A sobering trend in business travel is forcing companies to re-evaluate their processes and systems for controlling costs.
A recent study by the Global Business Travel Association (GBTA), reveals that across the board employees are choosing to ‘do it themselves’ and go out-of-policy when it comes to reserving hotels, flights and land travel (train and car), as opposed to using their company’s travel management service.
The study surveyed over 2,000 business travelers, from six countries around the globe including: The U.S., U.K., Canada, France, Germany, and Australia. Its findings clearly point to the fact that “out-of-policy decision making is common among business travelers” with percentages varying depending on the country:
United States: 59%
So why are people choosing to ‘go it alone’ outside of the travel policy?
“I booked out of travel policy because it was so much easier” says Mallika Chaudhuri, former design manager at Hey Trends, a Turkish based fashion company. “It used to take ages and hundreds of emails to use the in-house system, and I also felt that things got lost in translation. So I booked flights and hotels for me and the team on my own.”
In the on-demand age of globalization, consumer online tools are winning out over preferred travel vendors, because for many, like Chaudhuri, it’s simply more efficient than what the company’s travel policy defines.
The backlash is that companies are losing out
As younger, tech savvy, travelers working for smaller companies veer further away from the ‘dinosaur age’ of using in-house systems, companies are increasingly losing money and failing to ensure compliance with their travel policy.
The study shows that those who book out of travel policy often end up taking longer trips, staying at more expensive hotels and booking higher class air and train tickets. Out-of-policy travel choices are costing companies dearly.
France, for example, has an increased annual travel cost per out- of-policy traveler, of over 15,000 Euros, while the average U.K business traveler is spending an added 1,400 pounds (1,900 Euros) per person per year. In Australia, while being at the bottom of the spend rankings, the average business traveler is still over-spending by 2,600 AUD (1,700 Euros).
Not only does going out-of-policy affect a company’s financial bottom line, it also plays a role in employees’ productivity. Those who ‘did it themselves’ using OTAs (online travel agencies), spent more time – usually company time – comparing costs and booking flights than those who went through the in-house system.
“I’ve gone out of travel policy on occasions where desired flight times weren’t available or I could source a better rate myself,” says a senior manager at a leading software company based in the U.S. “I would also use it when I wanted to stay at a hotel that wasn’t part of the available inventory.”
According to the study, hotel accommodations top the list for out-of-policy travel, followed by air and train tickets. When staying at a hotel, there are various ways business travelers go out-of-policy including:
Ordering room service: 24%
Staying at a non-preferred hotel: 13%
Getting in-room entertainment: 11%
Staying an unnecessary extra night: 10%
Staying at a more expensive/higher-class hotel: 8%
39% of these travelers state the choice is for personal reasons
Yet at the core of people’s motivations to go out-of-policy is the lack of fresh and agile solutions coming from their employers. When companies fail to keep up with advancing technology, problems arise. In this day and age, online travel technologies have not only driven greater transparency, but also more competitive shopping and pricing.
OTAs and similar platforms are providing employees with the know-how to book, travel and spend the way they feel most comfortable, regardless of their employers’ policies. Companies need to adapt to this world and offer new solutions that empower employees to make the right decisions independently that work for both the company and the traveling employee.