Travel Expense Management in the Hotel Industry

By Dennis DuBois, Senior Director of Finance, Radisson Hotel Group

Dennis DuBois, Senior Director of Finance, Radisson Hotel Group

In many companies, travel expenses are a necessary expenditure to gain additional business. Unfortunately, it can easily be abused by staff and is something that many accounting/finance departments struggle with managing. In the hotel industry this challenge is not any different.

At a minimum, some simple policies and procedures should be created and enforced to ensure appropriate spending. Some examples of these would be the following:

1) Daily meal per diems should be established and adjusted according to locations (e.g., New York City vs. Tallahassee) to create some boundaries for individual travelers.

2) In instances where multiple people are attending a dinner from the same organization, documentation of who is in attendance is required along with having the most senior person at the meal paying.

3) Dinners with clients need to also be documented to ensure appropriateness and indicate what potential business could be derived from the individuals or companies in attendance.

"Managing travel expenditures via electronic systems or through professional travel managers will only be as good as the policies and procedures that have been established by the company"

To ensure that spending levels are appropriate in comparison to revenues, we require hotels in our portfolio to budget for trade shows or general travel and entertainment costs as part of their budgeting process. Soon after the completion of a trade show we ask that travelers prepare a brief written analysis with the submission of their expense reports to summarize how much business was gained from their attendance at the show. This will ensure money is being spent on the most productive trade shows and assist in the preparation of the upcoming year’s budget.

There are multiple software solutions in the market today that can help companies streamline their travel expense management. Some of these solutions include providing travelers the option of not having to carry a physical credit card. This is accomplished by providing the traveler with a virtual credit card or single use credit card. These types of solutions provide detail data on what was spent, location and limits financial exposure by providing daily spending limits for travelers. In addition, when a normal credit card is misplaced or stolen, issuing a replacement card is a time-consuming process and extremely disruptive to the traveler.

Professional travel management companies (TMC) may be a benefit for those companies that have large travel expenditures or have multiple travelers and significant number of destinations to travel to. These companies will have web-sites that will manage the entire trip—from booking airfare, hotel stays and car rentals.

These TMC’s web-sites allow travelers to handle their own travel arrangements within the parameters of your company’s travel policies. Agreements with these types of TMC’s will outline what policies the company wants to manage. This would include lowest airfare and preferred hotels and will notify travel managers when their travelers elect options that are outside travel policies. These deviations would include booking non-negotiated airlines or routes, non-preferred hotels and rates as well as car rentals. In addition, these TMC’s will highlight unused tickets that occur when a traveler must change their original travel plans due to unforeseen circumstances. This will allow the traveler to re-book to the same destination with the associated penalties but not lose the entire amount paid for the original ticket.

These type of professional travel managers will also be able to provide robust reporting and data metrics on travelers and their booking patterns. These types of reporting and data metrics are oftentimes available not only on your desktop but on a mobile device.

These firms also provide up to date information on travelers to their companies in the instances of an unfortunate weather or act of god or local disruptions due to conflicts or political upheavals.

For the individual traveler, automated updates of upcoming travel or changes to their itineraries are of significant value. These updates and reminders can be sent via e-mail or text messages.

Managing travel expenditures via electronic systems or through professional travel managers will only be as good as the policies and procedures that have been established by the company. Constant communication with a company’s travelers about these tools as well as policies is paramount to providing seamless solutions for the traveler as well as controlling an expense that often times seems out of control.

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