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At my employer, all travel bookings must be made via the same travel agency. If I don't, I apparently violate the contract between the travel agency and my employer (a university in Sweden).

A booking made directly via a train company is significantly cheaper than the same travel booked via the travel agency. Administrative overhead for the employer should be similar, because in one case they will get a bill to pay, in the other case a reimbursement form from the employee. Of course, there is an advantage for me as an employee to book via the travel agency; it's considerably less work. However, I personally like to figure out travel options and to be in full control, so I prefer to book by myself, even if doing so in my own time.

Why would an employer enforce all travel bookings to occur via the same travel agency, even if it's cheaper if employees book directly via the railway or flight company?

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It may be cheaper on that one specific trip. Do you know what the agreement is? Do you know how much the university saves on other travel arrangements by using this agency? –  Oded Dec 7 '12 at 20:33
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You yourself give the direct answer to the question as stated - Q: "Why would an employer enforce all travel bookings to occur via the same travel agency, ...?" A: "... all travel bookings must be made via the same travel agency. If I don't, I apparently violate the contract between the travel agency and my employer ...." Violating the contract may lead to legal action and then punishment if your employer is found guilty of a violation. –  GreenMatt Dec 7 '12 at 21:33
    
@GreenMatt That should be the answer; not just a comment. –  Dan Neely Dec 7 '12 at 21:56
    
@DanNeely: I made it a comment because I don't think that's really what the OP wants to know. (I think) He wants to know why his employer would make such an agreement. –  GreenMatt Dec 7 '12 at 22:01
    
I've never travelled for work, but I have travelled a fair bit around Europe for fun, and it's never even occurred to me to use a travel agency. Never seen the point of them. –  TRiG Dec 7 '12 at 22:12
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6 Answers

up vote 15 down vote accepted

We have the same situation, and where the travel comes from (research) funding there is always the temptation to save money by organising your own bookings. Our policy applies primarily to airfares, as our train network is impractical for city-to-city travel. The reasons we have (rightly or wrongly) are:

  • we recieve a rebate in total from our travel agents, as well as individual companies such as airlines and hotel chains. Of course, this rebate is not pro-rate transfered back to the teams that spent the money, but that's a different issue.

  • in the past, we have had people who have blown team project/programme budgets through unauthorised spending on travel. Rightly or wrongly, the policy is designed to avoid confrontations over this type of issue.

  • we have an internal hourly charge rate that includes overhead costs. Savings on short-haul travel rarely justify even the investment of 20 minutes of staff time, in terms of opportunity cost. Similarly, if their time is charged back against the research project, it can be more expensive.

  • people can use the freedom for personal advantage (special offers, frequent traveller points, selection of upgrades, supporting friends, buying tickets for others) and associated issues around transparency/auditing of public (or shareholders) money

  • there can be tax implications in some countries, depending on the rules around how employee expenses operate.

  • for larger organisations don't under-estimate the workload involved in processing the hundreds of expense claims and thousands of receipts involved, and ensuring these are stored and filed for auditing

  • staff don't always read the small print on "budget" deals, and you can find the costs escallate pretty quickly

and the most important one (IMHO)

  • having a single, simple blanket policy that covers all travel without exception is cheaper and easier to set up, audit, monitor, enforce and change.

If you have ever been involved in setting or enforcing organisational policy, you will know just how much time these discussions (and escalation of them) can cost an organisation, especially in the public sector.

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For the record, I don't agree with many of these, but that's not what the OP asked... –  GuyM Dec 7 '12 at 21:20
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There can be a number of reasons, but the primary three (that I'm aware of) are:

  1. The travel agency has a contract for discounted rates with the organization in terms of rebates or other financial considerations; i.e. the agency offers financial incentives for booking more travel with them. (Part of that contract.)

  2. Accounting considerations - the travel agency aggregates financial data.

  3. In public institutions, there is often also considerable pressure to ensure that all financial transactions occur through contracted and bidding process to ensure accountability for public funds. (Yes, sometimes that means the dollar amount spent is higher, and yes, from a strict dollar amount it often doesn't make sense - but the PR fiasco that often occurs when someone spends public money on an off-contract expenditure through someone's brother's company, etc., etc. is often considered to be a far greater cost that spending through a contracted agreement that may often cost more.)

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4. Old boys network ;) –  Oded Dec 7 '12 at 20:39
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In the travel industry negotiated rates are, for the most part, determined by the amount of travel and bookings. This includes hotel room nights, air segments, car rentals and so on.

In the corporate realm committing to a single agency often gains several benefits:

  1. A centralized and standardized travel purchasing and approval process.
  2. Easy access to the whereabouts of an employee while they are traveling.
  3. Reduced rates for most, if not all, of your travel needs.
  4. ....

Now in your case you may be able to find and make travel arrangements cheaper than your corporate agency. But your company loses the benefits and the ability to negotiate for better rates because they can't easily determine how many air segments, car rentals, hotel nights you've used in the past.

It's a short term loss (more expensive now) but has a long term gain (less expensive later) for the company or organization.

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They may not feel other employees will comparison shop for the best deals like you have. For more complex trips they may be able to save employees time by putting together various places to stay and transportation.

Having a single place can make payments easier and getting consolidated reports on all travel expenses as well.

Finally, someone may be getting bonus points and free travel.

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While I see the point of your question and have had similar experiences myself, a reason I've not yet seen mentioned for such an arrangement is that the travel agency can support you while you are traveling. I'll illustrate with a couple of my own experiences.

Twice I've had problems with car rentals when I was traveling, one of these was for work travel, the other was for personal travel:

  • With the work incident, upon arrival in my destination city, I found that the car rental agency with whom I had a reservation was no longer doing business in that location. One fairly quick call to the after hours number of the travel agency and I had the charges reversed from the original agency and a new reservation with another company that was doing business there and I didn't have to worry about a price difference.

  • For the personal incident, I had made my own arrangements. My flight was delayed and I didn't arrive until late at night. The agency with whom I had a reservation had closed for the evening. I then had to call that agency to cancel the reservation and request a refund of my deposit. Then I was at the mercy of a different car rental company in both what vehicles were available and the price I would have to pay.

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That's a very good point. –  gerrit Dec 7 '12 at 22:16
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Exactly it can cost them a lot more to have you be forced to deal with your own travel mistakes than to have the travel agency to handle it for you. Many times we will choose to be penny wise with our decisions instead of being dollar smart. So we will save $50 in travel expenses and end up with $500 in costs from lost time and aggravation. –  Chad Dec 7 '12 at 22:16
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Because way back when everybody was allowed to book their own, attention began to focus on cutting costs (perhaps due to a downturn or the influence of Lean and 6-sigma). Somebody put together a slick presentation including charts and graphs proving that money and time would be saved by outsourcing travel arrangements. It was fully embraced and nobody is looking back... except for the occasional traveler like you who's done some digging and found the truth.

While it probably did save some time and money initially, that benefits have eroded woefully over time to where is now functioning about as efficiently as the TSA or the Marine Corps. Nobody has verified whether or not the system still saves money. It is now the status quo and it is probably dangerous to challenge it. Still, if you ask, you'll probably hear this response, "we've got bigger fish to fry."

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What's the TSA? –  gerrit Dec 9 '12 at 20:21
    
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