How to reduce business travel costs

reduce costs

Smart ways to reduce travel costs for business

As companies cautiously return to business travel in 2022, minimising expenses without compromising safety or services will be key to keeping corporate travel spend lean.

While global business travel fell dramatically at the start of the COVID-19 pandemic, it’s expected to recover to pre-pandemic levels by 2024. However, the lingering effects and ongoing disruptions over the next couple of years will create a fast-moving, fluid travel environment, which will likely mean smaller and tighter travel budgets – making travel cost control more critical than ever.

With a little bit of forward planning, you could save thousands of dollars on travel without compromising the comfort of your staff or the efficiency of the journey.

1. The golden rule – plan ahead

Managing a corporate travel budget is as much about changing business traveller behaviour as it is about calculating travel costs. While last-minute business trips can and do happen, most of the time staff who need to travel for work will know well in advance. 

“Given the state of flux that we’re in right now, planning can be even more important,” says Head of Customer Experience Andy Jack. "It’s about making sure that people are thinking ahead – not just how they’re going to get to their destination, but also any expenses they’ll incur while they’re there. These things don’t need to be planned or booked as separate activities. Booking flights first and hotels or car later will all add to costs.”

Planning helps you think through scenarios more thoroughly. It’s always best to factor in the travel experience when travelling for work and the budget, is it better to spend a few dollars more on a hotel that is a short work to where the traveller needs to be over a cheaper location which will involve taxis or rental car that be overall more expense and stressful for the traveller?

2. Save on air travel expenses

Unsurprisingly, the average cost of business travel in 2022 has shifted over the past couple of years, so finding ways to keep air travel costs down will be key to keeping small business travel expenses down.

Book in advance

Booking flights ahead of time is the oldest cost-saving trick in the book. In practice, setting a clear expectation of timelines for booking travel for you people is key for setting standards and creating ownership of travel costs.

Shop around in a single booking tool

While it’s standard practice to compare flight prices across air carriers, it can also be time-consuming flicking between different booking platforms. SAVI is a fast, flexible online booking tool that does the searching for you, giving you access to competitive rates and significantly cutting down booking times. SAVI will also show you Airline the carbon considerations at time of booking, helping drive even more informed purchasing.

Pay attention to the baggage

There’s an art to packing light for a business trip, and it’s also how smart travellers travel more efficiently without any prolonged waiting at the baggage carousels and at the same time, avoids racking up overweight baggage fees. In your travel policy, setting expectation for where baggage is appropriate can help your people avoid unnecessary expense. Packing light and for longer stays allowing a laundry budget can be more cost effective than save you money.

3. Cut the cost of hotels

​​​​​​Accommodation takes up a big slice of travel expenses. It’s often not the room rate but all the ‘added extras’ that can quickly mount up – and they don’t always guarantee traveller comfort either.

Consider the location

For example, staying in Auckland CBD can set you back almost $200 per night, compared to accommodation options in neighbouring suburbs that can be half the price. However, you might then have to pay for parking for a rental car (which can be over $30 a day in many major hotel chains), or Ubers back and forth for meetings.

Stick to trusted providers and get rewarded for loyalty

If you have preferred hotel chains that fit your budget and you regularly book rooms there for business travellers, stick with them! They’re more likely to cut better deals and offer discounts if you’re a loyal customer. To manage this, include guidelines in your travel policy so team members know what charges are acceptable. No worries if you don’t have preferred suppliers as we have you covered through our local and global preferred supplier network.

Gather quotes from multiple hotels

It’s always a good idea to compare hotels and room prices – you’ll be surprised by the deals some hotels offer, especially for bulk travel bookings.

SAVI has added more advanced accommodation filters to quickly identify “Free Cancellation” options for bookings that won’t incur a penalty if a trip is cancelled. This is supplemented with enhanced accommodation safety and cleanliness information, available in SAVI. 

Dos and don’ts during the stay

Provide employees with clear guidelines about your company’s dos and don’ts for their stay at the hotel. For instance, mini-bar services might not be covered by the business or room service might be limited to one meal per trip

4. Have a comprehensive corporate travel policy

​​​​​​If your travel policy isn’t airtight, expenses will slip through the cracks. According to GBTA, 79% of business travellers surveyed identified their company’s travel policy as having the greatest impact on their travel decisions, so keep it simple, readable and, most importantly, reasonable.

Your travel policy should set out clear procedures that show corporate travellers how to budget for travel in a way that keeps the business out of the red – what cities and trips need lower budgets and which warrant higher spending – to increase fairness and get a handle on overall travel spend Policy should be clear, fair and set expectations and ownership, we are always happy to help in this space for any needing guidance.

Review, evaluate and update your travel policy

Take the time to check in on the expectations. Are these still relevant to your business and traveller needs? Do hotel rate caps need updating or are there new considerations to add. Your policy set expectations as to how your business should travel, if this becomes clearly outdated its loses relevance and therefore runs the risks of becoming obsolete and ignored.

Daily allowance examples

Historically, travel per diem (how much a traveller can expect to reasonably spend on accommodation and meals per day during a trip) has been used to estimate average travel expenses for a small business, it’s important to consider duty of care and traveller wellbeing  more than just encourage accommodation at the cheapest hotel.

5. Set up a pre-trip approval process

As New Zealand opens to international travel again, a pre-trip approval process will help businesses hit their travel program outcomes too. It’s a great tool for reviewing buying behaviour before you pay for anything and gives business travellers more cost ownership over their bookings.

Rather than relying on post-trip reports to mitigate any overspend, you can be more proactive with your travel expense management. Clear rules will help staff make decisions about what they do while travelling. Anything outside of that, they’ll have a process to follow to get approval.

“Having policy in-built when your people book, helps support and guide the right travel decisions. Automated approval processes can streamline the management of exceptions, making life simpler for the person booking. It can also be set to support in policy behaviour and only alerting the approver when needed, removing paperwork, admin and time that can be a pain and increase cost,” Andy adds.

6. Incentivise and reward employees for saving money

​​​​​While the ‘carrot and stick’ approach generally works well (although it’s not always the most engaging), setting targets for a save-and-win incentive can reward, recognise and create a buzz around driving the right behaviour. Andy is a big fan of “promoting those who are doing the right thing.”

“People engage when they know they’re making a difference and can see they’re helping the business perform better and achieve its goals. Hero those champions of the policy and others will follow.”

Employees understand the logic of not overspending on a budget but spending less than the budget doesn’t carry the same weight of consequence. Most employees won’t make the effort to spend less unless there is a real incentive to do so, Its always a balancing act between savings and traveller experience but booking in advance can avoid compromise. Thinking about how you can celebrate the right behaviours can be great positive reinforcement

7. Consolidate your bookings for cost savings

Consolidation has long been considered best practice for managing corporate travel. Moving from a highly fragmented program to standardised travel policies, processes and tools in a single travel management system means businesses can leverage their total travel volume to negotiate optimal supplier pricing and use data to drive better decision-making.

By pulling together your business travel through a travel management company, “you’re going to get better value because we can do a lot more with that information,” Andy says.

“We have tools that will save you time and money including solutions for duty of care, travel policies and visibility of what and how your corporate travellers are spending. We can negotiate better deals for you by tapping into our exclusive network – that will help with cost savings and, ultimately, drive your budget further.” 

Here are some more ways consolidating your business travel can help better control your budget:

Greater transparency. With centralised data, you get a clearer, more focused picture of what is happening across your travel program. It makes retrieving and analysing your travel data much easier, so you can be more efficient with your money and make strategic improvements that yield other benefits. 

Improved safety and security. In a managed program we can also help ensure you’re meeting your responsibilities as an employer, by streamlining traveller tracking and communications. In an emergency, being able to quickly locate travelling employees is critical – and that’s harder when you’re having to piece together information from multiple sources. Your travellers will also appreciate this with having one point of contact 24/7 can take the stress out of unforeseen challenges.

Better travel experience. Consolidating with a travel management company not only streamlines the booking aspect of business travel, but travellers also get a more consistent and positive experience. The business benefits from tighter cost management controls and the traveller’s needs are better satisfied.

8. Use corporate travel technology: expense management software

Technology exists to make the complex simple, and when it comes to travel expense management software, technology can eliminate hours of searching, spreadsheeting and travel expense activities – at every stage of the travel journey – and allow you to customise budgets based on the role of the traveller and the type of travel.

“We’ve invested hugely in our technology so we can regrow quicker and smarter, and our customers can get increased benefits,” Andy says.

“Using AI-inspired booking tool SAVI with machine learning, alongside Corporate Traveller’s Mobile App, travel managers and business travellers can book online, track policy compliance, view travel itineraries, access border health and hygiene information and receive alerts on any major incidents – just to name a few.”

Not only can software help streamline the booking and approval process and minimise expense management, but you can also leverage traditional cost-saving tactics more efficiently using real-time data insights while ensuring a smooth travel journey that will help travellers stay productive.

9. Understand travel ancillary charges

According to research by the Global Business Travel Association, ancillary fees account for around 8% of the total expenses involved in a business trip. They’re one of the recurring headaches of corporate travel spending, mainly because they’re ‘hidden’ within other expenses, which can make them hard to predict when planning a budget or expense policy.

These include a hotel fee for using the internet, an airline charge for food or drink or a car hire supplement for returning the vehicle to a different office from the pick-up. To manage and limit these expenses, establish a travel ancillary fees policy within your overall travel expenses policy.

Some business service providers can bundle these costs into one combined package, something you could negotiate with suppliers (or consult a TMC) to help you factor them into your budget forecasts.

10. Collaborate with a travel management service

Working with a travel management company (TMC) helps businesses optimise every part of their travel program – including how to save money on business travel post-COVID.

“Having the right expert there to look after you and your people so you can focus on your core business, that’s the human element you can only get from partnering with a TMC,” says Andy.

"A TMC can give you full visibility of your travel program to help you make the right decisions for a significant reduction in your costs. Then there’s the benefit of being associated with a global company that invests in new technologies and has access to a worldwide network of suppliers and partners. For example, get more value with TravelSMART – a suite of products that covers different areas of travel and work to provide great rates and added value to our customers. We’ve used our negotiating power with partners and suppliers to ensure that our customers are always getting the best deals. This allows even small businesses, who may not have the volume to negotiate deals with preferred suppliers, to piggyback off what we’ve been able to do. You’ll save money, get more value out of your budget and give business travellers a better experience too.”

While the traveller is away, you also have 24/7 support. If something goes wrong – missed connections, natural emergencies, or lost luggage, for example – the travel company is on standby to sort it out, regardless of the time.

Spend smarter: budget your trip better with a TMC

There are many ways you can squeeze more out of your corporate travel budget, increase efficiency, decrease spending and help both your employees and your business thrive – without compromising business traveller safety or quality services. The global pandemic has demonstrated how valuable a trusted connection with a travel management company can be for small businesses and how partnering with a TMC will remove the complexity of business travel post-COVID.

 

Know before you go – get prepared with the latest COVID-19 information:

 

 COVID-19 Travel Hub  Business Travel Checklist

 

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