If there’s something you should never underestimate, it’s the power of effectively managing corporate travel costs.
Without an effective strategy, you won’t only be wasting money, but lots of time as well. Therefore, it’s important to effectively manage travel costs since they can be unpredictable at times.
In this article, we’ll dive deeper into learning more about which financial strategies you should follow to manage travel costs effectively.
1. Implement Corporate Travel Policies
If you want to effectively control travel costs, you need to have a well-defined travel policy. A comprehensive travel policy provides guidelines for hotel stays, meal allowances, transportation, reimbursement procedures, and airfare.
Key questions to ask yourself when writing your corporate travel policy include:
- What is the maximum allowed airfare?
- Are business-class flights permitted?
- Which hotels or booking platforms are preferred?
- What’s the rate for meals and other allowances?
When employees know what’s happening, there’s less room for overspending and ambiguity. Your travel policy should be written in a clear form, and don’t forget to include it somewhere that is easy to find and serves as a reference guide for new hires or frequent travelers.
2. Use a Centralized Booking System
Centralized booking systems provide price comparisons, workflow approvals, and integration with expense management software. Moreover, they also help you enforce your company’s travel policy by flagging out-of-policy bookings. An efficient business travel company[1] will always consider implementing a centralized booking platform that lets you see all of your bookings and expenses in real time.
The benefits of using a centralized booking system include easier compliance tracking, volume-based discounts, real-time reporting, and better forecasting of travel budgets.
Decentralized travel booking often results in inconsistency, missed saving opportunities, and much more.
3. Start Planning and Booking Early
Last-minute trips might not be the most favorable amongst people, that’s why you need to plan ahead and it’ll do good for you. Regardless of where you book your corporate stay or trip with any sort of airline, booking weeks in advance is always a more cost-effective option rather than doing so at the last minute.
In fact, more than 50% of travelers have reported more last-minute bookings, mostly after the pandemic.
However, above all, it’s important to encourage managers and team leaders to schedule meetings and events in advance when possible, giving employees time to book cost-effective travel. You can set a reminder of automated workflows for trip approvals and bookings to encourage early planning.
4. Take Advantage of Loyalty Programs and Corporate Discounts
Many airlines, hotels, and car rental services offer corporate discount programs. These can significantly reduce costs, especially for companies with frequent travelers.
In addition to corporate discounts, encourage employees to enroll in loyalty programs that can accumulate rewards for both the individual and the company itself.
Some providers allow companies to collect points or miles that can later be used for upgrades, free travel, or other benefits. Consider negotiating group rates with hotels, using a travel management company (TMC) for better deals, and tracking loyalty program benefits through your travel platform.
5. Encourage Sustainable Choices
Over 80% of global travelers said that sustainable tourism was important to them and that they are willing to adopt sustainable travel incentives. One common approach is to implement policies that limit day-trips by air travel.
Other measures that you can take is to make sure that the total number of trips are reduced. Therefore, it’s important to make sure you plan everything out from the beginning.
In the case of having to use ground transportation, employees can split rides and even rent a car to reduce carbon footprints and costs.
6.Implement a Per Diem System
Implementing a per diem system allows organizations to manage travel expenses more efficiently and transparently. Rather than only reimbursing employees for every meal, taxi ride, or incidental cost, a per diem system offers a fixed daily allowance based on location.
This reduces administrative overhead costs, speeds up the reimbursement process, and eliminates the need to audit and track hundreds of receipts.
Moreover, it provides clarity for employees, making sure they know exactly what they need to do, and helps with budgeting during trips.
As for finance teams that are responsible for travel budgeting, it allows better forecasting and cost control, minimizing the risk of expense fraud.
Overall, a per diem system simplifies travel expense management while it fosters accountability and fairness.
7. Start Using Corporate Credit Cards
Assigning corporate credit cards to frequent travelers allows your company to gain greater control over their travel expenses. These cards help in offering numerous benefits such as travel insurance, expense categorization, cashback or points, and even fraud protection.
Some corporate cards can also integrate with expense management tools, making it much easier to track spending, generate reports, and reconcile accounts.
However, something we recommend is to make sure to set limits and monitor usage regularly to avoid any abuse. Your finance team should review all the statements you set in your travel policies. Not setting limits might have a negative impact on your business spending, so it’s always important to stay vigilant.
8. Establish Virtual Meetings When Possible
Business travel might not always be necessary in every case. Powerful video conferencing tools like Zoom, Microsoft Teams, and Google Meet allow people to handle meetings virtually.
Therefore, you should encourage departments to evaluate the necessity of travel before they book a trip. Implementing a “virtual-first” policy for internal meetings or routine client check-ins can aggressively reduce costs.
If you’re still wondering when you should choose virtual meetings over in-person ones, here’s what you need to know:
- Routine internal meetings
- Quarterly business reviews
- Interviews and onboarding
- Low-stakes client interactions
Hopefully, this will give you a better idea on when you need to set up virtual meetings and when not to.
9. Analyze and Track Spend Data
What gets measured can be managed much more easily. Tracking travel spend data helps companies identify trends, wasteful spending, and opportunities for optimization. You can always use expense management software to monitor your average cost per trip, high-spending departments, most frequent travelers in the team, and even vendor performance.
Reviewing your expenses regularly helps refine your travel policy, negotiate better rates, and predict future expenses more accurately. Metrics you can consider tracking include: Costs per mile/kilometer, trip revenue generated or deals closed, travel frequency by department or employee, and reimbursement time around.
10. Encourage Bleisure Travel with Limits
Bleisure travel, in other words, combining business and leisure travel together can positively contribute to employee engagement and satisfaction. Bleisure travel in a way is good at reducing airfare costs in some ways, but it’s important to always set boundaries.
As a travel company, you can allow bleisure travel as long as it doesn’t increase the company’s total costs. For example, if the paid stay is one-week and the employee decides to stay longer, they pay for the extra stay so it can be a win-win situation
The best practices to follow when it comes to bleisure travel are stating that personal expenses need to be clearly separated, time off should be pre-approved, and that company insurance applies only during business days.
11. Optimize and Analysis regularly
The business travel landscape is always evolving and a crucial step that needs to be taken is review and optimize regularly. Airlines might change their fare structures, hotels that you stayed at once might have different prices or not be around, and employee preferences might shift.
What worked in the past might not apply in the future and not be as cost-efficient as it once was. Therefore, you need to always review your travel policies, vendor agreements, and expense data at least annually. Survey your travelers for feedback, analyze policy compliance, and always explore new tools or platforms that can increase your savings and improve efficiency.
Without having to think any further, you need to always reevaluate vendor partnerships, travel approval processes, policy compliance rates, and focus on employee satisfaction with the travel tools you are using.
This Doesn’t Mean you Need to Cut Corners
Managing business travel costs doesn’t always have to mean cutting corners or reducing opportunities. The whole idea here is to make sure you are implementing the right policies, using the proper tools, remaining vigilant on how your expenses are growing and setting boundaries where needed.
The key here is to strike a balance between employee experience and cost-efficiency. After all, travel is important when it comes to growing a business, building better relationships, and innovating on a deeper level. Therefore, you should always seek to equip your teams with the right guidelines and resources, and in the long-term, you’ll see both operational and financial benefits.
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