The CEO’s Guide to Writing an Effective Corporate Travel Policy

As we plan for a post Covid Travel scenario, one document that is very important is the Corporate Travel Policy. What is the Corporate Travel Policy? It is that document that basically lays out the rules for corporate travel that employees of a company need to follow, to ensure travel for and on behalf of the company is handled in sync with the vision of the company. It will ensure that all business travel effectively delivers to the financial goals of the company.

Large Companies Need A Travel Policy

Small and medium-sized companies (SMCs), may not need such a Policy. It may be an overkill. Smaller travel budgets may easily be handled with a few rules and regulations. Larger corporations however, with interests and involvement in different countries, with multi-million dollar travel budgets, cannot do without a Travel Policy. A well written and effectively implemented Travel Policy can save a multinational hundreds of thousands of dollars.

I have seen some good travel policies. I have seen many that are just average. I have also seen travellers abusing the Travel Policy with some going around the travel policy to suit their own self-perceived lifestyles. It happens when there is no total buy-in with regard to a company’s rules and regulations; often in large corporations. Let us look at what will be a good Travel Policy in more detail.

Who Should Write The Travel Policy?

The first question many companies ask is who should write the Travel Policy? The short answer is that people who do not know much about the Travel Industry should not be involved in writing the Policy. I have seen many companies leaving it to the Procurement Department. Simply because they are in charge of buying everything for the company: whether it is goods or services. However, very few good policies originate in that department. I do not in any way underestimate their capabilities. I have met many good and capable Procurement Managers; but my contention is that it is not really under their purview to write the Travel Policy. It cannot be their job.

Some companies seem to get the Human Resources (HR), department to write the Policy. Of course they deal with employees who travel; but it does not mean they should be tasked with writing the Policy. 

Some companies try the ‘copy/paste,’ approach. They use their contacts, or their financial accounting firms, to get hold of some sample Travel policies, make a few modifications and publish their own Travel Policy. Personally, I do not favour a complete ‘copy/paste’ approach, because what applies to Company A may not apply to Company B.

Task The Travel Manager With The Responsibility

If I were the CEO of a progressive company, I would call my Travel Manager and make it his or her responsibility. I will however ask the person to create the document in consultation with me and also with HR, Finance and Procurement departments. It is important to have the input of the CEO because he or she may often be the only one who has a total vision of the course charted for the Company, its goals and objectives.

HR, because they are involved in all things to do with employees, Procurement, because they are often involved in various Request for proposals (RFPs), and Finance because they are the ones who will deal with things financial including all payments and reimbursements of expenses incurred on a business trip.

Why should it be part of the Travel Manager’s job? Simply because that person will know Travel well. Writing a Travel Policy requires an in depth knowledge of Corporate Travel and its various nuances. It will include first hand knowledge of Air Travel booking processes, and documentation. Negotiations with hotels and other suppliers that affect Corporate travel will also come into play. Ultimately it will be the Travel Manager who implements the Policy, and implementing it well will produce good results all round.

Alternatively, a company could get an experienced Corporate Travel Consultant with experience to work with the Travel Manager to draft the Travel Policy.

Define The Objectives Of The Policy

It is recommended that the objectives of the Travel Policy be clearly defined. It will be good to see at the very beginning of the Policy, what the company’s Travel objectives are. What it hopes to achieve through what means. It would be useful also to highlight policies of safety, health and environment in this section.

Consider Employee Needs

Transport

While creating a Travel Policy, employee needs should be taken into account. For instance it will not be in the best interest of a company to insist on a traveller changing flights at a midway point and making a 6 hours’ journey into a 14 hours’ odyssey, just because such a trip would cost less. A tired employee will not be able to perform well at his destination which could negatively affect the Company. There really is no harm in pampering the traveller a little as well, like allowing senior travellers to travel in Business Class. 

The Travel Policy must cover all aspects of employees’ travel. It must cover every need and potentially address every situation that could arise during the course of a business trip.

Class of Travel

The Travel Policy should clearly state who is entitled to travel in which Class of Travel. There are companies who differentiate between Economy Class, Business and even First Class travel. It should never be left to the interaction between the actual traveller and a Travel Booking staff of the Travel Management Company (TMC). I have come across travellers in the Arabian Gulf, pressurising Travel staff to get them an upgrade to Business Class because their Company, “Is paying the full Economy airfare.” From a Booking Agent’s perspective a well written Travel Policy will prevent such difficult situations.

Choice of Carriers and hotels

Hotel

The Policy should state quite clearly, which airline companies, hotel chains and car rental companies may be utilised, and if there are negotiated hotel agreements in place. It may be a good idea to give the employee a choice of hotels at a destination when arranging for the company’s Hotel Programme. 

As the TMC will receive a copy of the Travel Policy, they will automatically have the information needed to book air, hotel accommodation or car-hire. There need be no further discussion between the company travel booker and the TMC booking agent.

Booking Tool And Fulfillment

If the company uses an online travel booking tool to book all aspects of travel, then the Travel Policy should state clearly that booking the travellers and flight arrangements would be the travellers responsibility. It has been often observed that the corporate travellers try their best to shift the booking responsibilities to TMC staff. If that be allowed, then the TMC should be allowed to charge the company for additional time spent on the account.

Fulfilment (the issuing of air tickets and vouchers), may or may not be part of the agreed process. If fulfilment responsibilities are placed on the Travel Management Company (TMC), then the process by which it is handled should be detailed in the Policy, with measurement of service standards clearly defined.

Pre-trip Approval

Approval

All internal pre-trip approvals required must be specified in the Travel Policy. If there are internal company systems that can handle the approval process, that process should be specified in the Policy as well to enable the TMC to better understand the company’s processes. Both traveller and TMC booking staff should be familiar with the Pre-trip approval process. It will avoid ‘he-said,’ ‘she-said,’ situations later on.

Travel Insurance

Many companies these days insure all their travelling staff directly with Insurance companies. If such arrangements are unavailable, the company will do well to specify in the Policy, which insurance companies and what plans may be used by the TMC. It will also need to cover whether each individual trip needs to be covered by the Insurance Policy or whether the TMC could go into an agreement with an Insurance company on their behalf to cover a predetermined number of travellers for a period of one year.

Safety, Health And The Environment

It is important for the company to bring into the document, their standards of Safety and health to ensure the TMC is aware of what can, or cannot be booked.

Environment

The environment is everyone’s concern today. That will also need to be brought into the Travel Policy. For example if the negotiated airlines and hotels cannot be booked in an Un-budgeted destination, the TMC will need to be told in the Travel Policy, as to what hotels or airlines could be used.

Meals And Entertainment

Travellers should know whether their meals and entertainment (if they for instance, entertained an important business contact), are included in their per diem allowances or whether they would be reimbursed for such expenses on their return to base. The Policy should cover tips to service providers or restaurant staff who may be involved.

Taxis And Local Car-hire

An employee may often use local taxis and car-hire that may not have been booked before his or her arrival at a particular destination. The Policy should clearly state employee entitlements and how reimbursements will be handled.

VAT Refunds

Refunds in Euros

Many companies seem to forget about VAT Refunds on business travel all together. Recovering VAT could result in a saving of 10 to 15% of the hotel spend in most European destinations, depending on the destination of travel. The Travel Policy is the place to mandate that business travellers must submit their hotel invoices along with their travel claims when they return from a business trip. Such a requirement will ensure the company has access to all hotel invoices where the VAT paid can be converted to cash again.

Gifts And Favours

The Travel Policy should specify whether an employee may or may not accept gifts and favours either from the TMC or other companies involved in the process of executing travel plans. These could include such subjects as complimentary upgrades, or added benefits during a business trip. Such a clearly written Policy will prevent employees from unduly pressurising TMC staff to get them upgrades.

Standards, Measurement And Reporting

Measurement and Reporting

Standards and measurement should be defined at all stages of the Travel Booking and Fulfillment processes as well as reporting. A TMC should be able to demonstrate that they have met the targets specified by client company during a business review meeting which can be scheduled on a quarterly, half yearly or annual basis.

Refund Of Unutilised Air Tickets

Very often segments of an air ticket may be left unutilised because travel plans could have been changed midstream. Often fresh tickets are issued and parts of the old ticket remain unused. It should be the responsibility of the traveller to flag all unutilised segments to the Travel Manager who will then be able to apply for refunds through the TMC and track the progress of the same. Such action, depending on the company’s business culture when it comes to booking and changes, could result in additional savings.

Finance Dept – Company Purchasing Card 

Purchasing Card

The Finance Department is always involved in the settlement of charges involved in the process of booking and fulfilment. I would advise that all payments for purchases be handled through Company Corporate or Virtual Purchasing cards. That way, the company will get a standard suite of Management Information Reports that can even be customised and automatically fed into the client company’s financial systems; not to mention the free insurance that comes with such Card facilities. Such arrangements need to be clearly listed and explained in the Travel Policy.

The department could also handle hotel payments etc., through Corporate Credit Cards given to employees.

Conclusion

A Service Level Agreement (SLA), is often linked to the Travel Policy. I will leave that for a later post. 

In conclusion, the success of any Travel Policy lies in enforcement and compliance. In this regard, it would be good to have employees read the policy and cooperate with the company in its objectives. It is important to get employees to participate in the ethos of the company culture. In the end, it will make the Travel Manager’s and TMC’s jobs much easier, and the Travel Policy would have successfully achieved its goals.

© 2021 – Mano Chandra Dhas

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Corporate Travel Policy – FAQs

What is a Corporate Travel Policy?

In the Multinational Company’s relationship with its Travel services provider, it is that document that states the rules of the game. It states the rules for every aspect of the company’s Business Travel.

Who Should write the Corporate Travel Policy?

Several people in the company may qualify to write the Travel Policy, but it is best left to the Company’s Travel Manager or a professional Corporate Travel Consultant.

Should employee needs be taken into consideration while writing a Corporate Travel Policy?

The travelling employee is the person around whom the Corporate Travel Policy revolves. Their needs must be taken into consideration.

What are the items that should clearly be specified in the Corporate Travel Policy?

Some of the items it must handle are: class of air travel, names of selected hotel chains, car rental companies, safety, health and environment.

What is Pre-trip approval in Business Travel?

Pre-trip approval is the company internal process by which a company’s business traveller has his business trip approved for the booking and documentation processes to commence.

What are the checks and balances when it comes to Business Travel Management?

Standards, measurement and reporting are the mainstay of Business Travel Management

For refund of Business Travel air tickets who should flag unitilised segments to whom?

The Business traveller should flag unutilised air travel segments of his/her air ticket to the Travel Manager who will then arrange for the process of refund.

What is the ideal instrument for a company to purchase its Travel and related requirements for Business Travel?

Without doubt, a Corporate Purchasing Card or a Virtual Purchasing Card is the best way for a company to purchase its Travel requirements.

What are the two most important elements for the success of a Corporate Travel Policy?

The two most important elements in the success of a Corporate Travel Policy are: enforcement and compliance.

4 Comments

  1. Riyaz Mehmood Kazi

    Reply

    The inputs are valuable and precise, thank you for putting it up in open your wealth of experience and educating us in the process.

    Thank you very much .

    Riyaz kazi

  2. Savio D'silva

    Reply

    That is very insightful and very thought provoking Mano. Well done and thank you for putting it all out here.

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