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For Business, Corporate Travel & Meeting Buyers & Arrangers

Expense management: go with the flow

HOTEL BILLS ARE OFTEN LIKE MICK JAGGER’S FACE: they both contain many lines and the signs of expensive living. Handling hotel expenses can be one of the biggest headaches for travel managers, trying to separate room rate from food and beverage, tax from wifi, and in-room movies (ahem) from morning newspaper costs.

A fragmented supplier-base does little to help. So how can companies best manage their hotel expenses? There are many different ways, each with their own benefits, from using corporate cards coupled with manual expense claims to more automated systems. Here, BBT takes a look at what’s on offer.

CHARITABLE FOUNDATION WELLCOME, which aims to improve health around the world, has around 650 regular travellers – a mix of employees, grant holders, meeting delegates and committee members – who spend around £4 million a year on travel. Wellcome, established in 1936, has pledged £5 billion over the next five years to fund scientists and researchers. The organisation books around 4,000 room nights a year, more than half of which are in London.

Travel manager Rod Richardson runs the request for proposal and manages the rate negotiations for the programme. The organisation’s travellers are empowered to make decisions best suited to their circumstance and there is no pre-trip approval process in place. Wellcome’s preferred channel for hotel bookings is through corporate booking specialist HRS, with which it has worked for the past three years.

Travellers book their own travel within the set policy and compliance is in the low 90s. Some 82 per cent of the hotel spend goes through HRS, says Richardson. He says he chose to work with HRS because of the breadth of its content, the ease of use of the site and the ability to load the London net rates into HRS. “We have an agreement that a certain percentage of the revenue must be commissionable to them.

The remainder could be net-net corporate deals,” he says.  Although HRS has strong hotel content in the UK, Europe and the US there are some gaps, such as in Africa, where Wellcome has particular need. Hotel spend has traditionally been handled through billback because Wellcome had been reluctant to issue corporate cards for anyone other than very senior staff. Yet it was far from an ideal solution. “It was a nightmare to reconcile,” says Richardson. “On most days I was having to process between six and ten invoices.

They all had to be processed, signed and sent to accounts payable. At some points, it was overwhelming.” As a result, Richardson wanted to streamline the payment solution while limiting the risk of fraud and enabling new employees, contractors and other infrequent travellers to be better controlled. Wellcome’s previous travel management company (TMC)  introduced the organisation to virtual cards and Airplus’s  AIDA solution in particular. Hotel spend is now billed centrally by HRS using AIDA.

The introduction of virtual cards gave rise to several clear benefits: reconciliation has become much smoother; it has reduced the risk of corporate cards being compromised in high-risk regions; and it also means that employees would not be left without funds due to theft or curtailment of a trip or other delays. The high quality of data produced by the card scheme gives Richardson better visibility of end-to-end costs. However, the decision to mandate virtual cards faced some resistance from travellers initially because of loss of certain benefits, such as loyalty points and cashback.

There are also some acceptance issues still to be resolved. While virtual cards are widely accepted by reputable travel suppliers, Richardson says that in some markets, investment is needed to get suppliers to accept and understand the technology. Some hotels still require a hard copy back-up, for example. Richardson has advice for other travel buyers looking to get control of hotel spend. “The key thing is to ensure the reporting that comes at the end is what you want. When we started working with Airplus it wasn’t returning the reporting I needed and it took some perseverance to get the reports in the format we wanted.”

TMCs and virtual cards

TECHNOLOGY COMPANY MICROSOFT has used virtual payments to simplify processes at the same time as expanding reporting and monitoring to support compliance to its travel policy. In particular, its hotel programme used a range of billing processes, including travel accounts, corporate cards and paper receipts to track and reimburse travel expenses.

The company recognised that this created too much complexity with reconciliation. To streamline hotel expenses, Microsoft, working with its TMC, American Express Global Business Travel, implemented Conferma’s Virtual Payment Expert.

This virtual card solution creates a virtual card number (VCN) with 15 digits that works in the same way as a plastic credit card. Microsoft uses a single-use virtual card payment for each hotel transaction, allowing the company to set spending controls and capture vital travel data for reconciliation through one clear, streamlined process.

Now, instead of multiple bill payments and billing processes, all hotel payments are pushed through Virtual Payment Expert. It has allowed Microsoft to track, monitor, and reconcile all traveller spend in a single source, eliminated the employee reimbursement process entirely and created access to booking information using Conferma’s Trip Pay app on the Windows Phone platform.

The implementation gave Microsoft improved compliance, efficiency and programme visibility. Eric Bailey, Microsoft’s global travel and events manager, says: “The Conferma payment technology provides Microsoft’s non-FTE [full-time equivalent] travellers, such as recruits, with a better travel experience while reducing their out-of-pocket expenses from an average of US$1,000 per trip to less than US$150 per trip. Once again, technology has helped us reduce company and traveller risk while providing a better experience for travellers and travel agents.” Conferma CEO Simon Barker says this VCN technology provided what Microsoft required Amex GBT to deliver: “They wanted control, automation, simple reconciliation, compliance and efficiency, and they wanted it to be compatible with Windows-powered mobile devices.”

Hotel expenses on a budget

BUDGET HOTEL CHAINS PREMIER INN AND TRAVELODGE both operate business account schemes, and such schemes can work well when you have even a small amount of spend in the chain. Premier Inn’s business account was relaunched in 2007 and helped boost business bookings at the Whitebreadowned chain.

The account is free to set up and can be used to book accommodation at all UK Premier Inns, and room extras such as newspapers and wifi, as well as charging for food and drinks at Whitbread group restaurants within or adjacent to the hotels. Buyers receive a single consolidated VAT invoice at the start of each month for the previous month, and payment by direct debit is required 14 days later.

There is also an option for twice-monthly billing. Invoices include a comprehensive VAT breakdown and can also include data such as purchase order number if this was entered at the time of booking. The Travelodge scheme was launched in 2009. At the beginning of each month, account holders receive a statement showing their hotel spend for the previous month. This has to be paid by the first of the following month. Bookings can be made online, using a dedicated website or over the phone via central reservations and the scheme offers companies a 5 per cent discount on bookings. Management of the account is from a single, central account regardless of the number of individual cardholders.

The end-to-end experience

PARIS-BASED TRAVELDOO MANAGES TRAVEL AND EXPENSES (T&E) for more than 4,000 clients, including L’Oréal, AXA, Nissan and Renault. Like other combined T&E solutions, such as KDS and Concur, combining booking and expenses on a single platform means that users get the benefits of end-to-end seamlessness, control and visibility. “You can take a user all the way from thinking about a business trip to payment of the expense claim,” says Traveldoo’s chief product officer, Dan Fitzgerald.

“If people have taken our full T&E offering the reporting can be much more interesting, rather than if they are just using us as a booking tool. It is useful for travel managers to see how much is off-programme and how much in policy, while looking at average spend allows them potentially to adjust what those rate caps would be. If people are trying to push travellers on to hotel programmes, they can check on the uptake of those rates.” Traveldoo says it is doing everything it can to make the endto-end process as slick as possible for the user.

“One of the things you are trying to do is reduce burden,” says Fitzgerald. “No one likes doing expenses. People can spend hours doing it, and it’s dull and prone to error. The sort of automation where booking data flows into the expense report is one of the key benefits of linking through from travel to expense.” Fitzgerald says: “Ideally we can nudge people into adopting good behaviour. If a traveller has just paid something – for example, a taxi – they can take a photo of the receipt and we can geo-locate where they are, and that line item gets created.

The more we can be involved in the process, particularly with new technologies, the more we can capture data that we are targeting.” Although the data capture is rich, total automation is difficult to achieve. “I don’t think we will get there 100 per cent. One of our sources of geo-location data is receipt capture using mobile, the other is bank data coming through with some level of address information, and we use that to increase our accuracy to over 95 per cent.”

As well as the booking data, Traveldoo and other similar platforms can accept feeds from corporate cards that have been used to settle hotel bills. “We can reconcile that and, if there is any disparity, we can ask the traveller to clarify.” It is important to recognise that a hotel bill is a compound payment, made up of the room charge, food and beverage, and other expenses as well as VAT. “Because all of that data has been captured, you get control and visibility and a view of the total cost of trip, in terms of booked versus actual,” he says.

Fitzgerald adds that this approach differs from the more open-booking type approach taken by competitors. “You want to do this properly, particularly with duty-of-care concerns and not going to hotels that are blacklisted for legitimate reasons.” The T&E platform providers agree that a key metric for travel managers is leakage, and deploying end-to-end systems make it easier for them to spot booking patterns and habits that affect the travel budget.

What’s new in expense management

  • Concur has inked a deal with taxi company Gett that lets UK travellers select their corporate card and send the expense direct to Concur. Users will also have access to Gett’s fixed fares, giving them up to 30 per cent off.
  • Chrome River has announced a new technology integration with Traxo. Chrome River Expense will now be able to parse a hotel bill in English and most major foreign languages to extract line item data for the room, taxes, food and room service.
  • Expensify has rolled out its Price to Beat feature, which shows users the average price paid for similar bookings made on the same day. Administrators can reward travellers whose rates are below the average.
  • Expensify has also launched an initiative called Receipt Burner  with partners including Uber and Hoteltonight. Bookings made through these and others will now flow straight into Expensify.
  • Fraedom has launched an online booking and expense management tool called Fraedom OTE in Australia.
  • Sabre’s recently announced mobile platform, which integrates Getthere, Tripcase and its virtual payments solution, is to use Chrome River for expense management.

Ways to reduce expense fraud

  • Establish a clearly articulated policy for T&E, ensuring that it is read, understood and acknowledged.
  • Automate policy compliance.
  • Launch a corporate card programme to ensure spend matches claims.
  • Use a central, integrated online booking tool.
  • Mandate pre-approval.
  • Implement duplicate expense checking.
  • Establish rules so that certain types of expense (for example, sundries which can be used to hide out of policy expenses) are automatically submitted for further checking.
  •  Prevent collusion in the approvals process, perhaps by implementing a ‘boss rule’ so that the most senior employee always has to submit the expense.
  • Analyse and audit expense to highlight systematic abuse, such as always submitting expenses just below a threshold for more detailed checks.

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Comments

As a professional, I would like to follow a strict management plan so that I can easily manage things and projects in my professional field. Here also from this article, we can get some quick review on expenses management and especially these are applicable in entertainment, travel, and hotel field. So, we should learn some positive things from different sources to improve our current management system. Thanks for highlighting these topics.
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