Business travel has declined due to the COVID-19 pandemic, and the effects may outlast the disease. This is bad news for airlines, but what does it say about businesses and business travel as a whole?
Travelers are Still Traveling, but the Risks Have Increased
Although business travel has diminished, it's not down to zero.
About 80% to 100% of business travel for sales reasons will still occur
Travel for inter-company meetings will crash up to 60%
Customer support travel will decrease by up to 30%
Convention/trade show traffic will decrease only by up to 20%
In short, businesses may replace many in-person meetings with Zoom calls, but their economic success depends on their ability to make deals, occupy booths, and ensure customer success.
The main thing that's changed is that companies now need to hedge more strongly against the risk of increased costs. . In the short term, costs include the risk that a traveler might get sick. Costs will arise in terms of expenses such as increased sick days, benefits payouts, and travel insurance.
Even after we all get vaccinated, however, the wider economy might still suffer. Until the recovery occurs, companies need to be very careful about how much they spend—and business travel can absorb up to one percent of a company's revenues. What's more, the cost of business travel is steadily increasing. Hotel prices, airfare, and transport costs all jumped by up to 3% in 2019. They were expected to rise in 2020, but events put all projections into a tailspin. However, there's no reason to expect that costs have not increased.
Lastly, there's a risk that the trip fails to generate ROI. This risk is compounded by the fact that calculating travel ROI can be very difficult—60% of companies don't have a recordkeeping system that can link business travel objectives such as increased revenue or improved customer retention.
In short, business travel must go on, but travel is riskier now, and all these risks will usually express themselves in the form of increased cost. How can businesses hedge against these risks?
Reducing Travel Costs Means Increasing Travel Data Collection
Most people think of airplane tickets as the most considerable expense involved with business travel, but it only takes up about a third of costs. Other costs include hotels, restaurants, taxis, baggage-handling, insurance, health insurance, cancellation insurance, and so on. Each cost is handled by a different service provider, which means that it can be difficult for companies to aggregate these costs and understand whether their travelers are getting a fair price.
In other words, minimizing travel expenses starts with intelligent data aggregation.
For businesses, the priority should be to understand which travel is most likely to generate ROI. This means creating an integration that can firmly link, for example, a sales trip on May 14 to a deal that was marked "closed—won" the following month. What's more, this deal should exceed (hopefully by a lot) the costs of the trip itself.
With this data, businesses can strategically cut travel—approving only the travel that most reliably results in new or repeat business while trimming the rest.
In addition to lowering travel costs by reducing the overall number of business trips, companies can also ensure that each business trip is as inexpensive as possible.To do this, businesses need a central repository of payment data for each trip, one that can categorize each expense and help travel managers understand whether their travelers are paying too much.
Consolidate Business Travel Expenses with Grasp Technologies
Grasp Technologies is a leader in what's known as virtual payment technology, a concept that allows businesses to manage their travel expenses with unprecedented clarity. With virtual payments, companies have a fully contactless payment method for travel expenses. There’s a real advantage to this during a pandemic, but it’s far from the only advantage that these payments incur. When accountants consolidate records manually, this repetitive process can yield costly mistakes. Because these payment methods aggregate data automatically, there’s little to no chance for error.
Understanding exactly how much you're spending on travel is the first step towards optimizing travel expenses—and ensuring that travel generates ROI. For more information on how to get your business set up with virtual payments, schedule a demo with Grasp Technologies today!