The overall inflation rate may be under control but, when it comes to business travel costs, all bets are off. While the overall inflation rate for 2006, according to the Bureau of Labor Statistics, was 2.5%, the average costs of a business trip increased 4.6% - nearly double the overall inflation rate. According to American Express Business Travel, it is unlikely that 2007 will be any better, with North American air travel projected to increase 3%-5% and hotel costs expected to increase between 3%-8%.
Faced with cost increases, how should your business respond to higher travel expenses? Should you throw up your hands in disgust - or should you be proactive in minimizing your costs? If you are a “c’est la vie” kind of person, you might as well skip to the end of this article - it’s primarily intended for those who want to reduce travel costs or at least minimize their impact.
It’s no secret that there are numerous ways to purchase your airline ticket. You can go to a travel agent or, better yet, use any of the numerous online outlets designed to help you get the best deal. You can also go to the airlines’ websites to buy your ticket. These are valid ways to minimize costs, but did you know that airline ticket pricing fluctuates radically, sometimes by the hour? Without help, the only way to be sure you get the best deal is to spend your entire day online.
Help has now come in the form of a service named Yapta
, which constantly polls airline ticket prices and notifies you when there is a price decrease. Basically, you search for the flights you want and tag them with Yapta (a quick download from the website). Yapta then monitors the cost of those flights and notifies you when there is a price decrease, giving you the potential to save hundreds of dollars.
What are your employees doing with those ‘frequent flyer’ miles they accrue on business trips? Do you have a policy concerning the use of those miles? One way to reduce travel costs is to require that employees use these miles on company business only. If the employee travels enough, this could save you the cost of one or more flights in a year. Be careful, though - many employees count on using the miles personally - and you’ll have to make the call between saving on travel expenses and taking away a fringe benefit employees may have become accustomed to.
Let’s get the easy stuff out of the way first. If you, or an employee, take a trip to a destination where a good friend or relative resides, you might want to investigate staying with them rather than in a hotel. Spending time with a good friend can be far more appealing than being alone. Better still, it doesn’t cost you anything, unless you want it to. If your employee takes this route, it’s only right to reward them and their host in some way. You might pay for the cost of a nice dinner out for the employee and host or perhaps pay the employee something less than the cost of a hotel room and let them in turn show the friend proper appreciation. Either way, you save money - and the employee gets both an emotional and material benefit.
One mistake many travelers make is booking a room at one of the budget hotel chains. The rooms will at best be serviceable, but there is a reason they are inexpensive - typically, security is lax and amenities scarce at these hotels. If a few extra dollars will enhance the safety and comfort of an employee traveling on the company’s behalf, consider spending that money. A well-rested employee is likely to deal with customers far better than one who just didn’t get enough sleep the night before.
Employers really miss the boat by not encouraging employees to sign up for the various reward programs offered by the national chains. These programs offer benefits just for being a member (fast check-in/check-out, etc.) and free nights when enough reward points are accumulated. Again, this is where you need to be careful. Many employees see the points accumulated as theirs and will be severely disappointed if they can’t take the family on a cheap vacation using these rewards. On the other hand, you paid for those points and the cost savings might be enough to warrant a change in policy.
The first question you should ask when deciding on renting a car is “do I need a car?” Sometimes using a taxi will be just as convenient. If you decide you do need a car, consider using the sites where you purchased airline tickets for both auto rentals and hotel rooms. Once you have a list of the most promising rental agencies, give them a call and try to get a better rate. You should also investigate the advantages offered for becoming a member of one of the rental companies’ programs. Use that company whenever possible - doing so will maximize the value of your membership.
The use of corporate credit cards can be risky, but establish an account with a company that offers benefits (like increased miles or reward points) with use of their card. Taking advantage of these programs can significantly increase the opportunity for you to reach meaningful reward levels faster.
Finally, take advantage of any affinity programs offered by industry groups to which you belong. Sometimes, the group can negotiate a decrease in cost if you book through them or if the vendor knows you are purchasing under the program.
Business travel costs are increasing faster than the overall inflation rate. It is your responsibility as a business owner or manager to minimize those costs wherever possible. Taking a little time to follow some easy steps could pay huge dividends. Consider the suggestions in this article when making your travel arrangements and, if we can assist you with any of your business accounting or management issues, please give us a call.
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