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Measuring the true costs of corporate travel

  • January 3, 2019
Measuring the true costs of corporate travel 1

Business trips, while a necessary part of corporate life, take employees away from their homes, families and often, their routines. To minimise disruption and its impact on their performance, providing employees with comfortable, clean and convenient living space, as well as timely transportation options and an adequate meal budget is crucial for employees’ satisfaction. With these yardsticks, we’re already fleshing out the key considerations for any corporate travel policy — large or small.

There’s often considerable range in pricing for travel offerings. Take return flights from Europe to the US, which can cost in excess of €1000, or the range of hotels available in that US destination for well-past €300 per night. Upon which metrics does one best define a corporate travel policy given the variance in price, quality and convenience offered? Regardless of your position, be it employee or CFO, shouldn’t minimising the negative impacts of frequent travel on your performance be an important consideration? But equally as important is the control of travel costs for any business.

While the bill for a trip is, perhaps, a more direct measure of costs, the true total costs of travel for a company encompass work-hours lost, employee underperformance, deals missed, sick days and even employee attrition. Too often we see companies take a hard line on budget and impinge upon employee satisfaction — or the inverse, loose budgets with soaring costs. We at Hotailors advocate for flexibility in corporate travel policy: employees choose their preferred options on accommodation, travel and transport, while the company limits costs and time spent on the process.

Each employee is different, and each employee may change their preferences as time goes on. Some employees may value proximity to their early meetings, the client-site, or perhaps a historic part of the city. Others may wish to allocate more of their travel budget to luxury meals and restaurants, and more still may prefer to bill for car services instead of using public transport. The variations are endless, and employee preferences at any given time are known best, and sometimes only, by the employee.

Typically, the quicker a company grows the faster employee numbers increase. The result of this high growth is often added complexity and creeping (or exploding) travel budgets. This is most frequently seen in companies with no, or an ill-defined, travel policy. As we sketched out previously, employee preferences are sometimes transitory, that is they change from one period to the next. Having a clear travel policy allows the employee to act in accordance with spending constraints that a company is comfortable with — always, but with a little flexibility that gives employees the scope to design a trip that ensures they perform at their best and the strain of travel on them is minimised.

The effects of this strain are well-documented. Recent studies point to the effects of frequent travel on employee productivity, and the New York Times (2018) identifies recent trends in ensuring the comfort of business travellers. Citing a 2017 research publication released by the Global Business Association, “79 percent of all business travelers, and 88 percent of millennial business travelers, said their job-related travel experience affected their overall job satisfaction.” It seems that the corporate travel experience is inextricably linked with job satisfaction, an unsurprising finding for any frequent corporate travellers.

A bottleneck to this more holistic view of corporate travel policies are the perceived cost trade-offs within companies themselves. Phocuswright, a global travel research agency, found that;

“While some companies – around 7 percent – offer open booking for employees, around three out of four travel managers surveyed said that they would not allow off-policy booking, citing the inability to leverage volume discounts as a primary reason”.

We see that travel costs, or the perception of increased travel costs on the part of travel managers, prevents companies tailoring trips to an employee’s particular needs. And, while this may control short-term costs for companies, hidden costs around employee satisfaction and performance may surface further down the line.

Nobody knows the needs of employees better than themselves, and our tools put them front and centre of the booking process. Happy companies, happy employees.

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