Corporate Travel Cost Savings: Mastering Travel Cost Optimization

travel cost reduction and optimization

With corporate travel back on the rise, it’s not just your travelers that are reaching sky heights. 

The post-pandemic landscape has seen a significant increase in travel expenses, with hotel rooms and airline prices soaring beyond pre-pandemic levels. As a travel manager, you're now faced with the challenge of getting employees back on the road while holding down travel expenses to the greatest extent possible.  

This raises the question: how can you effectively optimize business travel costs while facilitating a successful return to business travel? 

We’ll explore the essential steps and best practices to help you become a master of corporate travel cost optimization. 

What is the strategy of cost optimization? 

The key to optimizing your travel spend is knowing how you’re spending. 

With access to up-to-the-minute data on your travel expenses, you'll know the true cost of:  

  • Every booking 
  • Every trip 
  • Every department 
  • Every person 

And how it's impacting your bottom line.  

By conducting a comprehensive audit of previous business trips and transactions, you can set benchmarks for future travel costs, create budgets that reflect your reality, and identify cost-saving opportunities that might otherwise go unnoticed.  

How to do a travel cost analysis? 

Remember: you can’t save money until you know what exactly you are spending. To help you identify those areas, here’s a list of steps that will help you understand the impact of changing travel dynamics and allow you to adjust your travel cost reduction strategies accordingly: 

  • Analyze historical data – By comparing your 2019 spend (pre-pandemic) with your current expenditure, you can identify areas where adjustments are needed and make informed decisions based on your organization's unique requirements. 
  • Don't include discounts – While discounts are great for reducing upfront costs, excluding them from the analysis helps you understand the true impact of travel expenses on your budget. 
  • Track primary spending – Identify the core expenses associated with business travel, such as airfare, accommodations, ground transportation, and meals. Tracking these primary spending categories will help you pinpoint areas where travel cost reduction can be achieved. 
  • Evaluate supplier contracts – Assess the terms of your agreements with suppliers, such as airlines, hotels, and car rental companies. Look for opportunities to negotiate better rates, terms, and conditions to maximize cost savings. 
  • Implement tracking and reporting mechanisms – Set up robust systems to capture and track travel expenses. This can include expense management software, credit card programs, and automated reporting tools.  

Armed with the above insights, you'll be ready to tackle travel costs head-on and pave the way for a more efficient and cost-efficient travel program. 

Implement holistic travel policies 

The key to reducing corporate travel costs often lies in cultural change.  

Going beyond mere booking and reimbursement rules, a holistic policy considers the bigger picture and aims to strike a well-rounded and balanced approach to travel management that considers factors such as: 

  • Employee well-being and duty-of-care – Prioritizing employee well-being can lead to cost savings in the long run by minimizing travel-related incidents and ensuring employee satisfaction. 
  • Sustainability – Incorporate sustainability measures into travel policies to reduce environmental impact and potentially lower costs through initiatives like carbon offset programs. 
  • Cost-saving measures – Introduce guidelines and incentives that encourage employees to make cost effective choices without compromising the quality of their travel experience. 

To implement a holistic travel policy, start by evaluating your current policies and identifying areas where improvements can be made. (Hint: This might involve consulting with employees to understand their travel needs and preferences.)  

By taking a comprehensive approach to travel management, you can create a culture of responsible and cost-effective travel while also prioritizing the well-being and satisfaction of their employees. 

Use travel tech to encourage share-shift 

By leveraging Travel Management Software, you can guide business travelers in making informed decisions, nudging them toward options that will help your program save money.  

For example, is your current OBT effectively managing all of your air credits and unused tickets? Alert travelers to unused tickets, vouchers, and credits, by leveraging a simple browser plugin, like the FCM Extension, to empower your employees with point-of-booking notifications. 

Real-time policy alerts and compliance monitoring help ensure adherence to guidelines, while tracking compliance behavior helps identify areas that may require additional training or support. 

Start preparing supplier agreement reviews 

When was the last time all your supplier contracts were reviewed in-depth and renegotiated?   

Whatever your answer may be: it’s never too early to start preparing for a review. In today’s ever-evolving market, it’s essential to stay ahead of the game and have an open mind when negotiating with suppliers.  

By being proactive, your organization has the room to be more creative and strategic in your negotiations. This could mean negotiating longer validity periods for contracts, negotiating outside of peak seasons for hotels, and consolidating vendors where possible. Continuous review of preferred hotel chains and other vendors can lead to greater cost savings.  

Leverage your consulting partner(s) 

When it comes to managing corporate travel expenses, sometimes it’s best to leave it to the experts

Designating a professional consultant to work alongside your Travel Management Company can be the game changer your organization needs. From sourcing and negotiating supplier contracts to handling post-trip financial reconciliation, your consultants have the specialized knowledge and experience to handle all of the intricacies of your travel program.  

While hiring a consultant does require additional expenses, it's an investment that pays for itself. By leveraging efficiency, expertise, and industry insights, your organization can achieve significant cost savings and improved travel experiences.  

Plus, you can offload the burden of travel management and expenses, allowing you to focus on other critical aspects of your business.  

Remember: Just because you are traveling more doesn’t mean you need a bigger travel budget.  

Start saving money on corporate travel today! Chat with our team to help you get started. 

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