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How to Reduce Business Travel Costs

In This Article

Managing travel is often one of the most overlooked expenses within a business, even though it’s one of the biggest! Considered an unavoidable cost by many, business travel can sometimes be neglected even when there are lots of things that can be done to prevent business travel costs spiralling out of control.

In this detailed guide we’ll explain:

  • How to manage and use data to evolve your business travel programme.
  • How to create an effective travel policy.
  • Strategies for reducing business travel costs.

 

This guide contains lots of tips that you can apply to your business travel programme to start saving money straight away!

How to Manage and use Data to Evolve your Travel Programme

Data is a crucial piece of the puzzle for managing an efficient travel programme, without it, you have no way of knowing how you’re doing or what opportunities there are for improvement. How much data you have will depend on how you currently book travel.


Currently using a Travel Management Company

If you’re already using a Travel Management Company (TMC), you probably have access to detailed management information reports showing you a raft of information on what you spend, where you spend it and what you could be doing differently.


Managing business travel in-house

There are lots of companies who don’t actively manage their business travel expenditure. But as the number of employees and business trips grow, it gets harder to keep on top of everything. And if you don’t know what you’re spending and how you’re spending it, how can you tell if you’re paying too much? Monitoring and analysing travel expenditure is essential if you want to reduce your business travel spend because without data, you won’t be able to spot cost saving opportunities.

If you manage business travel in-house, the data available is likely to be corporate credit card spend and expense claims. While this can require significant effort to extract the relevant travel figures, it will be worth it in the long run.

Managing Business Travel In-House

If your business operates an ad-hoc system for booking travel, and you want to reduce your business travel spend but don’t know where to start, here are some key metrics to consider when analysing your business travel costs.

Total Spend

Your total travel spend includes the cost of flights, train tickets, hotels, hire cars or other transport, travel expenses, conference costs and so on. This gives an overall picture of your corporate travel spend and comparisons with previous periods can show you trends and patterns in spending. If year on year increases are seen, is that because more travel is occurring or is each trip becoming more expensive?

Average Cost of a Trip

By taking the overall travel cost and dividing it by the total number of business trips taken during the period, you can find the average cost of a business trip. This can be further refined into average hotel, flight, train ticket and spend per trip, allowing you to see if average trip costs are rising. You can assess your average spend against industry averages to see if you are overspending unnecessarily.

Supplier Metrics

By looking at which suppliers you’re spending money with, you can gain an understanding of which airlines, hotels and train operating companies you use the most. By understanding where the money is being spent and with whom, you can begin to look for areas where alternatives would provide comparable services at reduced costs.

Traveller Metrics

Business travel is a requirement for many roles however, it’s important you don’t forget to monitor which employees are travelling and if their needs are being considered. Keeping an eye on who your top travellers are, where they’re going, how they’re travelling and what they’re spending, will help you assess the impact travel is having on their well-being. You could combine these figures with HR data to see if there are any links to regular travellers and high staff turnover rates for example.

Currently using a Travel Management Company

Most good travel management companies will work with you to understand your business goals and help you define a business travel strategy that will support them.

Let’s say your business has a goal to reduce costs by 20% this year. Your TMC may help you devise a plan to lower travel costs to help you achieve this aim without reducing the traveller’s experience, here are some example strategies they could suggest.

  • Developing a preferred hotel programme, negotiating lowest hotel rates and value-added benefits for the traveller such as upgraded room type, car parking and flexible cancellation.

 

  • Introducing new travel suppliers and corporate agreements to offer savings.

 

  • Educating your employees on the advantages of planning ahead, and more carefully planning the timing of the trip and meetings to make use of lower priced advance purchase air and rail tickets.

 

  • Implementing and managing airline corporate reward programmes.

 

  • Providing access to Internet and distressed hotel inventory to ensure a good range of accommodation options and rates.

 

  • Implementing an online booking tool to reduce booking fees and improve productivity.

Using Data to Reduce Costs

The examples described on the previous page are all actual measures taken for one of our customers, which collectively saved our customer £150k on their travel spend during one year. Crucially, all these actions could be measured accurately with data and KPIs so our customer could see the benefits and track progress as it happened. And it didn’t stop there, once one objective was met, we’d collectively define another one, and so on and so on. This makes it simple for our customer because they know which metrics to pay attention to and therefore, doesn’t get bogged down with all the data. And, because we do the analysis and provide the insight, our customer can focus on the actions needed to deliver results.

As well as defining the goals your analysis of business travel spend seeks to achieve, it’s important to identify the data to help track your progress, such as the various key performance indicators (KPIs) that will help you monitor your results.

At a very high level, these can include

  • Total business travel spend.
  • Spend under contract with a TMC vs. off contract leakage.
  • Spend with each travel suppliers such as airlines, hotels, train operators, etc.
  • Number of bookings made online vs. offline.
  • Number of days travel booked in advance.
  • Adherence to corporate travel policy.
  • Class of travel/standard of hotel
  • Achieved savings.
  • Missed savings opportunities.

This list could go on forever, but what’s important is to figure out how travel aligns with your business’ overall goals. This should allow you to find out which KPIs are relevant to your travel programme, and with so many metrics to consider, it’s having focus on these key result areas that will stop you getting distracted by less important statistics and figures.

  Download our guide to reducing travel costs

How to Create an Effective Business Travel Policy

Historically, travel policies in their simplest form have outlined guidelines on what employees can and can’t do when booking business travel, however, this is changing. Rather than issuing a blanket travel policy focused on controlling corporate travel spend, Travel Managers and Travel Buyers are becoming increasingly concerned with matters such as traveller wellbeing, duty of care and employee benefits. So much so that various departments each have a stake in how a travel policy is put together, which can make defining a set of guidelines that everyone is happy with quite a daunting prospect.

Ask yourself these questions when updating or writing a travel policy for the first time.

Why do you need a business travel policy

What is the purpose of your business travel policy? Speak with the different areas of your business that have an opinion about what the policy should be. Your Finance Director may be focused on controlling travel costs, yet your HR Manager may be more concerned about keeping your top travellers happy to boost staff retention. Once you understand the business’ objectives, you can create a policy that balances costs with traveller wellbeing.

 

Will one size fit all

Probably not… It’s always been common practice to have a policy for the majority and a different set of guidelines for the most senior employees, but does this traditional approach go far enough? Consider who your most frequent travellers are, if they travel excessively, should they be entitled to an extra level of comfort to compensate them for the stress of a busy travel schedule?

If your budget can’t stretch to business class or a better rated hotel, consider smaller perks such as lounges at the airport or a chauffeur driven car to make their trip just a little bit more enjoyable. Little gestures like this can go a long way to letting an employee know their efforts are appreciated, which makes a big difference to employee satisfaction.

 

How do you communicate it?

Once you’ve defined your policy, you need to make sure everyone it concerns understands what’s acceptable and what is not. A communication from senior management usually holds a lot more weight as people understand it’s going to be taken seriously. And while, the Intranet may seem like a good place to put it –don’t stop there.

If you have an online booking tool, make sure your travel policy controls are built in so it will only let the user book policy compliant trips. Likewise, if you use a TMC ask them to enforce it for you. You may want to use incentives to encourage people to really engage with the guidelines or have different departments compete with each other to make the most policy compliant bookings.

 

How do you enforce it?

Writing and sharing a travel policy is one thing but if you don’t enforce it, it’s a complete waste of time, and this still happens. Whilst surprising, it’s not unheard of for hugely successful businesses to put a complete ban on travel because their travel policy hasn’t been adhered to and they’re way over budget before year end! Don’t fall into the same trap.

Consider using a travel management company if you don’t already have one and ensure all travel bookings are made through your preferred partner. If they provide you with an online booking tool, make sure your policy parameters are built into the tool and that it’s flexible enough to have different policies for different users. With your travel management company enforcing your policy on your behalf, your life will be much easier!

 

How do you know if it’s fit for purpose?

A mistake made by many is that they write their travel policy once and then forget about it. To ensure your travel policy continues to meet your objectives, you need to let it evolve when it needs to. Your travel management company should be able to provide reports on policy compliance and exceptions along with reasons why, but you also need to be open to the opinions of your travellers too.

Managing and reducing business travel costs is of course very important but it’s also important to manage and reduce traveller risk as well as keeping an eye on traveller wellbeing. Balancing all these things can be tricky, but if you take a collaborative approach with the key stakeholders in your business, you should be able to strike the right balance.

Strategies for Reducing Business Travel Costs

Whether you book travel in-house, you’re considering using a travel management company, or you already have one, here are our top cost saving tips that you can use straight away to start saving money on business travel covering:

  • Air Travel
  • Rail Travel
  • Hotel Accommodation

Air Travel: Cost Saving Tips

Mix applicable airlines

It’s a common misconception that you can’t mix airlines on return tickets because it makes fares more expensive, but this is only sometimes the case. Some airlines have alliances with others, and where these partnerships apply, you can mix them up as much as you want to. For example, take using Star Alliance on a ticket to Zurich. Instead of travelling in both directions with Swiss, you could travel out on a direct flight with Swiss Airlines and back on an indirect flight with Lufthansa. A great workaround, when the theSwiss return flight is heavily booked.

 

Look for premium fares (Yes you read that correctly!)

Lots of corporate travel policies prevent employees from booking premium economy, business and firstclass flights, but they can sometimes yield lower prices. Of course, the majority of the time, these fares will be more expensive than the class below, but there are occasions when a premium economy, business or firstclass ticket offers a lower fare than the class requested.

 

Check out the codeshares

Codeshares are where two or more airlines share the same flight. Each airline publishes and markets the flight under its own airline designator and flight number as part of its published timetable or schedule, although it’s actually operated by only one of the airlines. For example, KLM and Delta codeshare, and it can sometimes work out cheaper to book the flight on the codeshares flight numbers instead of the operating airline e.g. book the KLM flight on the Delta flight number.

 

Negotiate a discount with your frequent airlines

Depending on your spend, you may be able to negotiate a discount with the airline on your frequent routes, this is known as an airline route deal. If you use a TMC, they should be doing this already, if you manage travel inhouse, have a look at your data to identify your most flown airline routes, airline share and average ticket values, once you have this information approach the relevant airlines to negotiate a discount.

 

Use discounted fares

TMCs have access to a range of reduced fares that are negotiated with the airlines for their customers. These fares can provide big savings compared to the published fares so it’s important these are considered when evaluating the options. If you’re not using a TMC, it may be worth considering using one so you can take advantage of their buying power.

 

Can you be flexible?

Always consider alternatives to reduce your travel costs. This may be looking a day or flight schedule either side of the planned date, using an alternative airport or even using a completely different mode of transport such as a car journey or train instead of a flight.

 

Use airline corporate reward schemes

Many travellers are familiar with frequent flyer programmes offered by airlines that give them points every time they fly, but lots of airlines also offer reward schemes for organisations that travel on business too. If your employees travel for business, it’s highly likely you’ll benefit from one of the schemes available.

Completely free to join, corporate reward schemes give your business reward points for the flights you book that are redeemable against air ticket costs and upgrades, or in some cases other travel products such as hotels, lounge access or car rental. BlueBiz, the reward scheme of KLM, Air France, Alitalia and Delta You can exchange your blue credits for tickets, upgrades and flight-related services, such as a more comfortable seat or extra baggage or even off set your company’s carbon footprint.

Rail Travel: Cost Saving Tips

Consider fixing your journey times and ALWAYS fix the outbound

It’s fairly common knowledge that the most expensive train tickets are those that give you the flexibility to catch whichever train you want, and it’s also understandable that business travellers like to have that option. No one wants to be hanging around for a 6 pm train when they could be on the 4 o’clock because their meeting finished early.

So, most travellers just buy the flexible ticket even though it costs their company the most money. Our experience shows that fixing the return leg of a rail ticket isn’t always practical, but you can still save a significant amount of money by fixing the outbound and keeping the return flexible.

For example, let’s look at a return ticket from Hull to London on the 1st March at 0857 and coming back at 1719. I can buy: a fixed return ticket for £65 a fixed outbound and a flexible return ticket for £133 a fully flexible ticket for £222 While the £65 ticket won’t be suitable for many business travellers because it restricts you to the exact trains booked, the £133 ticket will
because most travellers know which train they will take to reach their meeting on time and this option still gives them the much-needed flexibility on their way home. This example shows a £89 saving without causing the traveller any inconvenience at all.

Take a look at your rail travel reports for the year if you have a high use of anytime tickets, you should probably target reducing this by educating your travellers and updating your corporate travel policy. Your TMC will be able to help, so make sure you seek their advice on how to best to get your travellers on board.

 

Is travelling at peak times essential?

Travelling at peak times is considered the norm for business travellers, but could be more habit than necessity. The price difference between off-peak and peak can be vast, let’s look at an example. Return travel from Birmingham to London on the 1st March using an anytime, any route return is £176, yet an off-peak return is just £28.50! This shows a massive saving of £147.50!

Sometimes putting your meeting back by just one hour can allow you to travel off-peak and make a big saving, it also means the train will be quieter and less busy which makes for a much more pleasant journey.

 

Buy a railcard?

It’s worth checking if any of your employees already have or are eligible for a railcard. Railcards provide discounts of up to a third off Standard Anytime, Off Peak, Standard Advanced and First Class Advanced fares. Even though you have to buy a railcard, it could pay for itself the first time it’s used thanks to the discount. Speak to your TMC for more advice on purchasing and making sure it’s applied to all applicable bookings.

 

Book your travel as far in advance as possible

This isn’t exactly a big secret, in fact, every TMC will be telling their clients that booking travel further in advance will yield them lower rail fares, yet still, many travellers leave it to the last minute. Your TMC should be able to provide you with reports that show you how far in advance you book (also called lead time) and help you identify the potential savings by improving.

This simple adjustment in buying habits can make a drastic difference to the prices paid and it’s definitely worth investing some time in educating your employees about why it’s important. Incentives can work well to get travellers buying into the change so make sure you reward your
staff when you start to see improvements.

 

Consider alternative operators

Remember there are sometimes multiple operators on one route, and often one operator can be cheaper than another. Have a look at your regular routes to see which operators are being used the most; there may be an opportunity to save money by using an alternative.

For example, an anytime return from Birmingham to London on the 1st March is £176, but if you opt to travel on London Midland only, the cost is only £76, which is £100 saving. Looking at the alternatives is something your TMC will be able to assist with so make sure you ask them about it at your next review meeting.

 

Check your travel policy is fit for purpose

We often speak to companies who say they have high travel policy compliance, but when we dig a bit deeper, we sometimes find that their travel policy guidelines are so vague, it’s virtually impossible not to comply. With rail travel, this is usually because the policy simply stipulates the employee should travel in standard class.

As we saw in the examples earlier, each of following train tickets for are in standard class: a fixed return ticket for £65 a fixed outbound and a flexible return ticket for £133 a fully flexible ticket for £222. All vastly different costs, but all compliant with the ‘standard class’ travel policy. If the policy were to book ‘the most cost effective ticket’ or ‘the cheapest ticket’ the £222 ticket would actually be out of policy and would therefore save the business £157 or £89, depending on which ticket was booked.

What this shows is that a high policy compliance rate is only as good as the controls within the
travel policy. If you leave your policy wide open, of course, your compliance will look great, but it could be because your employees don’t really have anything to comply to.

Hotel Accommodation: Cost Saving Tips

Introduce realistic maximum room rates per city

Setting maximum spend limits is a good way of influencing how much your employees spend when they book hotels. Set these limits based on market trends, historical data and your company’s requirements, taking comfort, convenience and value all into consideration. It’s important the limits you set are fair and realistic, if not, you risk annoying your employees by forcing them to stay in substandard hotels which is never good for morale!

 

Negotiate for savings & added value

If you have over 100 bed nights in a location, you’ll usually find hotels will offer you a discounted rate to encourage you to use their hotel. Hotels are usually willing to throw in a few extras as they bid to secure your business so don’t forget to ask them to!

Extras such as complimentary WiFi, extended cancellation policies, meal vouchers, airport transfers or parking are just a few of the add ons available, and if you can get them included in your rate, you can create significant savings by avoiding travellers paying for them and claiming them as expenses.

 

Select preferred hotels

Most of us are guilty of indecision when it comes to choosing a hotel from time to time. To save travel bookers’ time, make the decision-making process easier for them by narrowing down the options. Identify a small number of preferred properties in each city that are cost effective, convenient and comfortable for your travellers. This way, you ensure traveller well-being is at the forefront of your choices as well as keeping control of costs at the same time.

 

Benchmark and evaluate performance

Regularly benchmarking your hotel rates against industry averages and similar companies helps to determine if you’re achieving value for money. It’s an excellent way of spotting opportunities for improvement and leverage when re-negotiating with suppliers if your rates become uncompetitive.

 

Don’t stay overnight (unless you really have to)

This may seem obvious, however, staying overnight may not always be necessary, especially if the traveller can arrive back at home at a reasonable hour and within a reasonable amount of time. While eliminating hotel stays wherever possible is a good way to reduce hotel costs, traveller well-being is paramount in these circumstances, and businesses need to ensure the traveller is happy with a long commute home if there is one.

 

Introduce a stay with friends and family policy

A great option for those who have friends and relatives close to meeting locations. Instead of staying in a hotel, why not stay with your family or friends? Not only does this drive cost savings, but you also get to spend some “bleisure” time with friends and relatives for a well earned catch-up! Some companies incentivise their employees to do this by rewarding them with a nightly allowance, which means both the company and the traveller benefit.

 

Join hotel loyalty schemes 

Even if it’s the traveller’s first stay with a hotel chain, and they have no points in their account, you can still save money by creating an account and joining a hotel loyalty programme for free. Accumulating points by frequenting specific hotel chains earns benefits and reduced night rates for the traveller.

4 Quick Wins to Implement Now!

There are lots of ideas on how to reduce business travel costs in this guide, but these strategies won’t happen on their own and you’re more likely to see success if you tackle a few at a time. To get you started, here are our the four we recommend you start with.

Number 1 – Introduce and enforce a business travel policy

Business travel policiesare vital to let your travellers know what they should and shouldn’t book, if you don’t have one, you’re giving employees permission to book whatever they want! Guidelines are great, but remember not to make them too rigid, a little bit of flexibility is usually a good idea if you want to keep your travellers happy too. If you’re going to go to the trouble of writing a business travel policy, make sure you enforce too.

Number 2 – Increase the advance booking period

Unlike leisure travel, the general rule of thumb for business travel is the further ahead you book the cheaper the price will be. This is particularly the case for rail and air travel. Take a lookat your travel data and see how far in advance bookings are being made. If your average is three days before travel, it’s safe to say there’s room for improvement!

Check out our example below!

Cheapest available return train ticket from York to London

  • 28 days in advance = £107
  • 21 days in advance = £141.50
  • 14 days in advance = £170.50
  • 7 days in advance = £239
  • 3 days in advance = £239

Booking 28 days in advance is a massive 44.7% cheaper than booking three days before travel.

Increasing the advance booking period (also known as lead time) is best achieved by educating your employees and continually reminding them why it’s important. If you can, come up with an incentive to help encourage them to book earlier and share the success with them to say thank you.

Number 3 – Negotiate with your most frequently used suppliers 

If you’re not negotiating with the suppliers you use the most, you’re missing a trick. Collate the data of how much business you’re sending their way and use this to negotiate a discount. If you’re using one, this is something your travel management company will do on your behalf, but if you don’t have one, you can still approach suppliers directly to secure a deal.

Don’t just look at suppliers, look at your top destinations and travel routes; you may be able to consolidate bookings to fewer providers to give you more buying power.

Number 4 – Sign up to corporate reward schemes

It’s amazing how much corporate reward schemes are underutilised, and they cost nothing to join. Your organisation becomes a member; you book your flights as normal, and you earn points for every booking. Once you have a certain number of points, you can redeem them against air ticket costs and upgrades, or in some cases other travel products such as hotels, lounge access or car rental.

On average, our customers save between one and five percent of their business travel spend from corporate reward schemes alone!

These tips should have given you some food for thought, and that last point is certainly something you can implement straight away. As with most things relating to business travel, communicating with your employees is crucial when you’re trying to save money so make sure you let your employees know why it’s important. Once you have their buy in, you’ll find saving money an awful lot easier.

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