Business Travel

Can a Travel Policy Reduce Employee Trip Costs?

April 28, 2016 by Rocketrip Admin

You’ve got better things to worry about than business travel. Rocketrip wants to cut through the confusion and give you the essential tools to manage your company’s travel and expenses.

Let’s start with the basics: our free example travel policy takes care of the heavy-lifting and eliminates the need to write your own policy from scratch. It’s a customizable template that can be tailored to match your organization’s specific requirements. With this framework in place, employees will have clear guidance on travel booking, spending, and reimbursement. From here your company can focus on driving next-level results – not just preventing overspending but actually motivating significant savings.

Lower Business Trip Costs One Business Trip at a Time

Rocketrip is lowering our clients’ average trip cost 30% with a common-sense approach to travel management based on smart budgets and real incentives for employees to spend less. You can read more about what we do in Inc. and Fortune, and if you’d like to see our solution in action, get in touch with the Rocketrip team to schedule a demo.

Whether you’re starting from square one, or looking to optimize your existing corporate travel program, a well-designed travel policy is the first step to lower costs and happier employees.

Travel is the second largest controllable expense at a typical organization. A survey of more than 1,200 companies conducted by J.P. Morgan found that T&E expenses accounted for 10-12% of annual budget. That’s a lot (too much if you ask us, or your company’s CFO). It’s not that employees try to spend a lot on their trips, just that they don’t have a reason not to.

(A Few) Ways to Reduce Employee Travel Spending

The best policies reduce expenses by setting clear guidelines for expected spending and promoting cost-effective travel, which may include:

Using the hotels and airlines with which a company has negotiated discounted rates.
Using sharing economy services such as Airbnb and Uber.
Traveling by rail instead of flying.
Choosing less expensive cabin classes.
Booking the lowest available fare regardless of airline loyalty status.
Allowing employees to stay with friends and families.

The specific travel behaviors employees are permitted to consider will vary from company to company. Likewise, an adaptive approach is best when it comes to setting expectations for employee travel spending: “clear guidelines” aren’t the same thing as static limits. Travel prices are highly variable based on date and destination, so a single, predetermined cap will be unable to account for the true cost of a trip. Hard and fast rules – “$500 for all flights, $200 a night for all hotels” – result in trip budgets that are either too low for employees to find suitable options, or too high for your company to meaningfully control costs.

Think of it as a matter of process vs. outcome. Lower spending is the desired outcome of travel policy, but achieving this requires having the right process in place. By encouraging specific booking behaviors rather than setting arbitrary spending targets, your company will see higher policy compliance and lower overall expenses.