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Travel Management

 March 10, 2011
Egencia Research Study Identifies Key Factors To Increased Corporate Travel Costs

 A new Egencia study has found that the most common breach of corporate travel policies is the failure to book air travel far enough in advance, with more than two-thirds of companies nominating it as a problem area. The global study of nearly 350 travel managers found 95 per cent of respondents view traveler compliance as important to the success of their travel program, with a failure to comply ultimately affecting the company's bottom line.

Conducted by leading travel management company Egencia, the 2011 Global Cost Avoidance Study found that 68 per cent of respondents said that the failure to book air travel far enough in advance was the number one area where travelers tend not to comply.

According to Egencia's 2011 Global Corporate Travel Forecast, flights booked 21 days in advance are 20-49 per cent less expensive than those booked one week from the date of travel. Other areas of frequently breached compliance, included:

- Not booking preferred carriers or lowest logical fares (42 per cent)
- Booking more expensive hotel rooms (32 per cent)
- Not booking hotel rooms with preferred hotel partners (30 per cent).

Egencia said improved market conditions and increased travel demand had resulted in a slight increase in air and hotel prices in the Asia Pacific region, making cost avoidance strategies even more important to companies.

Gaurav Sundaram, Country Director, Egencia India said "Indian corporate travel buyers have the greatest advantage in adopting global best practice immediately and leapfrogging the learning curve. They can immediately impact their costs and address leakage in spend by implementing Egencia recommendations. They key approach would rest on creating a strong central travel policy , ensuring compliance and managing exceptions "

According to a recent joint Egencia/National Business Traveler Foundation study, a carefully conceived and consistently enforced corporate travel policy allowed companies to reduce annual travel spend by at least 45 per cent or more.

The 2011 Global Cost Avoidance Study highlights several best practices and strategies that travel managers can use to protect against growing corporate travel costs related to air and hotel.

When respondents were asked how they promoted travel spend accountability within their company, 56 per cent noted that they establish a pre-trip approval system for approving or denying travel before booking, while 37 per cent identify rogue travelers and follow-up with them directly, and 36 per cent provide department managers with a specific travel budget that they manage and own.

In addition to strong policy enforcement and compliance, corporations should actively utilize cost avoidance tactics and best practices to ensure a successful travel program. Respondents identified "insisting that travellers use lowest logical fares" as the most effective cost avoidance tactic. Respondents also identified requiring pre-trip approval, leveraging hotels that offer discounted/included amenities, using independent hotels and using a last room availability clause as tactics used to avoid costs.

Corporate travel executives are increasingly focused on negotiating additional amenities or better terms and conditions into their hotel contracts, with 63 per cent of respondents saying that they are using this tactic to combat anticipated hotel rate increases in the coming year.

"With the economic growth in the APAC region, demand and prices are set to increase in 2011. To control corporate travel spend, it is now even more important to focus on policy enforcement and cost avoidance strategies," said Cecilia Routledge, Managing Director, Egencia Asia Pacific. "Maximising clients' budgets and minimising their costs is our goal without reducing their service, comfort or safety."

Educating travelers to utilize and understand the full benefits of comnegotiated hotel rates and programs like the Egencia Preferred Rate program offering discounted rates and additional amenities which can help immensely."

More than half (57 per cent) of participants noted that they do not include reminders in their travel policy communications about available hotel benefits or amenities that have been negotiated into their rates. This is a substantial missed opportunity, as educating travelers on the availability of these benefits through targeted communications can dramatically increase the likelihood of them using these rates and included benefits.

Respondents focused most prominently on negotiating free breakfast (77 per cent) into their hotel contracts, followed by free Wi-Fi (55 per cent), free parking (39 per cent), last day cancellation (36 per cent), and last room availability (24 per cent).

Further insights into Egencia's 2011 Global Cost Avoidance Study are available upon request. These include region-specific figures.

www.egencia.co.in