What Is Travel Management?
Travel management services and policies help to ensure that departments and employees spend wisely while away for business travel, whether to attend meetings, conferences or visit another corporate office. Travel costs and expenses often make up a sizable portion of a corporation's annual budget, so having a solid strategy is crucial to protecting the bottom line. Though travel is often necessary, there are ways to secure lower prices to make it as economical as possible.
Travel management is the process of securing the lowest possible rates for corporate travel, as well as tracking employee expenses on meals, ground transportation, lodging and other necessities. Companies can do this internally through the accounting or human resources department. Alternately, they might outsource this responsibility to a travel management company.
The application of travel management services and planning means spending time negotiating rates or contracts with airlines, hotel chains and car rental companies. It includes the process of reviewing employee receipts and claims for travel reimbursement, as well as the distribution of vouchers, maintenance of a travel management website and looking for ways to reduce corporate travel expenses.
If your company chooses to go the internal travel management services route, you will need to choose which department and personnel will be responsible for overseeing policies, procedures, bookings and employee reimbursement. When handled internally, sometimes employees are responsible for booking their own hotels, choosing restaurants, car rental companies and more. As they travel, they must keep track of all receipts and expenses and then turn them in to the appropriate internal parties for reimbursement. Other times, employees book travel through a special company website that automatically ensures that flights, hotels and other expenses remain within company policies for budget and brand.
While managing travel internally initially makes sense for a small and growing company, as a business grows, travel management can become too unwieldy to keep internal. External travel management services remove this pressure from a business so they can focus on what they do best. Travel management companies act as travel agents who negotiate the lowest prices and contracts with airlines, hotel chains, car rental companies and more.
External travel management services can be as simple as an externally created travel website that automatically facilitates and tracks employee bookings or expenses. It can also be as involved as having a specialized concierge available to each employee to arrange travel plans, hotel lounge access, car service and more.
Finding or negotiating the best hotel costs is a vital part of the travel management process, as lodging can easily become more expensive than airfare. Many companies require employees to adhere to a hotel chain list, as well as booking a room within a certain price range. The lower the hotel cost, the more money is available in the budget to cover things like dining and ground transportation. Companies who practice internal travel management typically use the same booking websites as the general public, while travel management companies have access to special rates as travel agents.
In travel management, ground transportation includes things like Uber, taxis, Lyft, shuttles, car services, car rental companies, subway fees and more. Your company's travel budget will dictate which of these services are covered expenses and which ones are not, as well as how much the company is willing to reimburse. For instance, when a free hotel shuttle is available from the airport to the hotel, your company may choose to decline reimbursement for a car service. Special deals are often negotiated with certain ground transportation chains and employees must use those services in order to receive reimbursement.
Like with hotels and ground transportation, travel management services and policies often stipulate which airlines employees book travel with, as well as what class they may book. Different cost requirements are often in place, depending on your business travel destination and the time of day you must travel. Flights might be booked through a special website, or employees could be on their own to book airfare and then submit receipts to the appropriate internal or external travel management parties.
While companies are not required to provide money for meal expenses, many choose to provide this service as a way of taking care of their employees without burdening them unduly. The amount allowed for meal expenses is usually part of the employee's per diem. Per diem is Latin for "per day" and it typically includes things like meals, hotel and ground travel.
For instance, your company might allot $325 per day in travel expenses. This is the per diem and the employee is responsible for figuring out how to budget that. If employees choose economical hotels and car rental options, there might be quite a bit of budgetary wiggle room for eating out. Some travel management companies work with businesses to specify a dining cap in order to prevent overspending on company-funded meals.
Many companies include continuing education expenses as part of their travel budget so that employees can take part in special meetings and events. Other times, a corporation hosts a large conference or meeting and a travel management company helps to negotiate low block rates for rooms, book meeting venues, coordinate ground transportation services and more. Sometimes, these services are easily booked through a travel management website and other times an agent must book accommodations for each individual. Some ground transportation shuttles and services may not require client booking at all.
Sometimes employees are required to pay for travel expenses on their own dime and then submit receipts for reimbursement. This can be financially burdensome, so some companies arrange for company credit cards that can be used for travel expenses. Employees are still responsible for submitting travel receipts to the proper internal or external travel management parties, but will not be responsible for footing any of the cost as long as they only spent on approved expenses. Most companies have a way to submit a travel expense report, either online or on paper.
Small businesses often save money by managing their own travel policies and services, but as they grow it becomes impractical to pay staff to manage travel details for hundreds or thousands of employees. In this case, it is often more economical to partner with a travel management company who can obtain travel agent rates for everything from airfare to airport lounges and hotels, car rental services and more.
For companies who manage their own travel expenses, there are often cost benefits to considering the following:
- Mid-tier hotels instead of high-end hotels.
- Mid-size rental cars rather than sedans.
- Budget airlines.
- No first-class bookings.
- Less expensive destinations.
For an idea of what a budget-conscious per diem might look like, the U.S. General Services Administration has a searchable travel management website of destinations that breaks down per diem expenses by hotel, meals and car rental. For a more middle-of-the-road cost option, Business Travel News compiles a yearly Corporate Travel Index that lists the average price of hotels, rental cars and meals in a variety of popular business destinations.