles, gift cards, or cash or for saving their employer money on business travel.  Book your plane ticket in advance? You get points. Rent your car from an economy brand? You get more points. Stay at a two star hotel instead of a four star hotel? You get even more points. Eat at an affordable restaurant? Even more points! By sharing the savings, both the company and the traveler benefit.