Rising Business Travel Spend
Is Your Per Diem Keeping Up?
Feeling like your travel money just isn't going as far as it used to? You're not alone. South African corporate travellers are grappling with this too. With prices zooming up, those once-sufficient daily allowances are falling short. The financial squeeze can really be felt in the shrinking value of daily allowances, or per diems, which cover things like meals, lodging, and getting around while on business trips, says Bonnie Smith, GM FCM South Africa.
The culprits? The South African rand dropped 6% compared to the US dollar this past year, and with inflation hitting 7.8%, trips abroad and even local jaunts are costing us more. Smith says, “That daily allowance that used to easily cover food, a decent place to stay, and getting around? Well, it's not keeping up with today's rising prices.”
Business travel spend on airfares and hotels: The plot thickens
To make matters worse, the FCM Global Trend Report for 2023 Q2 just dropped and, spoiler alert, it's not looking great for South African business travel expenditure. The big pain points for travel budgets? Airfare prices. North American business class has jumped 13% and economy’s up by 16%. Europe's not far behind, with business class rising 15% and economy hitting a 17% increase. As for the Middle East and Australia, brace yourself: business-class prices have soared by a third since 2019. Crazy, right?
But here’s another problem. There's a difference between what companies give as daily travel allowances and the real hotel rates in popular cities. For example, in London, a room costs around R2 484 ($129) a night, R2 253 ($117) in Dubai, and R2 214 ($115) in New York. Back home? Lagos is about R2 850 ($148), and Cape Town's R2 330 ($121) a night.
Now, compare this with the GSA's (the US General Services Administration) recommended daily rate for hotels: just $96 (without taxes). And for food and other small stuff? They suggest between R1 059 ($55) to R1 464 ($76), depending on your location. Oh, and that small change for tips? That's set at R96 ($5) a day. Makes you think about what you spend on business travel for your people, right?
Some companies are cutting travel budgets to save money. But here's the catch: doing that might be a mood-killer for employees. With those pre-inflation per diems, people might end up eating at burger joints instead of nicer places and staying in not-so-great hotels. That's not really the recipe for a refreshed and productive team.
But hold on, there’s a silver lining. Our team of travel experts is here to guide you on the most affordable, yet highest quality options.
Business travel spending without breaking the bank (or spirits)
So, what can you do when trying to keep a lid on expenses without skimping on comfort for your corporate travellers? Smith's got some pointers on how to find the middle ground:
- People first: Remember, happy employees = growing business. If travel allowances for global business travel are too low, it's a problem. Smith says companies should rethink their travel policies, especially when actual hotel rates and those daily allowances are miles apart.
- Be smart with booking: Smith suggests that a bit of flexibility goes a long way. Maybe book on quieter days? It might save a few bucks on flights and hotels.
- Negotiated rates: The FCM team has forged relationships with a global network of partners, securing exclusive rates on hotels, car hires, and transfers. Your business travel spend is optimised, ensuring quality and comfort without the hefty price tag.
- Loyalty pays off: Think airline and hotel loyalty programs. They often come with brilliant perks like free Wi-Fi and breakfast. Our experts are well-versed in the variety of available programmes and are ready to educate your team, ensuring every journey is as rewarding as possible. Plus, we’ll seamlessly integrate frequent flyer numbers into all bookings, enhancing the travel experience without inflating the budget. More savings, fewer dents in the daily allowances.