Managing travel for corporate purposes can be a headache. From flights to accommodation, and everything in between, there are many factors to consider.
The key to managing corporate travel effectively is having an effective policy. This helps to ensure consistent travel guidelines and reduce non-compliance.
Hotel costs are among the most important variables to understand when attempting to control travel budgets. They are a major contributor to a property’s profit and loss statement (P&L) and can affect many key metrics like RevPAR and ADR. Understanding the basics of how hotel costs are calculated will help you stay ahead of your competition and maximise revenue.
Room rates are determined by a variety of factors, including location, season, demand and star rating. In addition to these, things like flight searches to a specific destination or good or bad weather can also affect hotel pricing.
Hotels that use dynamic pricing strategies are able to consistently adjust room rates based on data about market demand, so they are able to maintain competitive prices and avoid having rooms go unsold. This means that they can appeal to different market segments and maximize their potential revenues.
Determining the right room rate is a complex process, one that requires an accurate understanding of your hotel’s competitive positioning and a deep understanding of the local market. It also means having access to real-time hotel data so that you can spot price changes from your competitors before they have a chance to impact your bottom line.
There are two main types of hotel room costs: fixed and variable. The former is what hotels spend to run their business while the latter is a profit measure that includes costs like electricity, water and rent.
Generally, hotels use cost per occupied room, or CPOR, to calculate the average cost of a hotel guest staying in a room. However, there are some properties that have an even more accurate measure of room profitability called cost per available room, or CostPAR, which is a calculation that takes into account both fixed and variable costs.
These figures are used to determine whether or not a hotel is profitable and can help hotels find ways to improve their profits. It is also important to know how much it costs to fill a room, as this will affect the overall cost of operating the hotel.
Airfare costs are one of the most important variables in any travel management strategy. They can affect trip planning, rescheduling and budget optimization – but only when properly understood.
A large portion of business travel is impacted by airfare cost, making it an essential part of any company’s travel management process. The price of an airline ticket is directly related to a number of factors including the distance traveled, time of year and cost of fuel.
The cost of an airplane ticket can also be influenced by other factors, such as the time of day and weather conditions. Airlines often offer different fares during different times of the year and at different airports to reflect these factors.
There are many reasons for the increase in airfare prices, including rising jet fuel costs and a surge in demand from travelers who were unable to travel due to COVID-19 restrictions. However, the main reason is that airlines haven’t yet recovered from their recent downturn and can’t grow back to 100% capacity as quickly as they want to.
While these factors have contributed to higher airfares, there are still a few things that you can do to save on airfare costs. Some strategies include looking for last-minute deals or trying to book early in the season, which will help you take advantage of lower rates. Reimbursement claim might also be something that your company offers.
Another way to save on airfare is to use a travel and expense management reporting tool. These tools are designed to make it easy for your finance team to view reports with all of your trip costs and identify trends or leaks in spending.
Using a travel and expense management tool makes it simple to compare your travel spend with your competition and track your airfare spending. Moreover, these tools can make it easier for your finance team to identify trips that don’t fit in with your overall travel policy and provide suggestions for rescheduling or budget optimization.
While some of the lowest airfares in history were driven by a lack of demand, the trend is showing signs of reversing and a resurgence of a healthy travel market. As a result, airfares are likely to rise again, but companies that can put together a smart travel strategy and find the right mix of airfare and other trip costs can maximize return on investment and ensure that their employees arrive on-site rested and ready to deliver.
Car Rental Costs
Car rental costs are one of the major factors that impact travel management. They can be difficult to predict, but understanding how they are affected can help you save money where possible.
The cost of renting a vehicle can vary significantly depending on several factors including location, car type and rental company. But the average cost of a rental in mid-October 2022 was about $81 per day, according to travel website Hopper.
Some travelers can save on their rental car by thinking outside the box, but it’s important to note that some of these alternatives will not be viable for all types of travelers. For instance, U-Haul truck rentals have become increasingly popular over the past year, but they are not a good option for most travelers.
There are also a number of ancillary fees that can add to the total cost of a rental. These can include refueling charges, drop off and pick up fees and airport or city fees.
It is worth comparing multiple options and checking prices on the Internet, as this will allow you to see how different car rental companies compare in terms of price. This will help you choose the best rate for your trip.
Almost all car rental companies have trackers on their cars, which are used to prevent theft and secure the vehicle. This can cost up to $15 a day, but there are a number of other solutions available that will be cheaper for most travelers.
In addition, some credit card companies will offer to cover the cost of rental car insurance if you pay for the rental with your credit card. This can add another $15 or $30 to your bill, but it can save you thousands if you are involved in an accident or have your car stolen.
Finally, if you are traveling with an extra driver, make sure to read your car rental agreement. Some suppliers will charge a small fee for an additional driver, while others will let you register an extra driver for free.
The rental car rate is usually updated as the fleet is released, so it is always a good idea to check rates as your trip approaches to ensure you are getting the most competitive deal. It is also worth cancelling your reservation if you are not happy with it, as this will help the company have an accurate account of what’s available for fleet planning purposes.
Duty of Care
As a business leader, you may be concerned about how your company’s travel management practices will impact your employees. Specifically, you want to make sure that your company is taking its duty of care obligations seriously.
The term “duty of care” refers to an employer’s moral and legal responsibilities regarding the safety of their employees, contractors, volunteers, and family members. This is an important issue because it ensures that your travelers are safe while they’re on the road for work purposes.
Duty of care is a legal and ethical obligation that requires your company to protect its travellers from harm, and implementing a travel risk management plan is the best way to do this. While there are many different methods that you can use to help keep your travellers safe, a robust duty of care program is the most effective and will be one of the best investments your company can make in its business travel strategy.
It’s also the best way to keep your employees happy, which can be a big boon for your company’s bottom line. If your staff feel that their company takes their safety seriously and cares about them, they will be more likely to stick with the organization and provide excellent service on every trip.
When you understand your duty of care and your responsibilities as an employer, it will be easier for you to develop an effective and efficient travel risk management plan that will protect your employees from all possible risks. This can include assessing any foreseeable risks that your travelers might be exposed to, as well as dealing with unexpected events like the COVID-19 pandemic that exploded around the world in 2018.
Your company’s duty of care policy should cover all possible risks your business travelers might face while on the road for work. This includes everything from weather, health, security, and political and social concerns to the emergence of disease outbreaks and natural disasters. It should also ensure that your travellers are informed and know what to do if they encounter any issues.