A guide to corporate travel policies
When you’re tasked with creating a company business travel policy, it’s tempting to slap something together and call it good. But your policy has the power to affect future decision-making by travelers, managers, and admins.
It can help you consolidate your company travel, making it easier to report and track business trips, or it can fail to affect behavior at all.
We’re kicking off this guide with an introduction to what a corporate travel policy is and what it can do for your company. Then we’re going into detail with some important topics and resources: best practices, tips for writing, a customizable policy template, how to achieve near-full compliance, how to manage trip approval using tech, even how to automate the business travel booking process.
What is a travel policy?
A travel policy is essentially a company’s rules and procedures that outline how their employees should approve, book, and expense travel for business purposes. Corporate travel policies are usually created by the Finance Manager and the Travel Manager and typically outline things like, if an employee can fly business class, how many weeks or business days in advance should they book their trips, or if there are certain precautions employees must take when traveling alone.
A comprehensive travel policy would normally pertain to both international and domestic travel, and have information about the following:
- Booking procedure and approved travel booking tool
- Allowable cost of booking (hotels, airfare, ground transportation)
- Special exceptions or rules for more expensive cities or routes
- Preferred company vendors
- Approval process for trips that exceed typical limitations
- Reimbursement process
- Permitted and not permitted expenses
- Travel debriefing process
- Travel insurance carrier
- Duty of care vendor or procedures
Clearly, a travel policy isn’t just about the moment of booking and its related expenses. It also controls all your travel arrangements and it affects employees in many different departments.
Why create a business travel policy?
Clear guidelines mean fairness for all.
Travel policies aren’t just rules, rules, rules. They shouldn’t cause frustration and eye rolls. Rather, travel policies can positively impact both travelers and businesses. Here’s how:
Benefits for travelers
- Flexibility and autonomy to book their own travel within guidelines
- Safety first! (Travelers’ whereabouts are tracked)
- Reduce confusion and hassle with travel booking
Benefits for the company
- Reduce spikes in travel spend and gain control
- Reduce friction and frustration over expenses and reimbursements
- Reduce total costs on business travel and optimize your company’s budget
- Increase fairness and foster a positive company culture
What should be included in a corporate travel policy?
Your company travel policy will be affected by how your company travels, who travels, and why they travel. However, there are some things that need to be in any company’s policy.
It’s essential to include your approved booking process and tool. Do you want travelers to book with one business travel platform so you can consolidate your spend? Do you want travelers to book for themselves within policy or do you want them to make a travel request to an office manager who books all trips?
Your policy should also clearly list what purchases can be expensed and what can’t, that way your travelers don’t unknowingly buy something that they won’t get travel reimbursement for or add unnecessary expenses to their corporate card. Business expenses like entertainment expenses, business meals, or registration fees for events, for example, all need to be clearly outlined in your policy.
Lodging policy guidelines
It’s also important to insert your company hotel policy rules and lodging expenses into your corporate travel policy. Every organization has different rules regarding accommodation within their corporate lodging policy, so it’s important to make them clear from the get-go.
In terms of hotel costs, it’s common for organizations to set a maximum hotel star rating or nightly/room rate that employees cannot exceed. It’s also usual for employees to be required to stay in standard hotel rooms, with ‘deluxe’ suites or rooms off limits.
Secondly, be clear about which incidentals can be reimbursed. These can range from room service and dry-cleaning/laundry services to valet parking and the use of hotel amenities (gym, swimming pool, sauna, etc).
Bear in mind that hotel rates are subject to both seasonal fluctuations and locations, so you’ll need to be mindful of any nuances depending on the time of year and employees’ destinations. For these reasons, many organizations prefer to partner with specific suppliers and negotiate travel packages and require their employees to use these suppliers wherever possible.
Travel and entertainment policy guidelines
You’ll also need to include a section on travel and entertainment best practices. This should include rules and guidelines on what employees can purchase in the name of entertainment while traveling.
Guidelines for travel and entertainment should include:
- Spending limits for meal expenses (either on a per meal or per day basis)
- Rules on what is allowed when employees are entertaining clients (meals, alcoholic beverages, etc)
- Clear instructions regarding situations where alcohol can and cannot be expensed, and a maximum amount that can be spent on alcohol per head
- List of unallowable personal expenses, such as laundry services, mini-bar charges, and personal phone call charges
- Instructions on information, original receipts, and other documentation required in order to process reimbursements
The travel policy is also a smart place to put your expense reimbursement process. This way travelers have a reason to check out the policy. You also need to clearly state who the final approver for these expenses is, and what the best way to pay for them is (do you offer travel advances? Should travelers use their own debit or credit cards for these payments?).
And finally (but certainly not of lesser importance), you need to include all of the safety information that travelers need. What should they do in case of an emergency while they’re away? Who should they contact for different types of emergencies? What insurance is available to them?
Guidelines for business class bookings
The rules regarding your corporate travel policy on business class bookings are an important section to include. Whether employees are not permitted to make business class bookings under any circumstances, or whether there are specific scenarios where they can, you need to make it clear from the outset what the rules are.
Although they’re typically less cost-effective than coach class bookings, there are circumstances where it makes sense to opt for business class bookings. For example, many companies specify in their corporate travel policy that business class bookings can be made if the travel segment exceeds a certain amount of hours (common benchmarks are anywhere between six and ten hours).
This type of rule allows companies to offer their employees comfort and flexibility during long-haul business travel, and can have a positive impact on traveler satisfaction — an important travel management KPI to be mindful of.
You’ll also need to consider a section where employees are permitted to use business class bookings when they’re cheaper than economy bookings. For example, there will be times when economy bookings are more expensive than business class after costs such as baggage fees and in-flight meals are factored in.
Another circumstance where employees could be allowed to make business class bookings is in the case of booking last-minute travel, where economy class bookings may be unavailable at short notice.
Remember, if there are no circumstances where employees are permitted to make business class bookings, make it exceptionally clear in your corporate travel policy to ensure there are no issues during the reimbursement process.
Guidelines on using business frequent flyer miles for personal use
When your employees travel, they rack up frequent flyer miles. There is no global corporate standard in place that governs whether the company or the employee keeps the frequent flyer miles. For this reason, it’s important to include a section that covers using business frequent flyer miles for personal use.
Some companies recognize that it is the employee, not the company as a whole who is traveling, and that employees should therefore be permitted to keep their frequent flyer miles. Others prefer to stipulate that frequent flyer miles should belong to the company and be used to reduce costs by using the miles to save against future flights.
Since there is no global standard, companies should define specific rules regarding employees using business frequent flyer miles for personal use to avoid any confusion. For example, you may want to allow employees to use frequent flyer miles, but stipulate that they cannot use higher fares for the purpose of earning extra miles. Similarly, you could make it clear that they must always travel with the least expensive airline, and not the airline with which they have a frequent flier relationship.
Within this section, you should also clarify how employees should record and save the miles they accrue. Using TravelPerk, employees can easily add and save specific airline loyalty program numbers to each employee traveler account, and we’ll also automatically check which of their travel rewards programs apply when they search for new flights.
Common challenges with travel policies
Most likely, you don’t want your travel policy to collect literal or virtual dust. Unfortunately, too many of them do. Here are some common problems with travel policy documents.
- Travel policies are difficult to understand
- No one reads them or remembers them
- Travel policies are not enforced using technology
- Travel policies come across as overly bureaucratic
Travel Policy Problems By the Numbers
- 64% of millennials understand their company’s travel policy but still book outside of it.
- 72% of businesses haven’t met their desired level of travel policy compliance.
- 50% or more of hotel bookings are outside of corporate policy.
Some of these issues can be solved simply by having a policy that more accurately reflects the needs of the business and the travelers. For example, if half of the trips aren’t compliant, the problem could be that your standard trip budget doesn’t reflect current travel prices or demands. The nature of your business might require lots of last-minute trip bookings, even though these are against the policy.
In addition to a realistic policy, the best thing that a business can do is to have a policy that is actionable and implementable using technology. A wiki or word doc or PDF just isn’t going to cut it.
You need a policy that lives inside of your booking technology.
How to bake your policy into the booking process
Because a document can’t affect what people buy, you need business travel booking tech. Use a booking tool that includes customizable travel policies and approval workflows. This way, if a trip is under policy, the traveler or admin can book it. If not, a notification gets sent to the appropriate manager or to finance (based on your prior approval settings for that traveler or department).
Now we have established what a travel policy is and why it’s important, have a look at the other aspects of this guide. This online resource will provide help on the following areas of a corporate travel policy: