7 Warning Signs Your Company is Spending Too Much on Travel
Despite the technologies making long-range communication and collaboration easier, business travel is steadily increasing. This year, the Global Business Travel Association expects U.S. business travel alone to surpass $292 billion, representing an almost 7% uptick over last year. The jump in spending is being driven largely by higher prices and additional spend-per-trip.
For many companies, travel—and the costs associated with it—are a fact of business. However, just because prices are increasing doesn’t mean travel needs to take an oversized chunk out of your budget. Here are 7 warning signs your company is spending too much on travel.
You are a small business.
A Concur study found that small businesses spend about 24% more per year on travel than big companies, partly because small business travelers travel more and partly because small companies don’t have the same kind of leverage when it comes to negotiating prices. The study results showed that small business travelers spend about $2,000 a year each more than big business travelers, and they pay more for every travel expense.
You don’t set an overall trip budget.
In terms of reducing travel costs (and any costs for that matter), there is no substitute for budgeting. A business travel budget should be based on current prices, the costs of things at the destination, and of course what the company can afford. One excellent way you can help your travelers stick to the budget is by paying for as much of the trip in advance as possible, including airfare, hotel rooms, and any other expenses—major or minor—that can be taken care of before they hit the road.
You don’t have an established protocol or preferred vendors for booking travel.
Have you taken the time to calculate how much time you or your employees spend searching for travel deals and making arrangements? If not, you might be unpleasantly surprised. Although this won’t show up on the expense report, it is still time that could be better spent doing something else. To avoid lost productivity, establish a protocol and a list of preferred vendors for everyone in the company to use when booking travel.
You don’t take advantage of rewards, points, and miles.
Hands down, the best way to spend less on travel is to take advantage of loyalty clubs. Combining points and miles with the rewards from travel credit cards can lead to significant savings. If you are new to this idea, explore The Points Guy’s Beginner’s Guide to Setting Up an Effective Points Strategy. For ultimate savings on hotels, check out a little thing we at Hotel Engine like to call The Best Hotel Rewards Program Ever.
Your employees take mostly overnight trips.
Overnight trips are expensive—first there is the trip itself, and then there is the downtime associated with driving, hanging about in airports, and so on. While many overnight trips may be unavoidable, some may be replaceable by day trips or even no trip at all (think: Skype).
You use reimbursements instead of per diems, or vice versa.
The question of which is better, per diems or actual reimbursement, isn’t something that can be decided in a blanket manner for all companies: it depends on factors including industry, company image, the nature of client relationships, and type of travel. While many companies default to per diems to reduce the paperwork and better predict expenses, this may not be the best (or the least expensive) option for your company. Read this Global Workforce article for the pros and cons of per diems as well as things to consider when choosing a travel expense policy.
You are continually surprised at how much business travel costs.
Most of the warning signs above are the result of one main problem: a lack of appropriate control over your company’s business travel practices. Spending some time to set budgets and develop policies surrounding business travel will allow you to better understand and predict its costs, so you won’t be so surprised when those expense reports come across your desk.
Featured image by SuperJet International [CC-BY-SA-2.0], via Wikimedia Commons