Business Travel Costs Are Expected to Rise -- Here's How to Negate the Price Bump
Business models are increasingly global; and that means companies are spending more money than ever sending employees traveling all over the country -- heck, all over the planet.
That's why you should be prepared to spend even more in 2019, according to a July Global Travel Forecast report. Next year, the forecast says, hotel prices can be expected to rise by an average 3.7 percent, and flight costs will increase by 2.6 percent.
By 2020, the business travel industry overall will be worth $1.6 trillion, according to the Global Business Travel Association.
Still, before you start slashing budgets to make your travel-budget ends meet, know that reducing travel costs doesn’t mean limiting employees to unreasonable per diems and putting them up in shady roadside motels. Instead, as with most solutions, balance is key.
By getting a little more granular with travel policies and meeting your employees halfway, your company can prevent unnecessary spending and stop wasting dollars that aren’t benefiting the bottom line. Here are several strategies to make the most of your travel budget:
1. Be smarter about room rates and hidden costs.
It’s always a good idea to set clear rules around nightly rates and room types that your business travelers can book. Some companies also set policies based on the star rating of the hotel involved.
Blanket policy rates aren’t the answer here. Instead, you should consider the cost of living in each city. Business Travel News puts out a helpful rate index that breaks down the average nightly price of hotels in major cities.
Meanwhile, don’t forget indirect costs. Will you cover breakfast, or is that included in the hotel rate? What does wi-fi cost? How about parking at the hotel: free or not? Some surprise line items may pop up on the expense report, as well, so travel managers should consider all indirect costs of booking a hotel room.
When booking, also keep in mind that the nonrefundable rate will often be the cheapest. Many companies are wasting money by ignoring this option, which can be up to 20 percent cheaper. Sure, business travel plans can change swiftly, but don’t be afraid to book trips in situations when travel plans are more definite. Over time, the savings will offset the occasional loss when plans do change.
2. Don’t rule out midscale hotels.
Although many business travelers tend to stay at upscale properties, major chains are launching midscale brands with a boutique feel in order to cater to travelers’ changing tastes. These hotels have two advantages: Travelers can still earn loyalty points with their favorite brands, and prices are up to 13 percent lower, according to the Business Travel News rate index.
3. Remember that the price you book doesn’t have to be the price you pay.
Hotels have taken on a dynamic pricing strategy just as their friends at the airlines have. What does this mean? Prices constantly change according to inventory. Take advantage of tools such as Yapta. That's a company we partner with to track price changes and rebook hotel rooms for cheaper rates if they become available before the trip begins. Yapta claims it can save companies an average of $369 per trip.
4. Save money on saved time.
On average, business travelers spend about 20 minutes reading hotel reviews before they book a trip, according to a survey by TrustYou and the Tisch Center for Hospitality and Tourism at NYU. And that's not ideal: You don’t want employees wasting time trying to pick the perfect hotel, and you don’t want them spending hours on the phone with airlines trying to rebook a ticket.
Those are hours better spent closing deals and making contacts. Remember: Wasted hours = wasted dollars.
You’ll also want to make sure that all the internal processes surrounding an employee’s travel are as efficient as possible. To maximize productivity, establish easy-to-follow procedures that allow employees to plan for travel. Clearly define who needs to approve plans and what tools or sites employees are expected to use. Pick a few mobile apps to adopt companywide, to help in the planning process.
Once your planning expectations are laid out, turn your attention to the ancillary processes. Work with your accounting department to make sure expense reports are easy for all employees to fill out. While you’re at it, ask your accounting team whether it has all the data it needs to run efficient reports.
Companies are expected to spend lots of money on business travel expenses -- but your company doesn’t have to. Smart companies will account for many variables in their employees’ travel budgets, but smarter companies will know how to make travel work best for them. Utilize tools, tips and procedures that optimize business travel so that your company and employees have the most efficient and satisfying trips possible.
This column was originally published on Entrepreneur.com on August 24, 2018.