10 Tips to Reduce Employee Travel Costs

For many companies, employee travel is an absolute necessity.

But with rising fuel prices and an increase in air travel demand approaching pre-COVID days, it’s more crucial than ever for companies to reign in employee travel business expenses.

Yes, businesses want to save money on employee travel, but they need to be smart about where to make the pinch.

Ahead, we share several ways that you can save money on your employees’ business trips without hurting their productivity (or feelings).

Here are 10 tips for reducing employee travel costs.

1. Know the Ins and Outs of Travel Expense Reimbursement

The simplest way of reducing travel expenses is to have a proper reimbursement policy in place that lets you reimburse employees accurately when they travel for business purposes.

If that employee reimbursement seems counterintuitive to saving money, think of it this way:

Having a firm policy in place means your employees can only expect reimbursement for actual business travel-related expenditures.

While most employees probably would not try to “pull a fast one” on their employer to get more money back than their actual expenses, it takes away that all-too-human temptation.

If you haven’t already, implement a straightforward reimbursement plan like this:

• Your company sets a per diem rate, which is set by the U.S. General Services Administration (GSA) for employee travel within the U.S.
• While on their business trips, your employees use the per diem on their travel-related expenses
• This means they do not need to submit supporting documentation like business receipts to the proper department when they return to the office (human resources, accounts payable, or however way it works in your company).
• If you do not go the per diem route, your employee saves their expense receipts. The department considers the reimbursable expenses and refunds the employees within a reasonable time frame.

The key here is to make sure your traveling employees know your employee travel expense and reimbursement policies long before they start planning their trips. That way, there will be no confusion.

They either keep their expenses within the per diem frame or they save receipts to submit for their reimbursement requests.

Also check out: What Employers Should Know About Per Diem and Employee Rights

What Types of Expenses Should Your Company Consider?

From airfare to dry cleaning, what your company decides is a legitimate employee travel expense is up to you.

However, we do have a few ways to make planning your company’s travel expense reimbursement policy easier to plan.

Transportation Costs

Will your employees be flying to their destination or driving?

A mix of both?

You will need to set guidelines on how you choose to reimburse them for their time on the road. If they are renting a car or driving their personal vehicle, mileage reimbursement and reimbursement for tolls are standard.

Use the Internal Revenue Service’s (IRS) mileage rate to assess how you will reimburse your employees when they drive to business events.

Business Expenses

These can include registration fees for conferences and meal expenses if your employee takes a client out to dinner.

Personal Expenses

Decide what qualifies as a personal expense that your company is willing to reimburse to your traveling employees.

Typically, these include meal expenses, business lodging (if longer than a one-day trip), commuting expenses, and entertainment expenses.

Incidental Expenses

Create a reimbursement budget that also considers incidental expenses, like when your employee tips hotel staff.

Now that we have discussed the massive elephant in the room that is employee travel expense reimbursement, we can share more generalized tips about reducing employee travel costs.

2. Book Air Travel for Off-Days and Off-Times

The cheapest airfares are usually available on Tuesdays, Wednesdays, and Saturdays. These are not the days you book, these are the days your employees should fly.

While there really isn’t a better day of the week to book air travel to save money, you can potentially save money by setting up travel alerts. Set up travel alerts with Google Flights so you will know when flights are at their lowest at any period of time.

Also, avoid peak travel times. On one hand, red-eyes aren’t great for employee productivity. And yet, rush-hour flights can be double the price or more of off-peak fares.

3. Get the Best Hotel Rates With Hotel Engine

Hotel costs can add up quickly, but there are ways for businesses to keep these expenses down.

With Hotel Engine, you can book rooms in top hotels for your employees and save 60% off the usual price. Hotel Engine partners with leading hotel chains like IHG, Hilton, Extended Stay America, and more, with 700,000 lodgings available across the globe.

Set up a Group Booking with us and we handle all the heavy-lifting, negotiating the lowest rates at the most comfortable hotels in any location.

And our Travel Tools make it easy for you to manage all of your bookings on a single screen. Your company will have its very own private dashboard that provides you with valuable insights into your travel trends.

No matter your travel policy, Hotel Engine will help you save time, money, and potential headaches.

4. Have Employees Share Vehicles, But Not Hotel Rooms

Rental cars, airport shuttles, taxis, Ubers — all of these things can be shared. But don’t make your employees share a hotel room.

This can be very uncomfortable for them, for one thing. It also doesn’t make your company look great in their eyes.

Luckily, when you book rooms using Hotel Engine, you don’t have to worry about cutting back on the number of rooms.

Our straightforward platform lets you book rooms in top hotels at a fraction of the cost. And no matter how many rooms you need or when you need them, you can rely on our travel experts to handle every step.

5. Don’t Underestimate the Importance of Loyalty

Airlines, hotels, and even many restaurants are in hot competition for your business travel dollars.

Using the same airline and hotel chain for as much travel as possible will earn your employees free flights, nights, and other perks that can save you money.

Along with using Hotel Engine to find exceptional lodgings for your employees when traveling, you can also sign up and collect bonuses for use on future trips.

It’s our way of saying thank you for your loyalty while illustrating what makes our services a perfect fit for your business needs.

6. Re-Evaluate Your Per Diems

Business models change. You may have more employees traveling than when you first created your per diem strategy. Tweak as necessary.

Plus, consider the types of travel and what’s involved.

If your employees will be traveling to a conference or other event where some meals will be provided, adjust their per diems down accordingly.

Also, ensure that the per diem is valued appropriately for the location. The cost of living is higher in certain cities than in others.

For example, you will need to initiate a heftier per diem if your employees are off to Paris, France, and not Paris, Texas.

Discover: Per Diem and Taxes: Top 7 Frequently Asked Questions (With Answers)

7. Ensure Any Applicable Refunds are Collected

The unexpected always seems to happen when we travel.

If your employees end up not using one of their flight segments or not staying in a hotel as long as planned, make sure you get the refunds whenever possible.

This is a must for several reasons, namely saving money and keeping all your ducks in a row for tax season.

First of all, when it comes to business travel deductibles, the IRS sets clear protocols for employers to follow. This makes it easy for you and your employees to claim business travel expenses during income tax season.

The IRS has two options for employers who use employee travel expenses for tax purposes:

1. If you opt to make a payment under an accountable plan, deduct all the actual costs of the employee’s travel expenses or per diem amount under the “expense paid” category.
2. If you instead opt to make a payment under a nonaccountable plan, deduct it as wages and list it on the employee’s W-2 form.

You can save a significant amount of money just by only paying the actual expenses your employees use. And, it will make things a whole lot easier come tax season.

8. Use the Same Business Credit Card for All Purchases

Many credit cards offer travel perks, and if your employees travel a lot, these can really add up.

For example, the savings on rental car insurance available on some Gold and Platinum Visas and Mastercards can make a huge difference on your travel expense reports.

Enrolling in loyalty programs with hotels and airlines can also be a real money saver.

All you have to do is sign up for a travel rewards credit card or loyalty program with the airline, hotel, or card issuer of your choice. The more you use the card, the quicker the rewards stack up.

Just ensure you sign up for the card that best suits your business needs!

9. Make Room for Incidentals

What if you get a frantic call from an employee on the road who says the hotel they booked will not accept their per diem? After all, a hotel does not have to accept a per diem rate.

You can prevent this from happening to your employees by booking through a platform like Hotel Engine. We do all the work for you, including locking down low prices and setting up booking confirmations.

10. Keep Your Employees Productive While They’re Away From Home

Ensuring your employees have everything they need to be productive on the road may not necessarily save you money on travel. But it can mean that those hours spent traveling aren’t a total wash in terms of getting things done.

Set your employees up with a few key items that they will need to complete their business mission.

Provide your employees what they need when traveling, such as:

• Pertinent travel documents
• Portable Wi-Fi hotspots
• Recommended apps for business travel
• Implement travel safety training before they leave the office

When your team has everything they need to succeed, you can rest assured that they will work hard.

And that makes the cost of their travels worth every penny.