Let’s face it. Budgets are tight for schools and local governments. All types of spending are coming under more scrutiny. Taxpayer funded travel is an area that gets more attention than most. School and local government travel is often for conferences and other fun events that may not have enough business value. A good travel request process will make sure that only necessary travel is approved.
We all know that some business trips are routine and others are fun. The typical routine trip is a visit to the company’s office in another city or to a client’s office. These trips are full of attending meetings, making presentations, and other things that people normally do day to day. In short, employees don’t have an incentive to take these trips unless they believe that there is real business need.
Then there are conferences. Conferences may feature free concerts, gourmet meals, and celebrity speeches. Networking opportunities are a staple of conferences. They are typically held in major cities with lots of free time to explore. Orlando, Las Vegas, and Chicago were the most popular conference destinations in 2015. Employees have an incentive to attend conferences even when there is little business value.
The 2010 GSA conference in Las Vegas became a symbol of government waste. The $75,000 bicycle building exercise and $44 per person breakfast made national news. Newspapers often report on travel dollars wasted by local governments. This conference of city leaders cost taxpayers of an Arizona town almost $2700 per person. The Freedom of Information Act gave the paper access to every dollar spent. Even a $7.42 Uber ride was mentioned. The city had no travel policy or travel request process. No one could justify what value the conference provided.
How can local governments incorporate a travel request procedure?
Schools and local governments can keep travel spending in check a few easy steps:
1. Require employees to make a formal travel request. The business value of the travel should be clearly explained. The travel request should be reviewed by multiple managers.
2. Store the travel request in perpetuity. A corporate travel system can make sure that proper records are kept.
3. Check that final expenses do not exceed the request. An integrated expense management solution makes this process easy.
Let Clarcity show you how easy a travel request can be.
Big changes have come to airline frequent flyer programs in the past five years. Southwest Airlines was the first to change its travel rewards program, known as Rapid Rewards program. In 2011, Southwest began awarding points based on the cost of each ticket rather than the number of flights. Southwest also began offering additional points to travelers purchasing refundable fares and to travelers who fly often enough to be in its A-List elite program. Delta and United mimicked Southwest’s changes in 2015, awarding travel rewards (miles) based on the cost of the ticket and the traveler’s elite status rather than based on the distance of the flight. American Airlines announced that similar changes to its AAdvantage program will take effect in the summer of 2016.
What impact do travel rewards from airlines have on a corporate travel program?
Are these changes good news for a corporate travel program? In short, no. They incentivize the behaviors that the travel policy is designed to avoid. Everyone knows that airfares usually rise closer to the date of departure. In fact, a study revealed that tickets sold one week before departure are 30% more expensive than they were two weeks prior. Tickets sold a few days before departure are often more than twice as expensive. The new programs encourage business travelers to wait to the last minute to buy their ticket so that they earn the most miles by paying the highest price.
Elite status has always provided an incentive for the business traveler to choose their flights based on the airline rather than the price. However, the bonus miles and points take this perverse incentive to a new level.
How can corporate travel managers curb this trend?
Corporate travel managers can fight back with a few powerful tools.
Require travelers to choose the flight option with the lowest logical fare. An online booking tool with a rules engine can determine which flights are “logical” based on departure and landing times, duration, and number of stops.
Require travelers who make last minute bookings to justify them with a written explanation. The explanation can be captured using your corporate travel system when the reservation is made.