Controlling Business Travel Expenses Through Effective Travel Policies

forced all players in the travel industry to become transparent in their pricing. The biggest impact has been on the traditional travel agent In May 2005, after three years of negotiation with ASATA ( Association of South African Travel Agencies ) and the industry players. SAA ( South African Airways ) moved to a zero percent commission environment and in doing so changed the face of travel in South Africa for ever. Overnight the traditional travel agent became a travel management company. Income was no longer derived from the supplier, but now a service that was provided to the traveler to process necessary travel request and paid for by the traveler. In terms of the corporate environment this change in structure forced corporate companies to analyze their specific travel patterns and review, develop, and implement a workable travel policy.

Non – compliance within corporate companies is an ongoing problem that has negative cost implications (Von Moltke, 2006). Procurement decisions are still largely left to office administrators and/or secretaries whose primary focus is on ticket price which narrows the view and ultimately cost the company more than necessary for travel (Bygate, 2006). The ongoing success of Low Cost Carriers has seen corporate companies having to abandon their support of legacy carriers in their attempts to reduce travel expenditure. This has not been well received by the travelers themselves. The recent demises of Nationwide Airlines has further diluted the number of seats available in the domestic market forcing corporate companies to look at the Low Cost Carries to form part of their travel policy.

Prior to the collapse of Airline they were well positioned in the market as they

offered the service of the legacy carriers but were priced in the Low Cost Carrier segmentTravel tends to be a very emotive issue as generally the corporate company is requesting their employers to spend time away from their families, friends & homes. The pre-eminent concerns of these travelers are not necessarily the cost involved but their own convenience and esteem while they are traveling. (Gilbert & Morris, 1995; Mason & Gray, 1995). One of the major contributing factors is the Airline Loyalty Program, the most notable one in South Africa being Voyager. The traveler in many instances with have their personal agenda of accumulating “Voyager Miles” as their main drive when authorizing travel requests.

The fact that Low Cost Carriers do not offer such programs is also the reason for disregarding such offers. Executives, given the choice, would like to travel Business or first class, stay in up-market hotels and, into the bargain, earn Voyager miles for their own year-end holidays. However these companies are just as interested in costs. Those are decisions dictated by a company’s Travel Policy. Although many travelers are aware of the companies travel policy, many are not aware a travel policy provides the kind of cost savings that can make a significant impact on your bottom line.

Studies consistently show that by implementing a travel policy companies save 25% or more,”(Gray, 2008). As travel management is constantly being redefined and companies grow more cost-conscious and global, it is crucial for corporate travel buyers to furnish a strong and cohesive travel management program. Such a program gives a corporation the framework to control costs, provide travelers with optimal service levels, effectively manage supplier

partnerships and meet the demands of the changing corporate travel environment. (Harris, 2008 Online). Though rigidly mandated policies with such severe penalties as non reimbursement for noncompliance remain the exception, many travel buyers continue to put teeth into their travel policies and grow vigilant in righting maverick corporate activity. (Boehmer, 2008: Online) setting up contracts and travel agreements with suppliers and providers is important but it is merely the first step to realizing actual financial benefits. Corporate travel managers then are responsible for developing corporate policies that fully optimize the company's travel spend.

In order for a company to get the most out of their negotiated discounts, policies must be created that compel employees to make their travel arrangements through a corporation's travel department, using these negotiated rates with preferred suppliers.

2. 3 Definition of Terms Travel Policy

A corporate travel policy is a document that is used to govern the travel expenditure of a corporate client. It takes into account the negotiated levels of travel that can be reserved for individual based on their position in the company. The policy includes and number of approved suppliers and highlights agreements that have been reached between the corporate and the supplier.

Generally based on volume the corporate client will enjoy benefits such as better rates, automatic upgrades, lounge access, wavering of rules ( this is related to air travel) etc.

2.4 Loyalty Programs

Loyalty programs are systems that allow loyal regular users of a supplier the ability to accumulate points or “miles” and once the individual has obtained a required number of points these can be redeemed to make free use of the product of the said supplier.Within South Africa the most

notable loyalty program is “Voyager” which is the loyalty arm of South African Airway. An individual is able to accumulate “Voyager Miles”, among other ways, for every trip they complete on SAA. These “Voyager Miles” can them be redeemed for free air tickets.

Low Cost Carriers Low Cost Carriers (LCC) offer a slightly different product to that offered by bigger airliners. They capitalize on cutting costs by using least-cost systems, including non-allocated seating, to provide an efficient service, without compromising on safety.For example, they use smaller-size aircraft that utilizes a high-density seating arrangement. This allows for maximum capacity utilization and low maintenance costs.

Most LCCs do not offer an in-flight service; rarely are free meals, drinks or snacks offered. Although the service offered by LCCs is targeted primarily at the non-business leisure traveler, price-sensitive business passengers also form part of this market. LCCs, as the name suggests, produce at low cost and aim to compete on price.

3. Statement Of The Problem

The purpose of this study will be to understand the non – compliance of travel policy for corporate companies using a case study resulting in a report that contains information to be considered when reviewing policies & procedures within the corporate environment.

4. Proposed Research Design

4. 1 Research Paradigm

The research will be done using a Phenomenological Paradigm due to the fact that it is concerned with the understanding of human behavior from the participants own frame of reference ( Collis, Hussey 2003)

4.2 Research Process or Methodology

The methodology chosen will be a cased study. Case study research excels at bringing us to an understanding of a complex issue or object and can extend experience or add strength to what

is already known through previous research. Case studies emphasize detailed contextual analysis of a limited number of events or conditions and their relationships. (Soy 1997)

4. 3 Demarcation of the Study and Units of Analysis

The case study will be conducted by means of interviews at the premises of Roche Products, Isando.Interviews will be conducted with senior management, line management & the travelers themselves.

4. 4 Research Methods / Tools to be used

4. 4. 1 For Collecting the Data

A basic questionnaire will be generated an forwarded to participants prior to a set appointment to interview the candidates.

The purpose of this basic questionnaire will be to establish what level of the Travel Policy applies to the candidate, or what level the candidate perceives he should fall into. Critical incident technique will be used during in-depth interviews to generate qualitative data.Although called a technique, it is not a set of rigid rules, but a flexible set of principles which should be modified and adapted according to circumstances. (Collis, Hussey, 2003) A phenomenological approach suggests unstructured questions, where the questions have not being prepared beforehand.

4. 4. 2 For Analysing the Data

The method for analyzing the data will be content analysis. Content analysis is a way of systematically converting text to numerical variables for quantitative data analysis. (Collis, Hussey, 2003).

Identifying comment statements and responses from the interviewees will help identify the reasons, if any, for non compliance of the travel policy

5. Possible Limitations To The Study

There may be a low response rate as the issues being raised are very emotive and candidate may not want to share their views on the subject. Also obtaining an equal amount of data from the respective

stakeholders i. e. Senior, middle and lower management.

It will be important to have a fair representation of each of these stakeholders to form an accurate representation of both the travelers and the company’s needs.

6. Possible Outcomes

6. 1 Possible conclusions

The main conclusion that will more than likely arise is that the traveler, irrespective of the companies travel policy will always endeavor to source travel options that will ultimately benefit themselves i. e.accumulating voyager miles, least amount of inconvenience whilst traveling . Stakeholders that adhere to the travel policy would have noticed a reduction in their specific cost centers travel expenditure

6. 2 Possible Recommendations

As it was highlighted in the literary review travel tends to be very emotive and if the traveler – the end user, sees a benefit they would be more inclined to stick to company policy. It would be recommended that the company implementing incentives for both the traveler and the Travel Management Company to actively pursue cost savings. It would be recommended that prior to a travel policy being drafted a process on inquiry take place and consideration for all stakeholders be taken into account.

Habitual non-compliers would be more inclined to adhere to the travel policy if they feel their concerns and needs are met, and that they were part of the decision making process.

References

1. 1. GILBERT, D. C. & MORRIS, L. 1995) “The relative importance of hotels and airlines to the business traveler”, International Journal of Contemporary Hospitality Management, 7(6): 19-23
2. MASON, K. J.& GRAY, R. (1995) “Short haul business travel in the European Union: A segmentation profile”, Journal of Air Transport Management, 2(3/4): 197-205
3. VON MOLTKE, I. (2006) “Travel Management – covering
   

your needs”, Business Travel, November 2006: 16