In today's environment, the reservation and booking process
has become highly transparent to most travelers. The corporate traveler is
almost functioning as a travel agent when they are using the self-booking
systems that travel managers have made available to them. It is essential that
those travelers get the best negotiated pricing in the marketplace for
airfares, hotel rates and other travel costs.
As the hotel request-for-proposals season commences, a key
rhetorical question that travel buyers should ask is, "Are our hotel rates
correct?"
There are many reasons for incorrect hotel rates being booked,
such as the rate is not loaded in the global distribution system, the rates are
not correct, the hotel is sold out, the hotel is withholding inventory, there
are squatter rates that overtake the correct negotiated rates and the travel
agencies use their own or consortium rates.
Another key rhetorical question is, "Are our airfare
rates correct?"
The airlines are consolidating rapidly and changing rates
and availability hundreds of thousands of times a day, which means that travel
managers need to implement comprehensive air management program audits to
really know if their companies are getting their negotiated preferred rate or
the best possible price. No self-booking tool or travel agency will suffice. We
find errors and mispricing commonly exceed a 20 percent rate, even after travel
agencies and booking tools use their quality controls.
Asking a seller if the first price they offer is the best is
futile because that is the same as asking the fox to watch over the hen house
or Enron if their numbers are correct. Travel buyers need to have their own
independent processes and controls, just like their companies employ to audit
their corporate financial statements. Companies also are required to have
independent accounting to comply with Sarbanes-Oxley regulations. Suppliers
cannot meet or fulfill these requirements.
Do travel managers see airlines, hotels, travel agencies and
other suppliers coming up to them and saying that their prices or availability
are not correct? Do travel managers know what their dynamic pricing formula is
based on and what is actually used? How do travel managers verify and/or audit
that the pricing is correct?
If a corporation is not deploying truly independent
oversight of its travel programs, double-checking preferred rates and commissions
earned, then someone else owns the hotel program. In these days of tight travel
budgets, investor scrutiny and a lagging recession, how can anyone afford to
turn a blind eye to millions of dollars being left on the table?
A blueprint to start on the path of corporate oversight and
good governance must include awareness that all things are not perfect. This
might sound too basic or simple, but many travel managers and procurement
specialists are not fully aware of the variable and costly impacts to the
corporate bottom line.
Another step on the blueprint path is gathering the data.
This is the key, and the data needs to be current. The reservation or travel
booking is the best source, but travel managers do not have all the reservation
data, as travelers commonly go outside the system for a variety of reasons.
Travel managers will never guarantee transparency and
integrity for their travel programs unless they audit the rate-loading process
and the pricing they have negotiated. Checking that rates are loaded in the
global distribution systems must be done on an ongoing and regular basis.
Checking these rates once or twice a year is not enough. We see corporate rates
being dropped every day. The corporation needs to be extremely diligent in their
oversight. Remember, suppliers benefit from these rates not being made
available to the travelers.
The next step is to compare the booked data to the
negotiated or best available price. This is a process that involves several
steps for accessing the negotiated pricing and GDS information, and needs to be
performed by someone other than the person making the booking, i.e., the
suppliers, to ensure complete transparency.
Finally, travel managers need to act on these reviews and
audits to fix the errors and inaccuracies and to correct the pricing before the
traveler commences the trip. Correcting errors and inaccurate pricing after the
fact, such as during the expense reporting process, will not save the company
money. Travel managers need to fix the rates so that the traveler and the
corporate cost centers benefit by having the best price at the right
time—before the travel occurs.
Lost airfares and hotel rates and unpaid commissions and
errors at the time of booking are costing corporations tens of millions of
dollars each year. Without corporate oversight, diligence, transparency and
independent audits, travel managers will never know about the lost savings
potential. What happens if a CFO or a chief purchasing officer decides to audit
a hotel program before the travel manager does?
Don't wait. Take ownership of the travel program now by
deploying independent audits that guarantee transparency, integrity and
fulfillment of negotiated airfares and preferred hotel contracts.
As we have learned, there is a lot of low-hanging fruit out
there. All we have to do is identify it. By using the same accepted oversight
and audit processes in the travel space that most companies use throughout
their finance, procurement and other processes and for other suppliers, travel
managers can get credited with bringing a new level of savings to their
organizations. In this business environment, anything less is just risky.
This story originally
appeared in the August 9, 2010, edition of Business Travel News.