Business travel will reach an all-time high in 2024 with corporate budgets needing to increase by at least 20% according to a new Corporate Traveller white paper, “2024: The Year SME Travel Comes of Age”.
Bonnie Smith, GM of Corporate Traveller, says business travel and event costs are not increasing as steeply as they were in 2022, but they’re still going up. Fuel, cost recovery, sustainability and fleet upgrades will continue to impact airlines. Fare rises of between 3% and 7% are forecast in 2024. Also, hotels will be forcing 3% to 8% rate rises for 2024, according to research conducted by Corporate Traveller’s sister company FCM.
And, although projections indicate a drop in interest rates and inflation this year (from 6,8% in 2023 to 5,2% in 2024), which will provide businesses with more disposable income, corporate travel programmes should still budget for moderate increases.
Smith adds that South African businesses are still vulnerable to the volatile currency and in particular, lower airline capacity to key business markets.
“Travel budgets will need to account for currency fluctuations, airline tickets – both locally and globally – and even food and beverage increases.”
The issue extends beyond South Africa. According to a Global Business Travel Association Outlook Poll, nearly three-quarters of buyers anticipate their travel budgets will increase or remain unchanged this year. Additionally, most respondents said they don’t think economic issues will restrict business travel at their company.
So how do businesses, relooking budget allocations across all areas of the business, motivate for the increases?
The report recommends changing our way of thinking so that travel is seen as an investment, not an expense. Travel is essential for companies looking to break into new markets, maintain relationships with clients and suppliers and even negotiate terms that will lead to higher profits.
“The key is to then relook business travel as you would any other investment – to put the money where you’re most likely to see the returns you want,” says Smith. “Maximising the return on a travel budget is to prevent low-value trips and invest in high-value trips.”
This can be achieved by tightening up your travel policy and putting clear approval processes in place so that all trips are scrutinised. This doesn’t mean binning trips that don’t meet certain criteria. It’s about exploring the right strategies and solutions to get the most out of travel budgets.
So, it could mean investing more in a particular trip by lengthening the stay or including another destination on the route so that more meetings can occur, for example. Or, that the trip is postponed so you can get less expensive flights. “It’s more about planning than controlling,” Smith says.
The second step? Work closely with a travel management company (TMC) to save costs and maximise your spend. Again, when reassessing business travel as an investment, bringing in a consultant or outside service is a natural consideration.
It’s particularly useful for small businesses that may not have the capacity, tools or in-house skills to introduce cost-saving strategies like travel policy refinement, rate negotiations and process efficiency. You can save anywhere from 5% to 50% of your overall travel spend by providing access to preferred agreements and additional negotiating leverage.
“It’s all about maximising the ROI on your travel spend,” says Smith. But how exactly can this be achieved?
She offers these tips to help business travellers:
* Set a clear purpose for each trip – Every business trip should have well-defined goals aligned to business objectives. These goals guide planning and help measure the ROI afterwards.
* Enforce a travel policy with approval workflows – This ensures only essential, high-value trips get approved. Technology can automate approvals based on purpose, budgets and compliance.
* Leverage preferred supplier rates and corporate discounts – Work with a TMC to access specially negotiated airfares, hotel rates, car rentals and more. This instantly reduces trip costs.
* Promote traveller responsibility and accountability – Travellers should participate in the process by providing trip feedback, managing budgets and following policy guidelines.
* Monitor travel spend before, during and after trips – Analytics help you understand the real ROI of a trip and inform better decisions going forward.