Last Updated on: March 11, 2024 at 9:25 am
Business travel costs are expected to rise through 2024, according to recent industry reports.
However, the associated expenses seem to be rising. Today, airfare, hotel rates, conference fees, and local transportation costs are all climbing. Though demand is recovering, capacity remains limited. At the same time, inflation and economic uncertainty threaten the growth.
Therefore, understanding the key drivers behind rising business travel costs can help companies budget and reduce travel expenses more effectively.
In this article, we'll take a look at:
Several factors are converging to drive up the overall cost of business trips. Let’s look into the main ones.
Business travel airfares are on track to rise nearly 50% this year compared to 2021, following two years of steep declines during the pandemic, according to a report from the Global Business Travel Association (GBTA).
Hotel rates are also rebounding. The same source mentioned that the average daily hotel rate for business travel rose nearly 30% to $161 in 2022.
Airlines and hotels reduced capacity during COVID-19 as demand evaporated. Now, they are struggling to ramp back up as travellers return. With demand outpacing supply, rates are spiking.
Business travel has been slower to recover than leisure travel. However, with restrictions lifting, events restarting, and companies calling employees back to offices, demand is projected to keep rising.
Airfares are forecast to increase 8.4% globally next year, while hotel rates will likely exceed 2019 levels.
The cost per attendee for conferences, trade shows, and other big business events is set to increase 25% this year over 2019 levels, according to GBTA.
Venues scaled back staff and space during the pandemic. Now, they are facing inflationary pressure on food, labour, and other expenses. With demand surging, they are passing those costs along.
The average daily cost for a business traveller to attend meetings and events rose significantly – by 58% to $160 in 20222. Prices are expected to continue rising next year.
After two years of restrictions, there is significant pent-up demand among business travellers who are eager to meet face-to-face again. Companies also have fuller budgets after tightening travel for so long.
However, economic uncertainty and recession worries could give a serious headache to your organisation’s finance department. Rising costs could force some businesses to trim travel plans.
From ground transportation to food and entertainment, costs are climbing thanks to inflation and lingering supply chain issues.
For example, daily car rental rates increased 9.8% to $45 on average in 2022. And don’t forget the sky-high price of gasoline.
Even though airfare and hotel rates may moderate, other expenses will continue pushing up overall travel costs.
Beyond airfare and lodging, business trips come with a host of secondary expenses – many of them easy to overlook. Savvy companies account for these hidden costs when budgeting.
Booking flights online or through a travel agency often incurs extra fees beyond the base airfare. Airlines have introduced charges for paying with credit cards. Online travel agencies tack on service fees. Using virtual cards and optimising payments can help companies avoid unnecessary costs.
Sending an employee overseas? A business travel expense such as a Visa application will vary greatly depending on the destination. A visa for Brazil costs $80, while one for China runs $185. Securing multiple entry visas adds even more costs. Factor these fees into travel budgets for international trips.
Travel insurance for a simple roundtrip domestic ticket can cost less than $50. However, for complex global itineraries involving multiple stops, premiums can exceed $500 to provide full coverage. Ensure insurance plans account for non-stopovers and duration.
Changing or cancelling flights can incur hundreds of dollars in fees, especially if there are multiple airlines involved. Booking flexible fares when possible can minimise these risks. But be prepared for it in budgets.
Seemingly small currency exchange fees on international trips can quickly add up. Withdraw larger amounts of foreign cash from ATMs to minimise fees. If you are a travel manager, consider using a fee-free credit card that doesn’t charge exchange fees.
Rescheduling an airline ticket for a new date can lead to hefty fees – especially on non-refundable fares. But cancelling and rebooking the flight can sometimes cost even more depending on seat availability. Consider flexible booking options when possible.
Getting to and from the airport adds up, whether it’s parking fees, rideshares, taxis, or other ground transportation. However, options like shared van shuttles can offer significant savings over pricier alternatives. Don’t default to the costliest option.
Airport lounge access can cost between $25-$50 per visit, depending on the airline and airport. Multi-city travellers can rack up fees fast. Consider discounted annual membership options to cut costs for frequent travellers.
Overseas trips often come with chunks of taxes and fees – tourist taxes, departure taxes, etc. In Europe and the US, these can add a nice chunk of change to your total bill. Factor them into budgets.
We’re here to help you get ahead of the competition in an area too many businesses overlook: containing the true cost of business travel.
With TruTrip, you can easily analyse past travel spend, forecast future costs, optimise bookings, and control expenses across the entire business. Sign up for a free trial today to get visibility into your true travel costs. Or book a demo to see how TruTrip can help rein in your travel budget during these turbulent times.
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