HR Management & Compliance

Tips for Cutting Employee Travel Costs

In good times and bad, employers are always happy to find ways to minimize costs. Employee travel is one area that has high potential for high costs—so it’s an area that also has high potential for savings. Between flights, rental cars, hotels, meals out, and more, there are many things employers pay for when employees are on the road. Let’s take a look at some ways employers can reduce the tab.

 

Here are several considerations for employers looking to reduce employee travel costs:

  • Consider using a travel service or agent, many of which have partnerships with travel providers that will get you lower rates. They can often get discounts due to volume that an individual company may not be able to get on its own. A travel service or agent can also save your organization valuable time in researching travel options and making arrangements.
  • Counterpoint: Don’t always blindly trust that your agent is getting you the best price. Periodically check to ensure that the organization can’t get better rates by booking directly. Renegotiate with the travel provider if it is not giving you the savings it promised.
  • If your organization is not using a travel service, consider negotiating on your own with hotels, car rental groups, or airlines for preferred rates. Some of these groups already have corporate rates for organizations that qualify.
  • If employees are booking their own travel, have clear guidelines in place for employees in terms of how much is appropriate to pay for a flight or hotel booking and what must be preapproved before purchase. If there are preferred travel partners, such as specific car rental companies or hotel groups, ensure the employees are aware of this.
  • Have a clear policy that outlines what travel expenses will not be covered by the organization. (Be sure to stay within the law on this—what the company must pay for may vary based on where you’re located; consult legal counsel with questions.) The policy should clearly note the types of expenses and limits on such expenses.
  • Consider outlining in your policy exactly the type of local transportation the employee will be expected to use. If possible and practical, consider requiring or encouraging the use of public transportation instead of taxis.
  • When booking for large groups, consider hiring a transportation company to shuttle all group members to/from the airport, hotel, and work location. This can save money over each individual booking his or her own transportation.
  • Encourage or require employees to return on the same day whenever possible to cut down on hotel expenses.
  • Assess whether it makes sense to use a per-diem model or a cost-reimbursement model for miscellaneous daily expenses while traveling.
    • Per diem is usually a set daily rate paid to employees who are traveling to cover their incidental expenses above and beyond what they would spend at home for things like food and parking. A per-diem rate is easy to calculate because it’s simply a flat rate based on the number of days traveling, regardless of actual costs incurred. If using a per diem, ensure the amount reflects the destination; New York is more expensive than Indianapolis, for example.
    • Actual reimbursement of costs means the company pays for the costs of things like meals while traveling (either directly or by reimbursing the employee later). The upside here is that if there is no expense for a given day, there’s no payment, so the total costs may be lower if closely administered. But the downside is that it is more cumbersome to administer and is prone to abuse.
  • Utilize technology to reduce the need for travel. A wide variety of free and paid options exist to facilitate online meetings, video calls, and more. In some cases, the same goals can be achieved through a virtual meeting rather than an in-person one.
  • Consider providing employees with memberships to organizations that provide travel discounts, such as AAA. The discounts received often more than offset the membership fees, and employees can utilize the benefits outside of work as well.
  • Follow up on unauthorized travel expenses, and discipline employees if necessary to ensure problems do not escalate.
  • Discourage or prohibit last-minute travel bookings without manager authorization. A last-minute booking is usually more expensive and should only be done when absolutely necessary—not because of a lack of proper planning.
  • Conduct periodic reviews of the travel policy and of employee adherence to the policy to see where there are gaps or unexpected levels of expense.

What else has your organization done to rein in travel expenses?

*This article does not constitute legal advice. Always consult legal counsel with specific questions.
 


About Bridget Miller:

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.