Shortly before the new year, the business forecast was less than sunny yet not in danger of full-fledged recession. The political scene was chaotic. Economic factors spiraled out of control with a trade war between the United States and China and the fate of Brexit still up in the air. Add that to the shifting dynamic of the workforce thanks to millennial employees, and talk of a recession was growing.
Enter 2020. No one could’ve seen it coming (save for the scientists who’ve been warning us for decades). The Coronavirus – COVID 19, has affected all levels of business, not just its travelers. The hospitality industry has been profoundly wounded by the loss of business the past couple months, and the end is not yet in sight. Now is the critical time for companies to prepare for a looming travel recession.
It requires a multifaceted approach. While various measures to save money can be implemented, one of the first places to look is the travel budget. If you are looking to prepare your travel department for hard times ahead or simply want to increase savings for your corporation, then here are some cost-saving measures for your business travel program.
Clarify Your Corporate Travel Policy
One reason that travel expenses balloon out of control for most businesses can be traced to a lack of clarity around travel policy. Basically, most companies fail to develop a clear policy for travelers to refer to when arranging travel plans.
A concise travel policy should include detailed information on booking flights, meal allowances, hotel and ground transportation costs and any extraneous expenditures, as well as instructions on how to handle extraordinary circumstances like the recent viral outbreak. The policy should explain procedures for getting costs approved while outlining how expenses are processed.
The more specific you are, the less room for error. Create a policy that standardizes the approval process while setting clear guidelines. This helps keep employees on budget, and it also prevents employees from booking expensive trips without approval.
For greater cost savings, invest in an automated pre-trip approval software like Authorizer PRO which optimizes the trip approval process and serves as a tool to control various travel costs. An advanced pre-trip approval software helps facilitate company policy compliance and high level of efficiency in the approval process.
The system monitors policy rules such as advance purchase, air, hotel and car rates, preferred vendor and seat selection, etc. and allows for the application of various policy rules based on traveler type, flight length, cost center, etc. The use of these advanced rule types, as well as the ability to minimize the need for manual approval, provide companies with ability to implement the most effective policy and process and secure significant savings in result.
Recovering Unused Airline Tickets
It is unfortunate, but true, that business travelers often change itineraries after booking. This can cost companies up to 20% of total travel spend. Non-refundable tickets tend to be cheaper upfront than flexible tickets which can cost nearly four times as much. Unused airline tickets usually cannot be donated or transferred, and expire within a year.
That is why monitoring unused tickets and utilizing it as soon as possible is an essential tool in controlling travel costs. Utilizing an e-ticket recovery platform like eTRAK PRO helps corporations recover most of the ticket value which would otherwise be lost.
Pre-trip notifications remind the traveler of the upcoming trip so they have a chance to make any necessary changes early. Identified unused tickets are posted to the traveler’s profile making it easy to identify who has unused ticket segments left in order to redeem or exchange them upon said traveler’s next business trip. Unlike GDS’s, eTRAK monitors unused tickets for a full year and alerts of tickets expiring in the near future. So if you don’t currently have a tool to keep track of unused tickets, we highly suggest you implement one.
Be Smart About Airfare
Set guidelines that require travelers to fly Economy, especially on short flights. You can set seat type restrictions based on trip length and traveler type. Restrict access to flexible tickets and encourage employees to book tickets on less expensive days whenever possible.
In business, last-minute travel is often unavoidable. As soon as you know about a trip, start booking it. Costs like airfare, hotel fees and more are all much lower when you book in advance. In fact, the prices can skyrocket at the last minute, exponentially impacting your travel budget.
Advance purchase options are ideal because they allow travelers to book and pay at a discounted rate so long as the ticket is issued a certain number of days before departure or within a fixed time from the date of booking. This can be determined in your contract negotiation with preferred carriers.
Save Money on Hotels
In the face of a recession, travel managers can re-evaluate existing vendor contracts as well as established contracts with new, preferred vendors to secure rates that will help the corporation maintain budgeted spending.
By promoting the use of those preferred vendor programs through your travel policy and pre-trip approval process, employees know what hotel chains they should book to redeem special corporate rates. Be sure to set a rate cap for most employees but allow for exceptions in certain situations.
Control Extraneous Charges
Just when you think you have corporate travel expenses under control, the auxiliary charges start rolling in. Therefore, be realistic about the needs of your employees on the road. Set a daily meal allowance instead of a per-meal allowance, giving travelers the flexibility to pick and choose how much they spend on each meal.
For transportation, encourage employees to use cost-effective methods like shuttle bus services or shared ride services like Uber. Again, you can create vendor relationships with Uber and Lyft for special rates.
Your travel department must also prepare for indirect expenses related to traveling like Internet access, parking fees or tips for service personnel. Setting a budget in advance can ease the potential for unexpected hikes in spending.
Don’t Be Afraid of Travel During a Recession
Recessions can be challenging, but it is important for your business to keep moving. With these tips, you can actively maintain your business travel within a set budget in order to stay on top of the competition. Implementing certain software solutions can have a great impact on improving efficiencies and provide significant savings. The future may be uncertain, but your travel expenses do not have to be.