Cost is so important when it comes to restarting business travel
The driving force behind the grounding of business travellers following the Covid-19 outbreak was safety. Individuals, their families, employers and countries rightly prioritised business travellers’ health over economic interests and closed borders and enforced travel bans in an attempt to limit the impact of the pandemic at home and abroad.
And, so we have remained grounded – bar the most essential of trips – for the last six months. The health and safety of business travellers remains the principal reason behind the drop in trips. The $64 million question now is when will it return and what will it look like when it does?
In July, a survey of more than 2,000 GBTA members revealed that 44% expected domestic business travel within the US to resume by the fall, but 15% said they simply didn’t know. Phocuswright’s senior vice-president of research Charuta Fadnis agrees that it’s anyone’s guess.
“We’re all struggling to understand how quickly travel will recover, because there’s just no precedent to something like the coronavirus pandemic. Recovery from past events like 9/11 or the global financial crisis generally took two to three years, but these events did not entail the same months-long shutdown of virtually all global travel. Health concerns were not an issue in either event, making it even harder to predict how soon fliers may feel comfortable.”
The truth is no one really knows when business travel will return to pre-pandemic levels – the industry group IATA has forecast it’s unlikely to be before 2024, but there appears to be widespread agreement that it won’t happen until it’s legal (border restrictions are lifted), convenient (removal of quarantines) and, of course, safe for travellers.
In parallel, the global economy is also taking a battering. In June The International Monetary Fund (IMF) predicted it will take a $12tn (€10.5tn) hit from the Covid-19 pandemic and two years for world output to return to levels at the end of 2019. However, the Organization for Economic Co-operation and Development (OECD), has since revised these forecasts expecting global economic output to contract by 4.5% in 2020, less than the previous June forecast of 6.0%.
The impact this will have on the great business travel reset is not to be underestimated. While reports have shown that around half of business travellers are keen to switch off Zoom and Microsoft Teams and get back on the road, meeting colleagues, clients and new business prospects face to face (one survey from Business Traveller found that companies still see these meetings as “essential” to meeting business objectives and Apple founder Steve Jobs famously said, “Creativity comes from spontaneous meetings, from random discussions.”), many companies will be under pressure to manage travel while simultaneously cutting costs.
As we mentioned in last month’s newsletter, travel restrictions may be driven predominantly by health and safety factors, but cost is also a factor as many organisations battle to reduce overheads and limit the economic damage of the pandemic.
Traveldoo provides organisations with several features to help control their travel expense budgets:
- Budgeting your cost centres – this allows you to understand where you are spending and to evaluate the profitability of your expenses. A cost centre is simply a category to which expenses are collected, assigned and reported for accounting purposes. In many cases, cost centres reflect a company’s departments, but you can also classify your expenses according to projects, global footprint, entities and company objectives, but every spending must be assigned to a cost centre.
- At Traveldoo, you also have the ability to assign a budget to a cost centre and to block expenses when the budget cap is reached. That allows you to monitor your budget closely and make appropriate adjustments if you notice – for example – that your annual budget for training expenses was been spent in the first three months of the year. It also encourages managers to use their budget efficiently and mindfully as to whether each business trip or expense is absolutely necessary.
- Allocating your expenses to the right cost centre – we mentioned above that all expenses must be allocated to a cost centre, but it’s equally important that they are assigned to the correct cost centre. If your travel or expense is multipurpose, choosing the right cost centre may not appear straightforward. The good news is the Traveldoo tool allows you to divide your expense amount into several cost centres.
- Sharing Trip Budget. With Traveldoo’s booking tool, colleagues’ bookings appear with the search results when you activate “Trip Sharing”. Group bookings instantly become easier and more efficient. Users can make cost savings and reduce environmental impact by sharing taxis or car journeys. This is a perfect example of why – and how – you can split an expense to different cost centres.
- Reinforcing approval workflows. Approvals must not be forgotten – especially in the current climate, when pre-trip approval is more important than ever, and companies are focused on cost-savings. Using the Traveldoo too, you can set up an approval workflow should an expense be higher than the pre-agreed cost.