6 Ways to Reduce Your Corporate Travel Costs
Corporate travel is a $251b industry, with 445 million business trips taking place annually. Companies spend on average $111.7b for domestic travel and $31.5b on international travel. That’s $949 and $2,600 per person, respectively.
Within the total cost of corporate travel, airfares account for the highest expense, with an average of $470 for domestic and $1,217 for international flights.
As if that’s not expensive enough, costs of corporate travels are expected to rise in 2019 based on the 2019 Global Travel Forecast report. This is due to the growing number of businesses going global.
With the increased demand for air travel and hotel rooms, airfare and accommodations are expected to rise. Unfortunately, companies only see a profit and revenue increase of $2.90 and $9.50, respectively, after all travel expenses are paid off.
Achieving balance between expenses and profit is a challenge that corporate managers have to face, but it’s nothing a bit of strategizing can’t fix. There are ways to keep the costs down and to prevent the price bump from negatively affecting business travel.
Start by working with a travel management company (TMC) to help you get more granular with your policies on corporate travel without sacrificing comfort and safety. Experts of enterprise-class business managed travel services can create an array of robust strategies to prevent unnecessary spend.
How NOT to Waste Dollars on Corporate Travel
If you are under pressure to reduce corporate travel costs, the following checklist runs through some quick wins that can easily be applied:
1. Be strategic with your booking choices
Booking flights and hotel stays during the off-peak and shoulder seasons are often cheaper, although there are trade-offs involved.
During the low season in London, for example (January and February), expect heavy rains, cool temperatures, high vacancy rates and many discounts. During the high season (May to September) the weather is ideal, but vacancy rates and prices trend higher.
The best way to cut costs strategically is to implement a clear booking policy. For example:
- Only standard rooms should be booked
- Stay only in 3-star hotels
- Book a room based on a budget threshold
- The company will only cover Wi-Fi and meal costs but not minibar charges
With the help of a high-end TMC, you get access to negotiated discounts on hotels that you book frequently. The same is true with airlines.
Moreover, a good TMC will provide you with the tools to track corporate spending, monitoring all e-ticket activity automatically, and managing travel invoices online, so you are in control over travel costs and minimize excess spend.
2. Take Advantage of Flights Promotions and Seat Discounts
Flights are expensive, but you can always count on airlines and their attractive deals and promos for more affordable tickets. If there’s none available during your booking window, opt for a fixed travel plan, which is usually cheaper.
In addition, you could specify that only Economy flights are allowed, or perhaps limit short-haul flights to budget airlines only. Don’t skimp on amenities, however. Try to look for airlines with comfortable seating and free carry-on bag allowance.
3. Set A Realistic Travel Allowance
This is how most organizations spend their travel budget:
- 21% on meals
- 17% on flight
- 17% on miscellaneous spend
- 13% on hotel
- 11% on gas
- 5% on car
- 5% on cell phone
- 3% on taxi
- 3% on supplies
- 2% on shipping
- 2% on tolls
- 1% on parking
So, where can you cut down costs?
When it comes to food and transportation, the goal is to give employees enough budget without limiting their options.
Rather than set a budget for individual meals, provide a daily allowance instead. Employees will not only have a choice as to how much they want to spend individually on each meal, but also on where to dine. If an employee is scheduled to meet a high-profile client, adjust your budget accordingly. The situation may call for finer dining.
As for transportation costs, always factor in travel times and the most cost-effective method to get from point A to B. Is it cheaper to allow employees to use their own vehicle and reimburse them for all the costs incurred? Or, is it cheaper to simply buy them a bus or rail card for every itinerary?
4. Consider Extra Charges in Traveling
It is important to consider additional charges when staff are traveling, such as parking fees, tips, and miscellaneous expenses that may pop up during a trip. While these expenses seem small individually, they can easily add up to a huge amount at the end of the trip.
There are also ancillary fees that business travelers are subjected to. According to the Business Travel News (BTN) and the Global Business Travel Association (GBTA), the list includes:
- Early boarding
- Onboard food and beverage
- In-flight entertainment
- Car rental fees for toll passage
- Car rental fees for drop-off or a one-way rental
- Hotel-related fees for parking
- Hotel-related fees for internet use
- Hotel fees for minibar or room service use
A good way to analyze and control auxiliary spend is to make your own list of expenses. Then, categorize them in to the following two categories:
- Spend during travel
- Spend via a TMC: costs of air, car, hotel
Be sure to document the amount that differed from what was recorded at booking.
An easier solution is to ask a TMC to figure out what possible expenses will be incurred for a specific trip, including auxiliary charges, and combine all these costs into one package. This way, you’ll be able to better control your corporate travel spending.
5. Revamp your company’s travel policy
Review your existing corporate travel policy closely. See if it covers all aspects of your travel requirements. Take note of the most recent trends in travel spending policy that might affect your company’s regulations.
Focus on the fundamentals, such as your approvals process and reservation guidelines. Implement a clear procedure that will help your traveling employees make decisions that stay within the policy. Cut unnecessary costs that will hurt your bottom line at the end of the trip.
Some general rules of thumb that may be included in a corporate travel policy are:
- All employees are required to file a travel request and have it approved before any trips,
- domestic or international.
- Only the department head/director can approve a travel request for business purposes.
- Travel is only allowed to countries pre-approved by the company or chosen as per company guidelines.
- All managers and travelers should plan a cost-effective business trip. All expense reports must be carefully reviewed and approved by each manager.
- Always exercise good judgement where expenses are concerned.
- All travel arrangements must be made only by the designated corporate travel agency.
6. Partner with a corporate travel management company
When you partner with Adelman Travel, you will be able to implement a customized travel management program that can save you money and time. We will help ensure that employees going on business trips do not deviate from the travel policy, reducing spend in the process.
We will give you a full picture of all your travel arrangements and help you make decisions that will significantly reduce travel costs.
You can use our pre-approval tool, AutoProve, to screen your employees’ itineraries and determine if the expenses stay within your budget and spending policy.
Now that you know how a high-end TMC can help cut down on corporate travel costs, it’s time to take action – get in touch with Adelman Travel. Gain access to our international rate desk ,and you are guaranteed to leverage significant savings on air, car, and hotel expenses.
Take our industry-leading knowledge, bundle it into a tight mobile app, and then customize it to meet the needs of your company. This will ensure that all future business travel yields maximum value for significantly less money.