- March 07, 2017
Working out how and where to allocate travel budget can be tricky. Under-allocate and you’ll either have grumpy travellers staying in substandard accommodation or travellers going rogue and breaking the budget.
Over-allocate and you’ll find yourself facing some tough questions around cost controls.
If you find getting travellers to stay within budget difficult, you’re not alone. In a recent survey of senior travel buyers, nearly 50% cited trying to improve travel policy compliance and getting travellers to stick to travel budgets as one of their biggest challenges.
Travel budgets need to be realistic – otherwise travellers will struggle to stick to them. In other words, if the average accommodation cost in a city is higher than their budget for the night, it will be harder for travellers to find somewhere to stay within budget.
So what makes for a fair budget – one that’ll keep both travellers and travel managers happy.
What is a good budget to set for accommodation?
According to our survey, 65.2% of respondents have an average hotel budget of €100+, with 23.9% allowing €150+ per night. Is this enough? Or too much?
The honest answer is it depends on the location. According to Business Travel News, average hotel costs in the US were $172.80 in 2016. But this peaked at $370.78 in San Francisco, $344.18 in Boston and $327.63 in New York. At the other end of the scale, it was only $114.59 in Tucson, Arizona.
The picture in the rest of the world is similar, with an average of $178. Caracas, London and Riyadh top the list at $510, $323 and $322 respectively. At the bottom of the list, Buenos Aires comes in at $91 a night.
At current exchange rates, $178 is approximately €168, which is higher than the average hotel budget for 76.1% of our survey respondents. With this in mind, is it any surprise that travellers are breaking their budget?
How can you increase travel budget compliance?
Now, if increasing budgets across the board isn’t going to happen, then it’s time for travel managers to get smart to ensure travellers comply with budgets.
Start by auditing your current accommodation budgets. Find out the locations where people are typically sticking to the limit and where they’re going overboard.
For cities where your travellers are consistently coming in under budget, consider reducing the budget. This will help you keep spend in this city in the green, by reducing the spend of those travellers who are spending over the new budget.
For cities where your travellers are breaking the budget, compare what is being spent to the average cost of a hotel room for the city. If your budget is well below the city average, then it’s probably time to increase the allowance.
As well, sharing the current budget allowance to employees, including any city specific rates, is essential if they’re going to stick to the limit. While this information will be part of your travel policy, communicating this in a way that engages people is vital if the information is going to stick.
Review Your Guidance on Booking Accommodation
Alongside your audit, consider your guidance on the booking process. Does it have to be booked with a certain chain? Do travellers have to use to a specific system? While these limits can keep things easy to manage, it can put the cost of travel by limiting the choice. Having better accommodation coverage will help you and your travellers find places that are suitable and within budget. By using a system that allows more choice and has more accommodation, a hotel near to the destination of travel can be found at a lower cost.
Booking.com for Business can deliver great accommodation coverage (more than 1 million hotels), giving you a better choice of location and amenities to you and your travellers. It works both through Booking.com for Business and as an integration with your existing online booking engine.