5 expert tips to help save money on business travel costs

30 avril 2024

Source: 5 expert tips to help save money on business travel costs, ZamaNdosi Cele, IOL, 29 avril, 2024

Businesses are constantly innovating and looking for ways not to blow money in harsh economic climates. Picture: Pexels

Travel generally comes with a high price tag and the cost-of-living crisis isn’t making things easier.

With inflation and interest rates at an all-time high, South African businesses and households have become increasingly price-conscious – especially when it comes to their discretionary spending.

According to business travel expert and FCM Travel general manager Bonnie Smith, business travel is often one of the biggest expenses companies face, so it’s important to find smart ways to optimise this spending.

She said that as companies look to tighten their belts, squeezing every last drop of value out of their travel budget is crucial for staying ahead of the competition.

“By proactively managing and enhancing the value of corporate travel, organisations can unlock resources to invest in other high-impact initiatives.”

According to Smith, if your company is looking to get more bang for their buck when it comes to business travel, here are some “money suckers” they can look out for, as well as some solutions to help save money.

Giving travellers too much accommodation choice

According to Finances Online research, meals make up the largest portion of a typical business travel budget and account for 21% of costs per trip.

And hotel breakfasts can be pricey, with OTA data estimating the average cost is £11.20 per person across 100 top European destinations. These breakfast costs can quickly add up, especially when travelling to multiple locations.

According to Smith, this is where having negotiated contracts with fewer preferred hotel providers becomes valuable.

“Hotels are less incentivised to offer discounts or complimentary services, like free breakfast or room upgrades, to businesses that can easily book elsewhere. The reduced negotiating power results in higher nightly rates and fewer value-added benefits,” she said.

To avert this, Smith recommends that businesses leverage their negotiating power by consolidating bookings with fewer preferred hotel partners to control meal and accommodation expenses, as this approach can unlock more favourable rates and value-added amenities, better managing the largest segments of the business travel budget.

Booking business travel at peak periods

Booking business travel during peak periods can significantly drive up accommodation costs, and higher demand during popular travel times allows hotels and other lodging providers to charge premium rates.

Smith highlighted that peak tourist seasons, school holidays and major conferences can also affect prices, while major sporting events and music tours can also send accommodation rates soaring.

To help contain these expenses, Smith recommends working closely with your travel manager or travel management company (TMC) to strategically plan trips around quieter travel periods.

The travel expert also noted that research by FCM Consulting also shows that booking domestic flights two days or less before a flight can cost an average of 19% more, and up to 30% more for international flights.

“This begs the question, just how important is that last-minute meeting request, and will it give you the ROI for that expensive ticket [for which] you just shelled out,” asked Smith.

Ridesharing rather than renting

Ride-shares such as Uber and Bolt have become a popular mode of travel for business travellers due to their convenience. However, Smith warns that ride-sharing isn’t always the more budget-friendly choice.

“Surge pricing during peak times can lead to significantly higher fares – a ride that costs R100 one time could spike to R300 an hour later.

“The unpredictable pricing also makes budgeting difficult. In comparison, renting a car provides more cost control. Car rental and fuel make up 16% of a typical business trip budget, compared to 3% for taxis.

“To manage rental car costs, businesses can negotiate rental agreements and leverage loyalty programmes to secure better rates,” said Smith.

Booking flights online

The travel expert said that when booking business travel, relying solely on online booking tools can lead to hidden fees that cost more than anticipated.

“Airlines increasingly resort to ‘junk fees’ – extra charges for checked luggage and seat selection that often creep in at the end of the booking process. These hidden costs make it difficult to compare the true total price accurately,” said Smith.

She said that to mitigate this, corporate travel agents and business travel specialists can provide significant advantages regarding flight bookings.

“Leveraging the large volumes of travellers they work with, these agents can secure discounts on flights that are simply not available to the average corporate booker booking on their own.

Beyond just finding the best base fares, travel agents can also provide access to perks like flight upgrades, reduced change/cancellation fees, and VIP lounge access – benefits that can greatly improve the business travel experience,” she said.

Missing opportunities for cost savings

And lastly, the business travel expert said that one of the most important things businesses can do to keep their travel budget in check is to closely identify and track the unexpected costs that can creep up.

“It’s not just about the headline price of flights and hotel rooms – there are a myriad ancillary fees that can significantly inflate the total spend if you’re not vigilant,” she said.

Smith recommended businesses ask vital questions to gain visibility into these hidden expenses, including which travellers are incurring the most in additional costs, such as airport transportation, WiFi fees or early check-in/late check-out charges, and what specific trips or destinations tend to have the highest level of unexpected spending.

The business travel expert said that by integrating the travel booking system with the expense management platform, companies can automate the generation of detailed reports to identify these trends.

“Armed with this data, you can start to make informed decisions about where to adjust budgets, negotiate better rates, or educate travellers on ways to minimise unnecessary extras.

“It’s all about getting that granular-level insight so you can pro-actively manage the business travel budget rather than having it burst due to unexpected costs spiralling out of control,” said Smith.

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