5 unexpected ways you could be wasting money on business travel

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6 min read

JOHANNESBURG – As companies look to tighten their belts, squeezing every last drop of value out of your travel budget is crucial for staying ahead of the competition. Business travel is often one of the biggest expenses companies face, so it’s important to find smart ways to optimise this spending.

“By proactively managing and enhancing the value of corporate travel, organisations can unlock resources to invest in other high-impact initiatives,” says Bonnie Smith, GM of FCM.

Here are 5 ways companies can get more bang for their buck when it comes to business travel, according to Smith. Look out for these ‘money suckers’:

  • Giving travellers too much accommodation choice

According to Finances Online research, meals make up the largest portion of a typical business travel budget, accounting for 21% of costs per trip. While per diem allowances usually cover lunch and dinner, breakfast is often an “unspoken” expense that business travellers add to their post-trip expense claim.

Hotel breakfasts can be pricey, with OTA data estimating the average cost is £11.20 per person across 100 top European destinations. These breakfast costs can quickly add up, especially when travelling to multiple locations.

“This is where having negotiated contracts with fewer preferred hotel providers becomes valuable,” says Smith. “Hotels are less incentivised to offer discounts or complimentary services, like free breakfast or room upgrades, to businesses that can easily book elsewhere. The reduced negotiating power results in higher nightly rates and fewer value-added benefits.”

Beyond breakfast costs, business travellers must also be aware of other unexpected fees, such as parking, early check-in, and late checkout. These ancillary charges can significantly increase the overall cost of a hotel stay, particularly when booking multiple locations.

To control meal and accommodation expenses, Smith recommends that businesses leverage their negotiating power by consolidating bookings with fewer preferred hotel partners. This approach can unlock more favourable rates and value-added amenities, better managing the largest segments of the business travel budget.

  • Booking business travel at peak periods

Booking business travel during peak periods can significantly drive up accommodation costs. Higher demand during popular travel times allows hotels and other lodging providers to charge premium rates. Peak tourist seasons, school holidays, and major conferences can also affect prices—major sporting events and music tours can also send accommodation rates soaring.

To help contain these expenses, Smith recommends working closely with your travel manager or travel management company (TMC) to strategically plan trips around quieter travel periods.

This approach is critical as the hotel industry has shifted from offering fixed corporate rates to more dynamic pricing models. As identified in the Q4 2023 Trend Report by FCM Consulting, there is a growing trend in North America and Europe of hotels offering corporates dynamic discounts off the Basic Available Rate (BAR) available to the public. This dynamic model, replacing traditional fixed rates, means corporate travellers’ rates “ride the price highs and lows” of hotel availability, only providing a 10-20% savings. This makes it much harder to budget for accommodation accurately.

The takeaway is that if a significant event like a Taylor Swift concert is taking place, it’s best to shift the dates of your business trip if feasible. Of course, there may be instances where travelling during a specific event or meeting is required. But in general, planning business trips for off-peak times effectively keeps accommodation costs in check.

Research from FCM Consulting also shows that booking domestic flights between two days before a flight can cost an average of 19% more, and 30% more for international flights. This begs the question: just how important is that last minute meeting request, and will it give you the ROI for that expensive ticket you just shelled out?

  • Ridesharing rather than renting

Rideshares like Uber and Bolt have become a popular mode of travel for business travellers due to their convenience. Travellers can hail a ride at any time, avoid the need for parking, and easily charge the cost to their company through options like Uber for Business.

However, Smith warns that ridesharing isn’t always the more budget-friendly choice. Surge pricing during peak times can lead to significantly higher fares – a ride that costs R100 one time could spike to R300 an hour later. The unpredictable pricing also makes budgeting difficult. Rideshares from the airport to a hotel can also be more expensive, with transfers from Cape Town International costing around R300.

In comparison, renting a car provides more cost control. Car rental and fuel make up 16% of a typical business trip budget, compared to 3% for taxis. To manage rental car costs, businesses can negotiate rental agreements and leverage loyalty programs to secure better rates.

“Overall, while ridesharing offers convenience, renting a car may be the more budget-friendly option for business travel, especially when travel managers can strategically plan trips and negotiate rental terms,” says Smith.

  • Booking flights online

When booking business travel, relying solely on online booking tools can lead to hidden fees that cost more than anticipated. Airlines increasingly resort to “junk fees” – extra charges for checked luggage and seat selection that often creep in at the end of the booking process. These hidden costs make it difficult to compare the true total price accurately.

However, corporate travel agents and business travel specialists can provide significant advantages regarding flight bookings. Leveraging the large volumes of travellers they work with, these agents can secure discounts on flights that are simply not available to the average corporate booker booking on their own. Beyond just finding the best base fares, travel agents can also provide access to perks like flight upgrades, reduced change/cancellation fees, and VIP lounge access—benefits that can greatly improve the business travel experience.

  • Missing opportunities for cost savings

“One of the most important things businesses can do to keep their travel budget in check is to closely identify and track the unexpected costs that can creep up,” advises Smith. “It’s not just about the headline price of flights and hotel rooms – there are a myriad of ancillary fees that can significantly inflate the total spend if you’re not vigilant.”

Smith recommends businesses ask vital questions to gain visibility into these hidden expenses: “Which travellers are incurring the most in additional costs like airport transportation, WiFi fees, or early check-in/late checkout charges? What specific trips or destinations tend to have the highest level of unexpected spending?” By integrating the travel booking system with the expense management platform, companies can automate the generation of detailed reports to identify these trends.

“Armed with this data, you can start to make informed decisions about where to adjust budgets, negotiate better rates, or educate travellers on ways to minimise unnecessary extras,” says Smith. “It’s all about getting that granular-level insight so you can proactively manage the business travel budget rather than having it burst due to unexpected costs spiralling out of control.”