tjl

Some people tell me that at their employer, a large company, travel arrangements are supposed to be made through a specific travel agent, which prefers certain airlines, hotels, and rental cars, and that getting reimbursed for travel using other airlines, hotels, and/or rental cars causes questioning for one's choice and delayed reimbursement, even if it is less expensive.

What incentives does a large company have to direct travel expenses to certain airlines, hotels, and rental cars, even at higher costs (as seen by the employee when choosing them)? It seems like the company is trying to discourage employees from making choices that save the company money.

gleff

The travel department is likely getting a substantial rebate from their preferred providers, and reaching a certain threshold of business may be necessary to obtain that rebate. So (1) travel spending on non-preferred providers may not be less expensive, factoring in the rebate and (2) travel spending on other providers may make it harder for the company to meet its contracted spending thresholds.

That's the theory anyway, whether real savings are yielded varies company by company.

tjl

Why wouldn't the company have the travel agent make it more obvious what the actual cost to the company for a reimbursible business expense is for such providers? (The "travel agent" in question is mostly used through the web with the usual displays of flights, hotels, and rental cars with prices.)

For example, suppose airline A offers a fare for $500, and airline B has a fare for $400 for flights that are of the same quality (schedule convenience, etc.). The company gets a $150 rebate from airline A. Why would the company not have the travel agent show the employee that the ticket on airline A effectively costs the company only $350 instead of $500 and having employees wonder why they have to jump through hoops to choose the apparently cheaper flight on airline B?

mkleiderman

Because the actual charge showing up on the employee's expense report for flying airline A will be $500. Usually the deals are structured along the lines of "If you spend more than $X with us per year, you will get a rebate of Y% of your total spend."

In my case, the travel agent's web site shows the actual cost of the ticket, but indicates which airlines are company-preferred. There's a second step after flight selection, where cheaper alternative flights are offered, and if you don't choose one of them, you need to justify your choice.

If you select a company preferred airline, it only brings up cheaper flights that are much (>20% or so) than your originally selected flights. If you select one that isn't company preferred, the threshold is more like 5%.

ETA a paragraph break.

cpx

Also, it requires manpower to verify if you actually got the lower fare.
its more economical for them to pay a little overhead to get a gurantee
that the fares are somewhere along the line of company policy.


With my personal memberships and know-hows I can save over 40%
on my travels, but i'm stuck with the company policies.
(may be someone up there is getting some kick-backs)

bdjohns1

If your company's big enough, you can sometimes see the difference up front at booking using your company's booking engine.

Best example I've got: last year, made a trip ORD-MUC-HAJ in biz. Priced it on united.bomb - ~$8400, 3 day advance purchase, fare basis CUA (UA flights operated by LH). Called up the company desk (run by AmEx), booked it (same fare basis) for ~$4500.

Of course, sometimes we take matters into our own hands. At one of my sites I visit, the company-preferred hotel is a Hilton Garden Inn. $85/night + tax, no free breakfast, etc. We stayed there a couple times and weren't especially happy, especially since we were going to be doing this weekly for 6-8 months.

Fortunately, a Staybridge opened right across the road at about this time. We went over there and said "hey, we'll give you 6-10 rooms from us, plus about that many from our contractors if you'll give us a break". So, we got the rate nearly matched (I think it's +$5/night), have free breakfast, the ability to cook for ourselves with our kitchenettes (after a while, you run out of restaurants), plus, since we've all been loyal, the front-desk staff (one in particular) go out of their way to make sure we're happy - we're all PC Plats now, so we're on a rotating basis for upgrades.

Athena53

At my former employer, the dirty little secret was that, while the Coach fares were comparable to what you could get outside, the Business Class fares were substantially below market level. I got to take advantage of that only once!

I've found that sometimes they don't offer all the schedule options on the company Web site so occasionally I booked elsewhere and they didn't get too excited. In fact, once when I was trying to get into the Holiday Inn in downtown Chicago on short notice, the corporate TA showed it full, with only much more expensive options available. I told her that Orbitz showed it open. "I guess we've used up our allocation", she said. So I used Orbitz. Same thing happened when my boss and another associate needed to book a room in New Orleans and waited till the last minute. The alternatives were either $300-400/night or down by the airport. Orbitz to the rescue again- they got into a Hilton for $225/night.

bpratt

There are other reasons. For example, one major Utah-based software vendor had a policy (may still for all I know) of using a major Utah-based hotel chain whenever possible. Whether this was due to the common religion of the hotel chain founders and the software company founders or some other reason was a subject of much speculation internally.

Bob

zansu

IME, the company has also negotiated set fares for "popular" routes. The route I fly most often prices out at ~1500 for Y class, but we pay a max of ~$900. And the company also gets a rebate from the airline, as mentioned by PPs

redbeard911

Your business unit gets charged $x, but the rebate goes to the home office/executive suite/mother ship if 15%-30% $x. Same with insurance rebates.