Tag Archives: travel funds

Travel rules are effective when they use real time hotel rates!

Travel rules are effective when they use real time hotel rates!

Everyone knows that hotel rates vary by market, season and when the room was booked. However, no one would describe hotel pricing as intuitive. Take the San Francisco market. The federal government estimates that the median rate for October of 2016 will be $250. Travel rules applied by government agencies will reflect this amount. However, a search for hotels on October 5th in a corporate travel system returns a median hotel rate of $409.

Travel rules will only be effective if an organization uses real time hotel rates.

Travel rules will only be effective if an organization uses real time hotel rates.

The rate is high because a very large conference  will be held on this day. In fact, there are more people attending this conference than there are hotel rooms in San Francisco.

Why are traditional travel rules unfair?

However, a hotel reserved at this rate would violate your typical travel rules. Hotel rates in a traditional travel policy are based on average prices in the market and month of the year. They do not take into account large conferences, days of the week, sub-market, length of stay, advance booking time, and other factors which have a significant impact on room rates. As a result, the company may not reimburse the employee for the full cost of the hotel.

Similarly, most managers reviewing an expense report for this hotel stay will question the cost. They may not know that the conference took place or how much impact it had on hotel prices. They don’t have time to research hotel costs on different web sites. Even if they did, most expenses are reviewed after the trip was completed and hotels don’t show rates for nights in the past. The manager may conclude that the employee didn’t use travel funds responsibly.

What can you do to address this situation?

A few common sense steps and the right travel software can solve this conundrum.

  • Set a travel policy based on the median rate in the market rather than a flat rate per night.
  • Use a travel booking tool that calculates the median rate and shows which hotels are out of policy.
  • Have the travel system notify a manger when a trip is booked. Trips which are too expensive can be cancelled without penalty.
  • Show the expense approver the rates available at the time that the booking was made. This gives the approver enough information to decide whether the travel funds were spent wisely.

Contact us to learn more about creating the right hotel policies.

A travel policy should have clear rules, not vague guidelines!

Business travelers should use the same care for spending company funds that they would use with their own money. This should be the basic premise for an effective travel policy. However, we have seen travel policies so vague that they allow policy violations. At times, they may even encourage business travelers to spend more than they ever would with their own money!

A case in point would be this travel policy from a prominent university. It states that airline fees for services including “convenient or early boarding, extended legroom, seat location, baggage, in-flight meals, [and] Wi-Fi service should be incurred responsibly and should not be excessive.” This vague rule leaves the traveler to determine what is responsible and what is excessive. It provides no guidance regarding this.

Seat 24J would violate an effective travel policy.

Seat 24J would violate an effective travel policy.

The seat map above shows an aisle seat in Row 24 which costs $75 and an aisle seat in Row 27 which has no fee. Does a seat on Row 24 provide more legroom, free drinks, priority boarding, or other perks when compared to Row 27? No, it does not! It just gives the traveler more miles or points and lets him leave the plane a few seconds earlier. Who is paying the extra $75? Employers with vague travel policies!

How can the above travel policy be more effective?

Making a travel policy more successful is easier than one may realize. An effective rule would say, “Travelers may spend up to $10 for each hour of flight time to purchase a window or aisle seat when no window or aisle seats are otherwise available.” Such a rule does the following.

  • It balances the comfort of the traveler with the need to spend the organization’s travel funds responsibly.
  • It clearly demarcates expenses that are acceptable from those that are not.

A corporate travel booking solution can tell employees whether they may purchase seats as they view the seat map! Such tools take into account the following.

  • The duration of the flight.
  • The availability of aisle and window seats.

Adding the said rule to the online booking solution is important because it ensures that travelers do not need to commit the rule to memory. However, they cannot claim ignorance of the travel policy after they have purchased their ticket either.