Travel Manager Gets a Grip on Unbundled Fees

Travel departments, some of them anyway, are learning how to manage ancillary fees. With the right reporting tools and travel policies, managing ancillary fees doesn’t have to be a difficult task.

“In tracking fees and negotiating with our vendors, we have found that ancillary fees have a minimal impact on our total travel spend. And tracking our travelers’ spending more closely helps us meet our obligations to our suppliers,” said Sally Abella, director of global corporate travel for Harmon International in Los Angeles.

The frustration around ancillary fees for many companies is that they don’t have a way to track the fees, so they don’t know what they are spending. And what they can’t track, they can’t manage.

“It is very important for the carriers to be very clear about what we are buying. Travel managers want ancillary fees in the GDS so we can see them in our booking tools. We have our entire purchasing process based on GDS and, for now, all of those charges are invisible when we purchase. The information is there, but it is outside the GDS.”

From airline baggage charges to hotel wi-fi charges, ancillary fees fall largely outside traditional travel management structures. The well-defined expense categories of air tickets, hotel room nights, and car rental rates are disappearing. In their place are base rates plus add-on fees, some mandatory, some optional – and some simply confusing for the buyer.

Reporting tool revamped
To get a handle on Harmon’s ancillary fees, Abella has revamped the company’s online expense reporting tool. She created separate expense categories for ancillary fees, so travelers can track them easily. This is the first time ancillary fees have had their own expense categories, she said.

Reporting fees is not an additional burden on travelers, Abella said. Harmon has had an online reporting tool since 1999 and has long had a 100% reporting and receipt requirement. The only change is that the company’s GetThere online expense tool displays new fee categories.

The new categories are all part of the familiar dropdown menu system, but they make it easy to track items such as inflight wi-fi, hotel wi-fi, airline baggage fees, hotel resort fees, ATM fees, travel fees, ticket change fees, and so on. What Harmon didn’t add was a miscellaneous category.

“We need to capture the data so we can manage it,” Abella said.

Policies on ancillary spending
Harmon also set specific travel policy on ancillary fees. The company won’t pay for inflight entertainment, equipment, phone, alcoholic beverages, seat upgrades, or priority seating/boarding, regardless of flight length.

Everything else, including pillow and blanket, snacks and meals, soft drinks, wi-fi and preferred seat selection, is allowable, depending on flight duration. Similar explicit policies apply to hotel fees, car fees, and other ancillary fees that business travelers encounter.

Creating and publicizing specific policies on ancillary fees means that travelers know what to expect, Abella explained. It also helps that the travel department actively supports company travelers.

Preferred frequent flier status is negotiated into air agreements, for example. New hires that have preferred status in some other carrier’s program are switched to similar status with Harmon’s preferred vendors. That means nearly all Harmon travelers are exempt from baggage fees.

Any employee who travels more than three times a year and reports paying baggage fees gets a status upgrade. That means no more baggage fees, as well as the addition of other perks that come with preferred status.

“If we find that we’re spending a significant amount on inflight wi-fi, we might reach out to Gogo  [inflight Internet provider] to talk about a corporate arrangement, just like we reach out to hotels to include wi-fi in our negotiated rates,” Abella said.

Training the traveler
Harmon also has “travel-specific training for all of our travelers that combines practical information like packing lighter, so they can carry on more often, and how to get preferred status with our preferred vendors,” Abella said.

“We help travelers understand the advantages of using our preferred vendors, which comes back in increased compliance with travel policy. And we don’t spend as much on ancillary fees.”

Abella doesn’t complain about ancillary fees. “I understand the airlines and other suppliers need to make money. Our suppliers provide a valuable service that makes it possible for us to do business around the world.

“At the same time, we need to manage our travel expenses. We need to know where our travelers are spending and what they are spending, so we can help them spend as effectively and as efficiently as possible.”