SMEs account for a substantial portion of the travel pie, but they often miss out on discounts due to low individual volumes of travel.
Adeline Teoh considers a range of options to see how business owners can maximise travel budget.
Whether it’s across the country or across the world, chances are your business will need to fork out for travel throughout the year. Setting a company travel policy can trim costs, avoid confusion, and give you more control over expenses.
If you don’t already enforce a policy, start with some definitive ground rules that outline what is expected of travel arrangements. For example, stipulate all domestic travel must be economy class, and rental cars must be medium-sized or smaller, saving money on petrol as well as rental costs. You might give a meal allowance of $80 a day, but does that include room service and mini-bar raids? Being specific about what you expect to spend on a business trip can make a big difference in the long term.
Air Travel
The air travel market has expanded, giving business travellers a greater choice of airlines and schedules. The increase in booking traffic prompted all the airlines to provide internet booking, making it easier and quicker to search for flights. Sites like Webjet.com.au will search various airline websites so you can compare prices, schedules and flexibility. While it’s tempting to buy the lowest fare, schedules can be fickle and low fares often have restrictions that can be costly to change. Shop around for a flight that will satisfy your budget, schedule and a possible change of plans.
Don’t forget that although you may have to pay a little more at your local travel agent, service can be more valuable than price. Agents are well equipped to handle changes in schedule and can also find fares you may have overlooked. For example, booking an earlier flight could save you enough to make changing your plans worthwhile.
Corporate Rates
All major hotels have corporate rates, which can be up to 50 percent off the rack rate of a room. However, you can save even more by being smart about where you stay. You can save on local travel time and costs if you stay in a hotel close to your main area of business, whether in the CBD or a business park. Look out for additional expenses such as phone calls, internet connection and meeting room hire. Some hotels include these services in their corporate rate but others will charge extra, so take into account whether you will need these services and how much they are worth to your business while travelling.
Transport
Generally it’s cheaper to hire a car than to catch taxis but it depends on the number of, and distance between, your destinations. If you have very few destinations, taking a taxi would be more cost effective, or if you’re seeing a number of clients in different areas, hiring a car is best. Also, look for alternative transport options; private taxi services may look expensive but they usually work out cheaper per day than taking a number of taxis and you have the convenience of having a driver on call, saving you time. Shuttle services to and from major airports are also quite reliable and often have pick-up points at major hotels.
Unfortunately, car hire is where you are least likely to find substantial discounts because car hire companies already operate on low profit margins. There isn’t a huge difference between the major companies so savings come down to the make of car. Choosing a car will depend on its intended use; you might prefer a bigger car for lengthy regional trips or a smaller runabout for city driving. The make of car will determine its hire price and fuel consumption, which is an extra cost to note considering the increasing price of petrol.
Travel Options
Timing is everything. If you have a choice about when you can travel, it’s worthwhile finding out about peak and off-peak seasons. Moving your study trip back a couple of days could save you a packet. This is also the case for flights where travel at certain times of the day is cheaper than others. But flexibility is usually more expensive. If you’re likely to change plans, using hotels or buying fares that have a flexible component is more cost effective than a cheap deal that charges exorbitant fees for changes. However, if your schedule is etched in stone, forgoing flexibility might mean big savings.
If you have a preferred airline, hotel group and/or car hire company, joining a corporate loyalty program will reward your repeat business with discounts. Some programs reward volume of travel while others might include additional services for free or give discounts. Corporate membership to global travel brands will help you save if you travel both domestically and internationally. To find a suitable loyalty program, ask your provider if they run one and examine your travel needs across the year. How often do you travel, is it more important that you save a little per trip or a lot per year?
Similarly, you can access special deals depending on your corporate credit card. All the major credit cards have pre-negotiated discounts with particular providers so if you don’t travel often enough to enjoy specific travel-related loyalty programs, you can still take advantage of available discounts.
Travel Management Companies
Travel management companies specialise in maximising your budget while providing comprehensive support in planning, and during, your business trips. Sabrina Ricci, NSW/ACT sales and account manager for global travel management group TQ3 Navigant, says that their holistic approach examines everything from travel policies to your booking procedures to make sure you are getting the most out of your money.
Moreover, Ricci adds, they can wrangle discounts using collective bargaining. “Smaller companies will use us because they can access a range of discounts that they can’t on their own. We give them the bargaining power in addition to the special rates we have with our preferred suppliers. We might approach an airline saying ‘we have 15 businesses each travelling to Hong Kong twice a year, is there anything you can do for us?’
“If you don’t have a dedicated person or division looking after your travel needs, which most small businesses don’t, then using the expertise of a travel management company makes sense.”
Unfortunately there are some fixed travel expenses that can’t be discounted, especially for overseas travel, so you need to consider these when devising your travel budget. These include taxes, duties, visas, currency exchange and possible inoculations. Your travel agent, airline or the relevant government department can provide further information.
As with most business expenses, how much you can save on travel will depend on the nature of your business, the frequency and location of travel, but by being savvy about your choices you can certainly find savings.
Case Study: Funding Travel
One charity has found working with a flight management specialist offers considerable savings—freeing up funds to inject into core areas of the organisation.
The Queensland Cancer Fund is the state’s peak anti-cancer organisation whose income relies solely on donations to continue its vital work in patient support, education and cancer research. Community relations coordinator, Fiona Gemmell, says that of the Fund’s 100 or so full-time employees, about 10 percent travel regularly, “either from regional areas to our head office in Brisbane, or interstate to meet with our national counterparts”. Occasionally there is overseas travel for health professionals on education scholarships and funding for overseas experts to travel to Queensland.
The Fund turned to Flight Centre’s business division to consolidate their travel expenses resulting in a more streamlined approach to travel booking and lower fares.
“The area where we have saved the most would definitely be on flights,” says Gemmell. “Flight Centre works closely with us to ensure the best possible fare on flights and other travel-related expenses, and by dealing with the same travel agent for every booking, they know our specific travel needs and are able to book our flights efficiently, which saves us significant time.”
Gemmell also cites the flexibility of the Fund’s staff as a key aspect to their saving, for example, arriving in Sydney an hour earlier than planned to save $100 on a ticket, while being able to use all travel carriers gives them more opportunities to save.
Using a travel management company, Gemmell estimates the Fund saves an average of $100 for every flight booked—money that is better invested in the core areas of their business.
While it’s tempting to buy the lowest fare, schedules can be fickle and low fares often have restrictions that can be costly to change.
Notable Deals
Ozjet: This new domestic airline caters to business travellers with tight schedules. Online check-in means passengers wait as little as 15 minutes to board a plane, plus each flight is capped at 60 seats, which makes for quick boarding and disembarkation. At the moment they only fly between Sydney and Melbourne, though other popular business destinations will soon follow. www.ozjet.com.au
Rydges: Organise accommodation at Rydges by setting up a customised web page. This means 24/7 access to your negotiated rates making it simple for everyone to manage their own travel needs. Detailed online reports are also available so you can keep track of expenditure. www.rydges.com
American Express Qantas Corporate Card: An annual rebate of up to five percent is available if you spend more than $20,000 on Qantas domestic travel. Also take advantage of a range of pre-negotiated supplier discounts such as hotels, car rental, telecommunications, and courier and freight services. Conditions apply. See the business section of www.qantas.com.au or www.amex.com.au for details.
BTI Online: BTI Australia has just launched BTI Online, a web-based service that combines the convenience of online booking with the assistance and support of BTI’s travel management experts. This is aimed at small businesses that can’t afford to engage the full services of a travel management company. www.btiauonline.com
