Corporate Travel Expected to Increase in 2015
Many companies scaled back on corporate travel during the recession, and experts predict that 2015 will be the year when businesses hit the road again. Thanks to the steady economic recovery and notably low fuel prices, the Global Business Travel Association expects business travel spending to increase over the next 12 months.
Travel Expenses to Top $300 Billion
The economic downturn in 2008 affected many companies’ travel budgets. Some businesses cut back on client visits and other trips by as much as 50 percent, and the travel industry felt the impact of these decisions.
“Businesses and consumers across the country were hit hard by the recession in 2009, and as a result, total U.S. trip volume dropped 14 percent that year,” said Dean Sivley, chief executive officer of GroundLink. “Overall, the financial situations of most companies has improved in the past 12 months, and we’re seeing a significant increase in the number of corporate travelers who are hitting the road once again.”
“The GBTA predicted that travel spending will continue to increase to around $310 billion in 2015.”
The decision to cut back on corporate travel doesn’t come without a price. A study from global research group Oxford Economics USA showed that the average U.S. company’s profits would decrease by 15 percent if they eliminated all travel. These losses would likely be higher in the business services, manufacturing, health care and education sectors, which rack up the highest travel expenses each year.
The GBTA reported that American business travel ended 2014 on a strong note, with an estimated $292 billion spent. Based on research from the GTBA Foundation funded by Visa, Inc., the organization predicted that travel spending will continue to increase in 2015 to around $310 billion. The researchers are optimistic about the domestic economy, despite stagnated financial recovery in parts of Europe and Asia.
“2014 was a stabilizing year for U.S. business travel, with continuous, sustained growth, despite a plethora of external issues internationally that have weighed down economies in Europe, Russia and Asia,” Michael McCormick, GBTA executive director and COO, said in a press release.
Not only is this news good for the country as a whole, it also provides ample opportunities for businesses and travel managers to leverage the competitive nature of the travel industry.
Travel Managers: Use This Trend to Your Advantage
Even when working with a higher travel budget, corporate managers can take steps to save their companies money as workers take to the road. Experts predict that the price of international flights will likely hold steady, but the cost of domestic air travel will probably increase. Travel managers should search around for the best flight prices and take advantage of brand loyalty or corporate credit card rewards. If your travelers frequently patronize one airline, don’t be afraid to negotiate for lower prices.
Managers who can cut back on ancillary fees may also save their employer serious money. Extra charges for baggage, flight changes, seat adjustments, in-air WiFi and early hotel check-in can add up quickly. Companies should set clear policies on which expenses are justified and how travelers can minimize extra fees.
When it comes to ground transportation, BCD Travel’s consulting unit Advito predicted that car rental prices are likely to increase 2 to 4 percent in 2015. Rental cars also come with ancillary fees such as toll charges, parking costs and one-way rental return costs. Despite these expenses associated with rentals, ground transportation actually outpaces car rental as the fifth largest business travel expense category – just behind airfare, lodging, dining and entertainment, according to a recent study by Concur. That’s why more and more companies are looking to manage car service as part of their overall travel management program.