Why do companies use corporate travel agencies?

Yeah, my company does the same thing, but we are allowed to go off on our own to book our travel too as long as it's not more than what the travel agency comes up with. Almost everyone just uses the agency because it eliminates having to submit expense reports.

Last year I had a trip and I flew Southwest. I purchased the "Early Bird" boarding so I could get a good seat. My total price including the early bird was 150 bucks cheaper than what the travel agency wanted to book for me. Luckily I saved that info. When I submitted my expense report, accounting disallowed my Early Bird fee add on. I went ballistic and showed them all the data and said "so you'd prefer that I spend more of the company's money? Next time I'll make sure I do that. Thanks for telling me, I'll make sure I pass the message around."

They gave me the money.

There are likely reasons that may not seem obvious.

Maybe it helps to have things centralized so there are fewer transactions.

There's a measure of control when a 3rd party is involved. Everyone may not be as careful and honest as you. Like when you see the pay extra for 3X the points offers.

There may be some advantages to buying in bulk (and the price they pay may be less than the price you see).

It saves you time and allows you to do what you're good at.

It may help with compliance. Travel is often one of the first things an auditor will comb through.

My guess is that they want to have tighter control. Also, does the company keep any points or miles earned or do you keep them?

If the company keeps them, then the travel agency may be able to use those to book flights and hotels and save the company money.

Another possibility is that you will fly one airline so you can earn miles and upgrades but that might not be the cheapest flight option. For instance Southwest might be cheaper and get you in an out when you need to be, but you want to fly Delta because you want the miles and status.

Also, what is your time worth? They may figure that if you spend an hour booking hotel and flights and then filling out the expense reports that is an hour you could be making the company money doing your job.

Controls could be a good reason.

If you have to go through one place to book trips, then the company can clearly see who was traveling where and when.

If everyone books their own travel and submits expense reports, there would need to be a system of someone using those reports to track everyone and look out for people who may get reimbursed twice for the same trip.

My company did it because many people didn't find the best deals. Other times by forcing everyone to use the same supplier (like the same airline if it flew to that destination) they could negotiate better rates and/or travel vouchers.

If you find a better rate, tell the corporate travel person about the betyter rate and ask them to book that trate.

Sunflower wrote:

There are likely reasons that may not seem obvious.

Maybe it helps to have things centralized so there are fewer transactions.

There's a measure of control when a 3rd party is involved. Everyone may not be as careful and honest as you. Like when you see the pay extra for 3X the points offers.

There may be some advantages to buying in bulk (and the price they pay may be less than the price you see).

It saves you time and allows you to do what you're good at.

It may help with compliance. Travel is often one of the first things an auditor will comb through.

These are basically the reasons companies use agencies.

The comment about the price they pay may be less than the price you see is very true. If the corporate bookings for Airline X or Hotel Chain Y go above certain thresholds then the company gets a rebate. This can be very substantial. I was told the true price for an airline ticket is about 2/3rds of the price you see. Obviously the rebates will vary from company to company.

I would also add the reduced cost of changing tickets. If you book independently and then your boss tells you to put back the trip by one day you will be hit with charges. Usually these are waived, or rebated, for large corporations.

A final issue is insurance. If you go through the corporate system then insurance is not an issue. If you go it alone you may find you are out on a limb for insurance. I don't just mean personal insurance but other insurance issues. We had a case of a guy who had to go to an off-site test and rather than book a rental car just used his own car with the intent of settling up the mileage costs with his boss later. The problem was he was also carrying hardware to the test site, about $100K's worth. I was in charge of the off-site test and when I realized what he had done I said to him, where would you be if your car was totalled or stolen? Who picks up the $100K tab? Your insurance? The company's insurance, for an irregular trip? The chances are the company takes the hit an his name goes to the top of the next lay-off list.

There are many companies in this world that are working and supporting the traveling agencies and I think it is a good initiative. The companies often have much work to do in new and beautiful places and this blogs also helpful in this case that is for the sure they know many beautiful places in this world. That why they are helping those travel agencies to have a better experience for the travelers and also for both of them.

Raddison nailed it.

The other issue is just accounting. It's not that they're so worried about the cost when employees book their own travel (most employees use common sense), but the auditors always tell companies that self-booking isn't a best practice.

The control thing has been less of an issue for me because historically I've billed clients for my travel. So there is guaranteed to be a third party asking if my expenses are reasonable. For the most part, good judgment has worked just fine.

I now have an in-between option. We have a booking portal that we can use ourselves (sort of like Expedia or something). It has rules built in so that anything "out of policy" requires an explanation, everything is billed to a specific account, and all of the bulk deals are built in. It seems to work pretty well. Sometimes the rules are a bit clumsy, but it's pretty easy to get around them by just writing, "the flight that's 20% cheaper will not get me into DC in time for my meeting" or something.

Lol

Are people in your accounting department mind readers or does your company employ a special investigative unit to figure this out (which the accounting dept decided not to use in this case)?

Maybe you can simply give the data with the expense report next time...

Just a thought.

My former company had a travel agency, but it was optional. I optioned to never use it. A lot of it had to do with convenience: if the work ended early, I could find the next flight out without have to deal with the back and forth of a travel agent. We billed clients for travel, so the firm was militant about using the agent.

BUT, if there was a special deal (multiple times I got a cheaper 1st class ticket b/c of status than the coach/business price), I'd always print screen and submit it. Many times the client would question flying 1st class, but once I explained the price difference and asked them to look at the printed price sheet I attached, they understood and reimbursed. Same with upgraded hotel rooms or fancy rental cars.

Once I printed out a weather report. I rented an AWD full size vehicle. I was sent to the U.P. (flew in to Green Bay) at the end of January. Temps were in the teens and they were expecting a foot of snow. I explained in the expense report that there was NO WAY I was sliding off a ditch in backwoods WI while driving an economy rental.

So they can sue somebody when things go wrong.

That's the ENTIRE corporate MO.

One thing that using a third party does is that it tracks the location of employees. In the event of an emergency, it helps the company locate everyone who might be needed. If you company is 25 people then it isn't an issue but when it is thousands, you always have people traveling.

As companies get bigger, they implement policies like "Only 3 VPs can be on a flight" or "only 7 employees can be on a flight". In the event of a plane crash, they don't want the company to be completely lost. Most third parties have systems in place that automatically let people know that they can't book a flight due to too many employees on it. If everyone was booking through Orbitz or on their own it would be impossible to track this.

Because some corporate managers wife runs the travel agency and uses all of the points to go on a 4 week all expenses paid vacation every year tax free.

I'm a corporate supply chain guy and I both share your frustration and can answer your question. What big companies do is negotiate (or have their travel agent firm negotiate on their behalf) discounts or rebates based on total volume enterprise wide and also using a single travel agency allows them to monitor traveler behavior. For example if you stay in the Ritz Carlton when there is a perfectly good Holiday Inn Express in town or when you book business class tickets on domestic flights. The honest truth though is that many companies force you to use a single travel agent but they fail to actually negotiate the best hotel rate based on volume or structure rebates with airlines that offer deals better than any Tom, Dick, or Harry could get just by going online. I often book very complex international trips and the company we use need their hand held every step of the way or they will book silly trips like Tokyo to Chicago via Mumbai

Long story short, it's way easier for the company to track travel and the cost thereof. If you book separately through airlines, hotels, mainline websites like Expedia, tracking everything for everybody can become a messy problem.