You won’t be promoted if your business travel expense report comes in under budget. There are no ticker tape parades for booking a flight for a fare that’s half your company’s maximum. And, sadly, no one’s writing songs about the guy who used but a fraction of his per diem during that sales meeting in Cincinnati.
Maybe that’s why business travel expenses for U.S. companies are expected to top $310 billion this year, (according to the Global Business Travel Association). That’s roughly equivalent to the GDP of Malaysia.
But it doesn’t have to be that way. Workers and their companies can reduce their share of that very large business travel pie by simply eliminating the mistakes that over-inflate your business travel expenses.
Yahoo Travel talked to Daniel Ruch, Founder and CEO of Rocketrip — a company that helps clients reduce their business travel expenses by rewarding employees who spend less on the road. He shared with Yahoo Travel the top mistakes business travel spending everybody makes.
Using an inflexible spending policy
Not all hotels cost the same. (Thinkstock)
Some companies mandate you spend no more than, say $250 on your hotel room. Some might have a $500 maximum on domestic round-trip tickets. It may seem like a sure-fire money saver, but Ruch says a pre-set travel spending limit has the opposite effect. It almost begs for an employee to spend the entire amount, which can actually be more than is necessary in certain locations.
Suppose an employee has a $250 max allowance for hotels and has to go to Baton Rouge for a sales meeting — there is no reason not to blow the entire $250 splurging on a super-nice hotel room, even though it’s easy to find a hotel room in Baton Rouge for much less.
And it does’t necessarily translate to savings in a pricier city. “An employee can use the excuse that ‘I can’t find any hotel in New York City for $250 a night,’” Ruch says, “and spend more there too.”
Set limits “eradicate any cost sensitivity an employee might have,” Ruch says. “A [travel expense] policy has to be relevant to where an employee is traveling at any given time.”
Ignoring easy ways to save
No, this doesn’t apply to apple-picking companies (if there are such things). Ruch says “low-hanging fruit” are easy, common-sense cost savings that are easy for business travelers to ignore like this big one: booking flights early. Many travel experts will tell you this is the easiest way to save money on a trip. “We find that the closer you get to a departure day, airlines increase ticket prices about $108 per week,” Ruch says. And yet, business travelers are notorious for booking late. Maybe that’s because of the last-minute nature of many business trips, but it swells your travel expenses just the same.
WATCH: LimoLiner: Putting the “Bus” Back in Business Travel
Yahoo Travel looks at another way business travelers are saving money: taking luxury buses instead of planes and trains.
Not utilizing the sharing economy
Why not use Airbnb for business travel? (Airbnb/Facebook)
“We find Airbnb saves 30 to 40 percent compared to a hotel,” Ruch says. He’s a big fan of using home sharing services during business trips instead of renting hotels (even better: staying with friends). Plus, some business travelers actually prefer staying in someone’s home to a hotel. “They can have a kitchen and more of a sense of what it’s like to live there as a local,” Ruch says.
Providing no incentives to save
“If you give [employees] a reason to want to save, you can drive behavior above and beyond any policy,” says Ruch. For example, Rocketrip uses software to predict how much trips will cost so that businesses can come up with target spending for employees. If a trip comes in under the target, there should be reward, like a percentage of the savings going back to that worker.
Having execs set bad examples
“No employee is going to want to fly first class if the boss flies economy,” Ruch says. “Having leadership mirror desired behavior is a big deal in terms of setting an example for the rest of the company.” Plus, “If the CEO flies first class everywhere, it sends the message that cost sensitivity is not important in an organization,” Ruch says. “Leadership can be good role models of cost sensitive behavior.”
Vague spending goals
Worse than having strict travel policies is having none at all. Some companies, Ruch says, that don’t feel comfortable setting guidelines for travel expenses will tell their employees, “Spend like it’s your own.
“It’s the worse thing you can do,” he says. “If you tell employees to spend within reason…what does that mean?“
The result: you’re just inviting extreme behavior. “You get employees who are incredibly frugal and you get expensive sales guys who are staying at the Four Seasons and flying first class.”
Ruch’s suggests the key to ending travel waste is getting everyone on the same page so that all sides, the company and its employees, benefit. “We recommend customers get tangible about it and communicate their goals,” he says.
Check out our original adventure travel series A Broad Abroad.