Company Travel Policy: How To Craft A Corporate Travel Policy

Table of Contents

Corporate Travel: Striking a Balance Between Cost and Value

Professionals make an average of 2.6 trips each month, demonstrating the importance of travel in the corporate sphere. However, these trips are frequently restricted by high travel costs.

How therefore can we maximize business travel while achieving a compromise between comfort and affordability? This manual will examine:

Budget guidelines and allowable expenses
Determining travel allowances for various destinations
Cost-saving strategies for maximizing budget
Ensuring traveler comfort and value without overspending
Implementing and enforcing company travel policy effectively

It is a given in the corporate world to travel. Business travelers anticipate making 2.6 travels each month on average, which adds up to almost 30 work-related trips in a year.1. Although this figure may be much higher, 71% of executives claim that high costs are among the most expensive business expenses and restrict their organization's ability to travel.

For this reason, it's critical to strike a balance between the cost and benefit of business travel. By doing this, you can guarantee that your staff members benefit as much as possible from significant gatherings, conferences, and company retreats. Similarly, it's critical to evaluate which comforts are essential and which can be forgone in order to maximize your vacation budget.

This tutorial will cover how to set aside money, evaluate reasonable expenditures, and put staff policies into place in order to develop a corporate travel policy that works for your business and stays within your budget.

Establishing financial parameters

Just like any other organizational operation, travel costs money. And, over the last five years, it’s gotten significantly more expensive. Since just 20192:

Flight tickets have increased by 2.6%
Lodging has gone up by 16.3%
Restaurant prices have jumped up almost 30%
Rental car costs have soared by nearly 40%

In order to maintain a financially sustainable workforce, organizations must set clear budgetary constraints and travel regulations for their personnel. These regulations must include all facets of work travel, including the amenities that employees expect while on the road in addition to their expenses.

Calculating the allocation for trip

Businesses differ in their views on what constitutes appropriate spending and in their budgets for travel. Similarly, different employees have different expectations for the services and lodging they would receive while traveling.

But regardless of budgets and profits, each company should establish guidelines defining the maximum amount of money they will spend on:

Transportation: Where your employees are and where they're going have a big impact on how they get there. Flying is the most economical alternative for many trips in the United States (but some train rides can be less per mile). But even though it's the least opulent, using a bus or other form of ground transportation is nearly always the least expensive choice.3. Make it a practice to compare costs, speeds, comfort levels, and ease of use for various modes of transportation before making a reservation.
Food: While traveling, employees will have to eat out most of the time. Twenty percent of Americans spend up to $20 on a restaurant lunch, and twenty-four percent spend up to $30.4. Therefore, a maximum of $70 to $100 per head should cover a day, depending on the particulars of your employees' dining habits.
Accommodations: A hotel room in the US typically costs $155 a night.5.Depending on the precise city you're visiting, this can vary greatly, so budget around that amount (or more) for each day of your work trip.

The largest factor affecting travel management is the destination. Some of the most expensive U.S. destinations for frequent travelers on business are6:

New York City, NY: The priciest city for business travel due to its exorbitant accommodation and eating expenses.
Washington, D.C.: Its high cost is partly due to its high lodging and food costs.
San Francisco, California: Known for pricey dining and hotels.
High hotel rates and other travel-related costs in Los Angeles, California.

For more budget-friendly alternatives in the U.S., consider cities like:

Charlotte, NC: Lower overall costs for accommodation and dining.
San Antonio, TX: More affordable lodging and meals.
Phoenix, AZ: Offers a balance of amenities with lower expenses.

These cities offer a nice combination of affordable living and business-friendly facilities.7.‍

The length of the vacation should be reflected in your budget as well. If your staff is just going to be gone for one night, think about cutting back on funding and provide more money for longer stays.

Techniques for cutting costs

It's advisable to plan ahead, create travel plans, and schedule business trips as soon as possible to reduce travel expenses. For example, booking airline tickets six months in advance can save you up to 10% more than purchasing them two months prior to departure.

In addition, several lodging establishments provide discounted rates for prolonged visits or multiple reservations. Make cautious to compare prices for these kinds of offers and ask about any possible reductions before making a reservation.

Ensuring the comfort of passengers

Your employees don't have to forgo any comforts or amenities just because your company's corporate travel policy tries to reduce costs. It's true that giving employees lengthy flight schedules, mediocre lodging, and poor food is a surefire method to lower employee satisfaction and discourage them from wanting to travel.

Rather, ensure that the costs of your travels are well worth the money you paid for them. There are a number of ways to reduce your travel expenses without compromising the comfort of your staff, whether it be for housing, airfare, or meals.

Including Travel Insurance

Don't undervalue travel insurance when you're trying to strike a balance between comfort and expense in your business travel coverage. Travel insurance can offer your staff members financial security against unforeseen circumstances like flight delays, misplaced bags, and incidentals at hotels. It also aids in emergency medical planning, which makes it necessary for most insurance companies' policy compliance.

Incorporating travel insurance into your policy will guarantee that your workforce is protected in the event of unanticipated events, protecting your investment in business travel and providing your traveling personnel with piece of mind.

Options for lodging when traveling

While it used to be possible to find reasonably priced vacation home rental services like Airbnb, those days are long gone. In over 75% of cities, these vacation homes are now more expensive than hotels and provide less amenities.8

Therefore, the traditional hotel room is your best option in terms of value. If your company is big, you might want to think about partnering with international hotel chains to get bulk discounts. In order to receive incentives and free nights on subsequent visits, you may also attempt remaining loyal to a single hotel network and accruing reward points.

Options for transportation

If your employees are used to traveling in business (or first) class, moving them to economy can result in significant cost savings. Generally speaking, business class tickets cost two to 10 times as much as regular seats.9.

It's debatable if they add any additional value. Your employees will arrive at their destination at the same time as everyone else, even though they might have a few additional inches of legroom and a nicer meal. If you're determined to provide the best possible flying experience, though, try being flexible with your departure and arrival timings in order to get business class seats at a reduced cost.

Flying might not even be an option, depending on where you're going. If employees are required to drive, ask them if they would be willing to pay for utilizing their own cars. For business travel, the Internal Revenue Service (IRS) sets a fair pay rate of 65.5 cents per mile, but even the most affordable rental cars run well over $100 per day, not including gas.11,10

Considerations for meals and dining

It can be difficult to plan or supply meals for every member of your crew when they are on the road. It might be difficult to accommodate dietary restrictions, individual preferences, and even times when people want to eat.

Which is why it's advisable to establish a budget and give your staff complete control over where, when, and what they eat. Consider booking hotels that include complimentary breakfast in order to reduce food expenses. By doing this, you may cut around a third off of each employee's daily meal allocation.

Implementing and enforcing the policy

Regarding acceptable spending and travel charges, everyone needs to be in agreement. If your organization has different travel budget requirements in the past, it's critical to explain the new policies in detail and manage their execution.

Policy communication

If you’re planning to make changes to your business travel policy, inform your team with as much notice as possible. Once you’ve decided on new regulations:

Email your organization to announce the new regulations
Clearly outline the policies and explain how they differ from the previous guidelines
Hold a meeting where employees can raise objections, air concerns, and gain clarification on the new rules
Communicate when there has been an update to your travel policy

Encouraging all staff members to sign your travel policy agreement and providing them with copies to keep at home serves to both reaffirm its terms and remind them of acceptable spending. All of your visitors can attend classes that teach them how to make affordable hotel and airfare reservations, among other things.

Monitoring and feedback

Refund expenses only up to the predetermined amount and keep receipts for all reimbursement requests to guarantee that everyone complies with your company's policies.

Executives have the last say when it comes to their company's travel rules. Nonetheless, you still need to consider how your employees are feeling and what worries them about the new regulations. To better understand your rules:

Use surveys to gather anonymous feedback
Host roundtable discussions where your workers can suggest alternative rules
Work with a small group of high-level, longstanding travelers to rework policy specifics if necessary

Conclusion

Corporate travel essentially entails finding a careful balance between price and value. Companies can optimize their travel budgets without sacrificing employee comfort by following these principles.

To recap, some key questions that have been answered throughout this guide include:

What is the appropriate budget amount for business travel? Depending on the destination and duration of the trip, your budget should be adjusted to account for lodging, meals, and transportation.
Which cost-cutting measures are you able to take? Make a plan, bargain for bulk discounts, think about traveling in economy class, and look into getting reimbursed for using your own car.
How can you guarantee passenger comfort without going over budget? Offer incentives such as complimentary breakfast at motels, a fair food allowance, and a focus on value when choosing lodging.

Adopting these guidelines and encouraging candid communication among staff members can help you develop a company travel policy that works and supports your budgetary and well-being goals.