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Travel and Expense Management

Open Booking and Business Travel

Controversy is not unknown within the travel industry, and with the possible exception of the ever-fierce window vs. aisle seat debate, no issue divides opinions quite like that of open booking. Some within the world of corporate travel decry open booking as a threat to policy compliance, a hands-off approach to travel management that’s incompatible with the needs of large organizations. Others argue that open booking offers as many benefits as it does drawbacks, and suggest that companies should adapt their policies to fit the new business travel landscape.

So who’s right? The truth, as always, lies somewhere in the middle (Editor’s note - Airline seating is one important exception to this rule. Though it’s impossible to determine whether the window or aisle seat is categorically better, what’s clear is that the middle option is always worst). Open booking presents real challenges, but also real opportunities, for companies looking to make employee travel convenient, efficient, and cost-effective.

Here are some answers to FAQs about open booking and travel management.

What is open booking?

Open booking is the practice of allowing employees to book business trips outside of an officially approved channel. It contrasts with more tightly managed travel programs, in which employees are required to book their trips using a corporate booking tool such as Concur, Egencia, or GetThere. When a company allows open booking, employees can plan their business travel much as they might ther leisure travel. They can book through price comparison sites, or directly with an airline or hotel.

How common is open booking?

Conventionally, open booking has been seen not so much as a type of travel policy as an absence of travel policy. Small or midsize companies that haven’t yet developed official systems for overseeing employee travel often default to a laissez faire style. But the larger a company’s travel volume, the more important it is that there are processes in place for managing costs and ensuring policy compliance.

A survey conducted by PhoCusWright and Business Travel News shows the extent to which managed travel programs are characteristic of large companies, and open booking characteristic of small ones. 67% of business travelers who worked for companies with at least 5,000 employees said that their companies had managed travel programs with official rules on vendor usage and booking channels, compared to 41% at companies with 500 - 4,999 employees, 33% at companies with 50 - 499 employees, and only 12% at companies with fewer than 50 employees.

However, it would be a gross simplification to say that only small companies allow open booking. Even companies with mandatory travel policies experience “leakage,” or trips booked outside of the approved channels. According to research cited by Concur, 40% of managed travelers don’t always comply with their company’s booking channel policy. Employees will book on the open market, whether they’re officially permitted to or not. In recognition of this fact, many organizations that utilize a travel management company (TMC) and corporate booking tool also incorporate elements of open booking into their travel policies.  

Why do employees book outside of official channels?

Employees go outside of official booking channels for a variety of reasons, including:

  • They have brand loyalty to an out-of-policy airline, hotel, or rental car company.
  • They find it to be more convenient to book through their preferred travel site or app than in their company’s booking tool.
  • They are unaware of company policy on booking channels.

One of the most important reasons why travelers book on the open market is that they believe they can get a better deal than those available through a TMC. A study by the Global Business Travel Association found that “nearly all business travelers (98 percent) believe they are getting a better deal for their company at least some of the time when booking outside of their corporate booking channel.”

Business travelers’ embrace of open booking is an extension of habits they’ve learned while planning vacations. Self-service booking has all but replaced travel agents in the consumer space. This is especially true for Millennials, who will account for nearly half of the work force (and half of all business travel) by 2020.

What are the advantages of open booking?

Open booking appeals to employees and employers who value flexibility. It offers the advantages of:

  • Greater Choice for Employees - Employees are free to book how and where they choose, usually subject to guidelines on allowable spending.
  • Fewer Added Systems - A purely unmanaged travel program foregoes use of a corporate booking tool or TMC, which reduces fees and allows employees to use their preferred travel sites.
  • Cost Saving Opportunities - There are deals to be had shopping on the open market. Though large organizations might be able to negotiate significant rate discounts with airlines and (especially) hotels, many others will find that the greatest savings come from allowing employees to use whatever the lowest cost option is for a given trip.

What are the limitations of open booking?

Open booking presents some difficulties from the perspective of those in charge of managing employee travel:

  • Cost Control - Perhaps the greatest challenge for open booking is limiting spending. Corporate booking tools can be configured to only show in-policy options, but the open market provides no such guide rails. There’s no guarantee that employees will comply with nominal spending limits, or book with a preferred vendor.
  • Reporting - Even when employees do book directly with a preferred vendor, they miss out on their company's unique discount rate with that supplier. If there’s no backend system for identifying direct bookings on employee expense reports (and usually, there isn’t), this spending remains invisible, which limits the potential value of negotiated discount rates. There are additional data problems that arise from open market booking. Whereas trips booked through a TMC can be analyzed in detail for vendor usage, employee booking behaviors, and travel destinations, this data is harder to collect and report on for trips employees book on their own.
  • Duty of Care - Aside from cost-control, a primary concern of travel management is tracking employees on the road and keeping them safe. An open market booking policy requires that a company collect trip details from multiple sources so employees can be located in case of emergency.
  • Traveler Support - Corporate travel agents can assist with itinerary changes, cancellations, and rebookings. Though not all employees will require this level of support, some find it to be one of the most valuable aspects of a managed travel program.

Conclusion: Weighing The Pros and Cons

Open booking, like tightly managed travel, isn’t right for everyone. At many companies, the de facto result is a blended system, in which employees are encouraged, or even nominally required, to use approved booking channels, but in which there are also processes in place to integrate trips employees book on their own.

Rocketrip is entirely platform agnostic: our budget and reward system works in conjunction with any combination of TMC, corporate booking tool, and expense reporting system. Though Rocketrip travelers often save on their trips by shopping for affordable, policy-compliant options online, a pure open booking system is relatively uncommon among our clients. In fact, the majority utilize a TMC. Rocketrip helps these organizations increase policy compliance, leverage the full savings potential of their discounted vendor rates, and capture data on all travel spending - even for trips booked on the open market.

Have more questions about open booking? Looking to improve travel at your company? Schedule a Rocketrip demo to learn how to reduce travel expenses by motivating employees to spend less.

All Tags: Travel and Expense Management, Open Booking

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