Global study shows significant losses from unmanaged hotel programs

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cost_control
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Egencia previewed results today from a global study “Hotel Cost Control: Savings and Opportunities,” finding that companies risk tremendous annual budget losses through unmanaged travel activity.

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Egencia previewed results today from a global study “Hotel Cost Control: Savings and Opportunities,” finding that companies risk tremendous annual budget losses through unmanaged travel activity. Pairing insight from corporate travelers, travel executives, and real-world travel programs, the study also examines common areas of loss, ways to prevent leakage, and emerging opportunities for cost savings in an effort to establish industry best practices.

A global survey of 433 travel executives revealed missed opportunities for corporations managing hotel spend, including that 30 percent said their companies did not have a hotel policy in place. Supporting data confirms other gaps including:

– 65 percent do not have city-specific hotel per diems
– 33 percent use expense reporting to monitor compliance
– 34 percent require pre-trip approval to monitor compliance
– To encourage compliance: 32 percent proactively inform all employees who book travel of the policy; 29 percent verbally reprimand those who book out of policy; 12 percent send email notification to those who book out of policy; and 12 percent do not enforce compliance at all.

These statistics are significant because defining hotel per diems by city or actively enforcing a policy once in place can help make a travel program more fiscally sound. Likewise, requiring pre-trip approval can boost compliance and deter unnecessary spending by palpable amounts.

This issue was further underscored by the results of a global survey of 1,000 travelers and arrangers. Fifty-five percent of those that responded noted that their company does not enforce or simply encourages them to follow a hotel policy, and 32 percent said that their company does not have a hotel policy at all.

The Hotel Cost Control study also takes a deeper look at the benefits of proactive policy management and reducing leakage. For example, for Egencia clients with an average travel spend of US$15 million or more, those actively enforcing policy saved roughly 17 percent on average daily rates (ADR) versus those companies that do not enforce hotel policy. Companies that enforce hotel policy also see 14 percent greater policy compliance and a 33 percent greater hotel trip attach rate versus un-enforced programs, meaning they are reducing leakage in their program.

Besides sharing best practices for policy implementation and enforcement, the study also examines topics such as:

– Preferred supplier strategy and negotiation
– Managing change within your organization
– Monitoring and policy oversight
– Benefits of mandating

In its 2010 Forecast and Hotel Negotiability Index, Egencia found that hotels represented fertile ground for buyers to negotiate better rates and realize travel cost savings. To address this issue in-depth, Egencia invested in this global study and will share this along with other best practices in a free web seminar “Hotel Cost Control: Best Practices and Opportunities” on March 11, 2010, 10:00 am Pacific time/1:00 pm Eastern time/6:00 pm GMT at Egencia.com. To register for the Webinar or to receive a free copy of the white paper, go to Egencia.com or http://www.egencia.com/mktg/2010_q1_hotel/default.asp .

Source: www.pax.travel

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