Thanks to rising hotel and airfare prices, corporate travel is expected to slow for many businesses as budgets tighten, and executives re-evaluate their travel programmes. According to a recent study which surveyed 847 travel managers and 1,158 business travelers worldwide on their corporate outlook for 2016, travel managers expect big corporate travel spenders to keep spending, and small companies to take fewer trips as a result of increased prices.
Airfares are supposed to eat up the most business travel spending this year, followed by hotel stays and meetings. 41% of travel managers say airfare costs will rise, compared to 35% for hotels. Meetings and conventions, however, drew mixed reviews with 24% of respondents predicting higher costs and 15% lower costs.
Travel managers in India had the most positive outlook for business travel, followed by managers in the UK and U.S. Conversely, Germany, Mexico, South Africa, Australia and Switzerland had the most negative outlook. Of the 24 countries featured in the poll, the ones who had the most pessimistic about growth this year included Russian and Brazilian travel managers, who expect trip numbers to decline in 2016.
In the same survey, 36% of high-spenders believe they will book more trips in 2016. For big corporates that are expected to keep spending, policies may need to be revised to manage travel spend when prices are higher. For example, employees should know their spending limits throughout the booking process as detailed in the company’s corporate travel guidelines, so they don’t exceed travel budgets too quickly. That means that a company’s policy should be integrated into every step of their booking process, so employees are aware of what they can spend and when.
Car rentals, on the other hand, are only expected to rise 21% and rail trips 18%, so local trips may become more common over international travel to keep costs low. Scheduling business meetings nearby may be more efficient for companies, especially if hotel rates are low. Also, other rewards or amenities including airline miles, free hotel nights, and complimentary meals or alcoholic beverages may also be included to entice travelers further.
Savings opportunities like these will become more apparent with slow travel growth. For example, hotels and airlines may drop rates for certain properties that are hosting a conference, or having a last-minute deal to encourage travel. Similarly, conventions and trade shows may lower ticket prices or offer discounts to persuade conference-goers to attend. They may also partner with nearby hotels or airlines to provide additional incentives for business travelers.
Therefore rather than tightening travel budgets, companies should instead take advantage of the savings opportunities that come with slow travel growth. Furthermore, companies should also re-evaluate their travel programmes to accommodate for such perks and rewards. That way employees are more likely to stay within spending limits as outlined in corporate travel policies and benefit from such travel rewards when booking their trips, which ends up being a win-win for both employees and employers alike - even in times of slowed travel.