How can planning business travel budgets in advance help them go further in the new financial year?
The new financial year is almost upon us – and there’s mounting pressure on travel managers to cut spending in 2024, according to Business Travel News Europe.
With global business travel spending expected to surpass 2019 levels in 2024, two years sooner than forecast, according to the GBTA’s Business Travel Index Outlook, cost remains a central conversation when planning travel budgets.
Can planning ahead deliver both cost savings and added value?
Reed & Mackay saw that clients were increasingly booking air travel further in advance in 2023 compared to 2022. In-house data shows a 5.9% increase in clients booking air travel more than 14+ days in advance in 2023, compared to 2022, and an almost 5% drop in booking trips 0-2 days before flying.
Furthermore, according to our latest data showcasing significant trends across the legal industry’s travel bookings, the median lead time for international bookings reached its highest point in Q3 2023, standing at 53 days. This data aligns with the industry’s commitment to securing cost savings via advanced planning.
Find the best air fares
The OAG expects a ‘continuation of the status quo in flight prices, with minor fluctuations’. This forecast is one Reed & Mackay Learning Specialist Global Fares Jo Shilling agrees with.
“Air fares should be settling down in 2024,” Shilling says. “The increases we saw coming into this year came from the huge increase in the cost of fuel. The increase in fares between 2019 and 2023 was 16% and that’s unlikely to happen again.”
So, with this more positive outlook on fares, why should travel managers still consider planning their business travel budgets in advance? Shilling points out that booking flights for corporate travel further ahead can deliver added value and drive business efficiency.
“While airlines’ advance purchase fares don’t have the same flexibility as regular corporate fares, they can offer huge savings. And you can book 11 months in advance for most airlines,” she says. “So if an organisation is booking for conferences or meetings where dates are set, it makes real sense to book in advance. Not only will it save on costs, it takes the worry out of whether you’ll get the flights you want at the right time to make those conferences and meetings, within your budget. Additionally, it’s easier to book travellers’ preferred seats.”
Furthermore, careful planning means if your organisation’s travellers have a surprise meeting to attend that requires travel, there could be spare money in the budget to cover those eventualities.
Shilling further advises how planning business travel budgets ahead can help with trip-batching; combining several meetings into one trip. The added value? Trip-batching can not only help with costs, it’s the more sustainable choice of travel. And it can be effective for traveller wellbeing.
Find the best hotel rates
Last year, hotel prices, particularly in major cities, soared. And, hoteliers and analysts project corporate hotel rates to be higher than those of 2023, an analysis most buyer respondents of BTN’s Annual Hotel Survey expect too. This is partly due to that there’s been no sign of slowdown in demand for travel, according to figures from hotel data specialist STR.
However, while hotel price increases are starting to slow down compared to 2022, says Reed & Mackay Global Programme Manager, Commercial, Slavka Gindeva, there’s still a lot of pressure on those rates. “Inflation partly drives this. Then hotels have higher salaries and energy costs to pay, some of which pass on to the traveller. Plus there’s high interest rates and leisure demand is still strong,” she says.
“They’re also affected by the availability of accommodation. Where new hotels would usually have been built, this trend has stagnated over last couple of years. So there’s not as much inventory. Plus, some cities, such as New York and Florence, have changed their rules around AirBnb short stays. That means more demand on hotels from the leisure market.”
All valid reasons for travel managers to start planning and booking ahead for accommodation their travellers require in 2024. There’s also a better chance to obtain corporate rates rather than waiting to book closer to the date of travel.
Demand for accommodation
“Until COVID-19, the majority of corporate rates with hotels were LRA. This means, until the last room sells, the hotels were obliged to provide a room for client at the agreed corporate rate. Fewer hotels offer this now,” Gindeva explains.
“Every hotel has its own revenue management system, managed by more sophisticated AI systems. So the decisions behind rates are data driven. If a hotel reaches a certain occupancy level, the systems can close availability and it’s harder to get corporate rates. We encourage booking at least a couple of weeks before a business trip, to avoid the risk of unavailability.”
Demand for accommodation is also affected by several other factors. As the events industry is expected to experience significant growth from now until 2028, hotels will be in high demand. So another legitimate reason to plan ahead and find the best rates for your organisation.
Then there are major events taking place in cities across the world to take into consideration when planning business travel budgets. These inevitably drive up hotel prices and availability. With the Paris 2024 Olympics Games, for example, Gindeva advises avoiding business travel that requires accommodation in the French capital during July and August. If you must go, consider staying outside the city – but book now.
And, with the rise of bleisure travel showing no signs of slowing down, there’s even more demand for hotel rooms. Plus, hybrid working is prevalent across many organisations. This generates an increase in the need for external meetings to bring workforces together. Generally, with working-from-home days likely to be either side of the weekend, Tuesdays and Wednesdays continue to be the busiest times for booking hotels. That’s for both accommodation and their meeting space. So it’s worth considering booking outside those days to gain added value.
“If companies can plan employees’ travel further in advance, they should,” Gindeva advises. “It’s the best way to get corporate rates that suit your budget.”
Mail hello@reedandmackay.com to discuss all of your travel and event management needs.
