Corporate travel is making a comeback. Research by American Express shows that senior UK finance leaders plan to increase spending on business travel and expenses (T&E), and 60% of finance decision-makers say that business travel is important to their organisation. Elsewhere, Morgan Stanley reports that corporate spending on travel and expenses will hit 97% of 2019 levels by the end of 2023 [1].
A travel boom looks like great news for business. Figures suggest [2] that organisations can increase profits by £12.50 for every £1 spent on business travel. However, controlling budgets and implementing more sustainable practices are top priorities for travel managers in 2023, according to research from the Institute of Travel Management (ITM).
In an uncertain economy, finance leaders are looking to get the best value for travel budgets, so it’s important to have control and visibility of travel and expense spending. Three quarters (76%) of finance executives in our survey say that increased visibility of T&E spending would be beneficial to their business.
Organisations are also mindful of increased scrutiny and compliance requirements around environmental, social and governance (ESG) initiatives. In our survey, 77% of executives agree that they need to balance business travel with sustainability.
These are the top five strategies that finance teams can use to meet these challenges:
1. Implement a travel policy
A corporate travel policy, or T&E policy, is a set of guidelines that set out official rules for arranging flights, hotels, and other travel-related plans. Your policy should clearly explain what costs the business covers, and how the employee will be reimbursed.
Three-quarters (76%) of finance leaders say that employees regularly or occasionally incur out-of-policy expenses, such as spending on personal items or spending that is over the approved limit. A clear travel policy helps employees understand what travel is considered essential, how much can be spent, and what expenses will be reimbursed. This avoids unnecessary expenditure and ensures that employees are booking within approved guidelines.
A corporate travel policy can also provide improved visibility and control over travel and expenses. For example, the American Express® Business Travel Account gives finance teams control over business travel expenses to increase travel policy compliance.
2. Use technology to your advantage
The ITM found that travel managers say improving online booking tools (OBTs) is a top priority for 2023. The good news is that today’s tools offer integrated booking and expense management, often with built-in compliance tools. Innovations such as AI chatbots and automation are providing business travel teams with a smoother, easier booking process.
American Express Global Business Travel provides customers with access to leading online booking tools such as Egencia and Concur, making it simple to automatically import American Express Card transactions into an expense management program.
The latest generation of mobile apps can streamline business travel booking and expense management processes in a single application. This makes it easier for corporate travel teams to keep track of travel budgets, with a 360-degree, end-to-end integrated service.
3. Negotiate discounts
Corporate travel managers are looking for more cost-efficient ways of using the travel budget. While it might be tempting to cut back on travel and expenses, it is probably smarter to identify opportunities to negotiate discounts with key travel suppliers. That way, businesses can cut overall budgets without cutting out travel that could drive value.
For example, if your company regularly spends on specific hotels or destinations, then you could contact those businesses to negotiate a tailored or discounted rate. Negotiating perks such as upgrades, free Wi-Fi or breakfast with your preferred suppliers might also be possible, reducing travel expenses further.
American Express Global Business Travel account holders benefit from our global presence and well-established industry relationships, allowing us to negotiate rates on everything from airfare to charter buses.
4. Encourage sustainable travel
ITM research showed that 75% of buyers are not satisfied with their OBT’s ability to include carbon budgets and emissions at the point of sale.
Business travel can play an important role in helping businesses reach sustainability targets by encouraging employees to make more eco-friendly choices through targeted suppliers and travel options while negotiating favourable rates with eco-friendly suppliers.
Organisations can provide travellers with mobile-friendly travel documents to reduce printing or use the travel policy to incentivise drivers to rent electric vehicles or use sustainable, local providers where possible. Building a sustainable travel policy could also incorporate an incentive program to reward the most carbon-conscious travellers.
5. Analyse travel data
Controlling travel budgets is much easier if your organisation has access to a travel platform that offers analytics. Almost three-quarters, 74%, of respondents in our survey say they need more detailed data and insights on travel and expenses.
Data analytics is an important element of modern T&E software platforms. This functionality helps finance leaders to track and understand budgets by group, department or project, along with insights into which hotels, airlines and travel firms are most expensive. This data could help your business to negotiate a special rate or implement a policy change to reduce unnecessary expenses.
Analysing travel data is critical to understanding the costs for common business trips and expenses. This information supports the creation of cost benchmarks and makes it easier to identify staff and departments that spend more than others.
Striking the right balance when it comes to T&E budgets
Business travel is poised for a period of growth but as the cost of travel increases, finance teams have an important role to play. By adopting a thoughtful approach to travel and expense spending, organisations can realise the full value of business travel while also helping the business to improve the sustainability of business travel.
In part, this means embracing technology to gain more visibility of travel data. Tracking and understanding how travel budgets are used makes it easier to identify opportunities to negotiate discounts or change the way employees travel on work assignments.
At the same time, finance teams will find themselves at the heart of sustainability initiatives. Updating corporate travel policies and negotiating the best deals with eco-friendly travel options can help organisations reduce emissions and meet ambitious ESG targets.
Sources
[1] Morgan Stanley, 2023 Outlook: Business Travel Bounces Back, Dec 2022
[2] TravelPerk, What is the return on investment for business travel?, 2022