What Last-Minute Travel is Costing Companies, and How Travel Policy Monitoring Can Help

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A new report from Concur shines light on just how much last-minute business travel is costing companies and provides evidence for how organizations can save money when travel policies and travel management technology solutions are adopted and monitored.

Travel and expense management solution provider Concur parsed through data from roughly 22 million U.S. domestic round trip airline bookings made through its travel solution between 2011 and 2015 to identify some key areas businesses can focus on to reduce costs. For instance, it found the best time to book airline travel was between eight and 15 days before the trip. If a company can book within this time frame, it will save 18% compared with if it books within seven days of travel, the report said. Concur also estimated if the company can book at least eight days before a trip, it will save an average of $148 per ticket.

Some last-minute business travel is necessary, however, and if a company books a trip only a week out, prices are not likely to vary significantly within those seven days. “If a traveler must book less than a week in advance, the cost savings will be negligible whether the flight is purchased six days, three days or one day before the flight,” the report said.

According to the data Concur used for this report, it said 50.6% of business travelers booked trips 15 or more days in advance in 2015. A quarter book between eight and 14 days and nearly 17% book within four to seven days of the trip. These booking windows have largely stayed the same since 2011, the report showed.

The cost of last-minute travel also varies depending on the season. For instance, premiums on purchasing an airline ticket a week before travel are lowest in June when they are 8% cheaper than other months of the year. August and January, though, are when companies are most likely to pay the highest premiums when booking airline within seven days of a trip, according to the report. For example, Concur said the average price of an airline ticket in January when booked eight or more days out is $401. When booking within a week, though, that January airline rises to an average cost of $558.

Extra Airline Fees Add Up

Airlines are increasingly making more money through ancillary fees by charging travelers for checked bags or extra legroom on the plane, for instance. In its report Concur points to data showing ancillary revenue grew from $22.6 billion in 2011 to $38.1 billion in 2014 — a rise of 69%. Between 2013 and 2014 alone, airline ancillary revenue grew 21%. Companies need to be mindful of these extra fees. While an airline ticket may be cheap, the total cost of that business trip may end up being much more if the airline has multiple ancillary charges, making it crucial for managers to track these costs as part of the price of the overall flight, the report said.

Tim MacDonald, senior vice president of travel for Concur, echoed that point, saying these ancillary fees can be a real challenge for companies.

“It’s a challenge that is magnified by the number of travel bookings that occur outside of the travel manager’s travel program,” he added.

According to Concur, more than 50% of hotel bookings and more than 24% of airline bookings occur outside a company’s travel program. To tackle this, MacDonald said travel managers are generally taking one of two approaches, one being adopting a travel expense solution that can provide analytics capability and insights on company travel, allowing managers to begin reporting on the total cost of business trips, which includes these add-on fees. With Concur’s solution, travel managers are able “marry” basic travel costs, like airline tickets, to additional travel expense information like airline ancillary fees, MacDonald said.

Another approach travel managers are taking is adopting even more robust and complete travel solution like Concur’s TripLink, which makes it possible for companies to capture 100% of employee travel costs. The solution connects a Concur user’s account to suppliers like hotels, rental car companies and airlines, ensuring business travelers receive their corporate discounted rate when booking trips, and making sure all travel data is captured. Such a solution allows travel managers to “have a full view into travel and ancillary fees,” MacDonald said.

Advice for Travel Managers

Booking outside a company travel program isn’t necessarily “maverick spending.” Most of the time, it is approved by managers to save the company money or because a trip cannot be booked through a travel agency or through a specific travel policy.MacDonald said there is a “fallacy” out in the market that travel enforcement is the answer to reigning in company travel costs when travel “monitoring” is the real key.

Travel managers should be monitoring compliance to corporate travel programs and have a solution in place that will, for instance, send a request to an employee who books outside the policy that asks them to not repeat the behavior in the future.MacDonald said in the case an employee or manager books an airline ticket within seven days of the trip, a notification can communicate to the person that the ticket was more expensive for the company, and to consider that when making future travel plans. It’s not telling the employee to cancel the trip, necessarily, he added, but offering evidence for why he or she should try to comply to the company’s travel policy in the future.

“When we know our compliance is being monitored and tracked, we tend to try to comply,” MacDonald said. “That is our recommendation — leverage the automated processes and tools built into Concur Travel and TripLink to make that happen.”

Additional Insight on the Report

The main thing that jumped out to Concur in its recent report was the “magnitude” of the cost of last-minute travel. This “magnitude” was probably larger than the company anticipated seeing, MacDonald said. However, it does point to why it’s necessary to have travel policies and technology solutions in place to manage company travel and associated costs, he said.

“It really enforces the value of what I would call applying passive policy enforcement or encouragement to your travelers,” he said.

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