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Keep Your Travel Costs Down

Travel costs can be a particularly difficult challenge for the cost-effective business manager. The deck is stacked against you. Your travel agent is paid on a commission, and therefore is rewarded for getting you to spend as much money as possible. And the airlines, hotels, and car rental agencies often have confusing rate structures.

During my first few years of business travel I was pleased whenever I was offered the "corporate" rate at hotels and car rental agencies, figuring that I was getting the cheap price offered to major corporations. I later learned, to my chagrin, that the corporate rate is often the most expensive rate you can pay for a hotel or rental car! When calling a hotel or car rental agency directly, you have to ask for the "cheapest" rate -- and keep asking until it's clear you've hit the bottom of the well.

Some other tips to reduce travel costs include:

Consider hiring your own internal travel agent, who works on your payroll. This not only may save you some commission costs, but allows you to better monitor your employee travel and determine whether advance ticket purchases or negotiated rates could save your company further expense.

If your company isn't large enough, or doesn't travel enough, to justify an internal travel agent, shop for a travel agent that will obtain the lowest rates for you. Ask other companies, particularly those who travel frequently, who the good travel agents are. Then call several agents and ask them to book the same trip for you, including round-trip airline ticket, hotel and car rental. Select the travel agent that consistently obtains the lowest cost travel, canceling your reservations at the other agents (make sure you don't book non-refundable tickets). This low-cost agency should now be your permanent travel agent, although you should periodically monitor their performance against other agents to ensure that you aren't being taken for granted.

Monitoring travel costs can be complicated, but can result in thousands of dollars worth of savings to your company.

Q. Should I allow my employees to keep the frequent flyer points they earn on their business air travel?

A. Good question. And a tough one, because frequent flyer programs essentially encourage your employees to overspend on travel to get valuable points. Some companies forbid their employees from collecting frequent flyer points, which I don't recommend, because those companies are throwing away a potentially cost-free benefit for their employees. Others require their employees to use their frequent flyer points only for business travel, which is a tremendous administrative burden and is often unenforceable.

One policy that has met with some success is to buy back frequent flyer points from your employees at a rate that (a) allows the company to arrange business travel at a greatly reduced cost, while (b) giving employees a little extra (taxable) pocket money. Good idea, but it still encourages employees to maximize the number of frequent flyer points they earn -- which may cause them to spend more than they should on travel.

A policy that seems to have achieved some success in managing frequent flyer points is to give your employees a choice. They can either collect the points but allow the travel manager to select the airline, hotel, or car rental agency that they use, or they can turn down the points and select the airline, hotel, or car rental agency that they like. The choice is theirs.