Why do employers require booking through an agent such as BCD Travel? It seems like such a waste of money at $45 per booking, even for something simple like a rental car. Are they getting a discount or kickback? Is there really a savings to the employer in the end?

closed as off-topic by Neusser, user67108, Newton, AakashM, David Richerby Aug 9 '18 at 12:37

  • This question does not appear to be about traveling within the scope defined in the help center.
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  • Which companies? Do you mean "why does my employer require..."? – MadHatter Aug 9 '18 at 5:47
  • Welcome to TSE. Like any other business service, there are a wide variety of reasons why a customer might choose them. You don't know what the fee and rebate structure is. You don't know what benefits they are providing to different corporate departments or representatives. You don't know what discounts they have negotiated. Or, it might be inertia, or a kickback, or something more sinister. In any case, the question as given, open-ended and with no initial research attempted, is not a good fit for SE. Please take the site tour and review the help center and edit the question as needed. – choster Aug 9 '18 at 5:57
  • Right, the questions you ask are exactly what I'm wondering about. Figured somebody who works in these parts of a corporation could lend some insights. That background is not shared with regular employees. – T S Aug 9 '18 at 6:01
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    @TS Again, please take the site tour and review the help center. For instance, why do you single out a single travel agency? Do you have something against BCD that you don't against Carlson or American Express? What research into travel agencies as an industry have you already attempted on your own? This information should be edited into your question. – choster Aug 9 '18 at 6:34
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    Probably that $45 per booking is way cheaper than having someone in-house managing all of that. – Newton Aug 9 '18 at 9:35

Many companies like orderly processes to save overhead.

Where I work, to purchase something I'd have to get the approval of my boss, involve the purchasing department, possibly get three separate bids by different vendors if the amount is high enough, select the best (not necessarily cheapest) bid, send the invoice to accounting, etc.

The total could be several hours of working time. The cost of this time is much higher than just my salary, there are taxes, rent on the office space I use, and so on.

If the vendor has been pre-selected, the process is much easier. Get the expense approved by the boss, tell the purchasing department, and they'll place the order. This can save several hours.

  • There are also definite advantages for the company in having one supplier to deal with. If everyone books their own car rental and one goes wrong (say, contested damage to car) the company could end up spending a lot of time and money sorting it out. If instead I have one supplier handling them all, volume gives me clout: I can say "sort out rentals 24, 577, and 833, or I move all my rental activity next year". – MadHatter Aug 9 '18 at 6:14

A corporate travel agency, or nowadays, a "travel management company," can provide a number of benefits:

  • Control: everything goes through one central source. The agency can enforce corporate travel policies, so nobody has to worry that you've gone off and booked a ridiculously expensive first class ticket or added an unauthorized 3-day stopover in Aruba to your itinerary. They don't want you booking a ticket that costs $1,000 more just because you want the frequent flyer miles from that airline. The agency can evaluate the price/time options for flights and recommend those toward the cheaper end of the spectrum, or require appropriate approvals for more expensive travel. They can also check for airfare price drops after booking and ensure refunds or credits are handled for cancelled trips.
  • Payment: everything is billed centrally, and the finance department only has to deal with the approved travel that's been submitted by the agency. Employees don't put travel on personal credit cards, nor does the company have to issue corporate cards to everyone.
  • Time and skills : not everyone is good at booking travel (some people are terrible) and companies don't want their employees spending large amounts of time comparing options when there are professionals to do the job. Not every employee knows to use websites to compare fares from different airlines or to search for flights from different nearby airports. Of course, this can be frustrating if you do know what you're doing and don't like the options the agency has given you.
  • Changes: the agency gives you a 24/7 number you can call to make any changes, and late-minute changes are a common need with business travel, instead of dealing with the airlines. Any change fees can be handled through the agency.
  • Discounts: businesses can maintain relationships with airlines, hotel chains, and rental car companies to get discounts and perks in exchange for their business. These range from programs for small businesses like United's PerksPlus to a large company or two buying up enough business class seats to convince an airline to operate an entire longhaul route (gestures at Swiss's "Roche Coach", an SFO-ZRH route for which Roche's commitments were reportedly instrumental). A corporate travel agency will manage these agreements and direct travelers to the best fares for the company, including non-public negotiated deals.
  • Awareness of where everyone is: the agency maintains records of all employee travel, so the company knows where all employees are in the world and can respond to any emergencies.
  • Events: want to fly a candidate out for a job interview? Or need to fly 500 customers half way around the world to an event? An agency can do that, handle all the logistics, and manage the billing. It would take in-house staff time to do the same.
  • Reporting: the agency knows the entire business's travel patterns, and can produce reports to help find ways to reduce expenses.

Whether the company is actually getting their money's worth is harder to evaluate. Processing an expense report costs money, so front-loading more of the work onto a travel agency takes some work off of the finance department. Stopping just one employee from wasting money on unnecessary travel expenditures can add up to a lot of $45 booking fees. Or perhaps they're wasting their money and would be better off without the agency. Travel can make up a large portion of a company's budget, so they may find the part of the process that you don't see, the behind the scenes management of the entire business's travel, to be worth the cost even if it doesn't seem worthwhile at the individual booking level.

  • Thanks Zach, yeah I see those are all reasons why they bring value, but much of that, at least in the several Fortune 500 companies I've worked at, is enforced or handled elsewhere. The Discounts bullet is where my curiosity lies -- how much savings is there that is unseen by the employees. On the surface, the quoted prices are almost never cheaper than what I see online. – T S Aug 10 '18 at 7:24
  • @TS There's some older (2012) data here. The discounts vary a ton, but domestic looks like it was sometimes as low as 2% and an average more like 8%, but international discounts were much higher, presumably depending a lot on the market and volume. Oh, and taxes and fees (huge percentage of price) aren't discounted. But they can also include other benefits like frequent flyer status, lounge access, free checked bags, etc... – Zach Lipton Aug 10 '18 at 8:53

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