From baggage fees to international roaming charges, discover how to avoid the common hidden travel costs when budgeting for business travel
If the reality of business trip expenses doesn’t match the budget, hidden travel costs could be the culprit. Flight delays and rescheduled meetings can derail your team’s travel plans, with rebooking adding unplanned expense to the original budget. Unexpected baggage fees, hotel service charges and international roaming charges can all chip away at the best-planned travel budget, leaving your department scrambling to make up the difference.
Part of corporate travel planning is understanding the little hidden fees that can catch finance admins out. The travel industry is notorious for add-on service charges, not to mention the added costs of telecommunications and taxes. In this article, we’ll give you a rundown of the most common categories of hidden travel costs to prevent any surprises. This will help you forecast your average business travel expenses more accurately, for better resource allocation.
Gone are the days when an airline ticket quote covered all costs. It’s surprisingly easy to get confused by airline baggage rules, even for seasoned corporate travel planners.
This is because airline baggage rules change frequently and aren’t always stated clearly at the time of booking. While most international flights include a free checked and cabin bag, you can’t count on it. And for domestic flights, you’ll almost certainly need to pay baggage fees for anything that doesn’t fit under the seat or in an overhead cabin.
Excess baggage fees can run between £15 and £80 or more, depending on size, so always make sure you know what’s included.
In addition to excess baggage fees, hidden airline fees sometimes include little extras like priority boarding, extra legroom seats, and in-flight Wi-Fi. Many now charge for meals and drinks. As you’re creating a business travel budget for your team, be sure to work all these little costs into the total price of airfare.
Some booking platforms charge to make your flight, hotel, and rental car reservation. While these may be incorporated into the total ticket price you’re shown, sometimes they’re added at the end as a separate charge.
The best way to avoid these hidden booking fees is by using a business travel management solution like Booking.com for Business which doesn’t charge any subscription or booking fees. In addition, companies benefit from exclusive corporate rates on flights, hotels, and car rentals. With flexible booking options, you can avoid unexpected cancellation fees as well.
Hotels make up a high percentage of average business travel expenses, so you’ll want to examine fees carefully when budgeting.
When you’re quoted a per-night cost, it may only cover the room itself. Some hotels charge additional fees for use of their onsite amenities, such as the fitness centre, spa or swimming pool.
Additional hotel service charges might include things like:
If you see ‘incidentals’ listed on a hotel invoice or receipt, this refers to those little extra amenities used during a hotel guest’s stay. That includes things like:
Notably, most companies don’t include these incidentals as a valid work travel expense, so business travellers will need to pay these hidden travel costs out of pocket. When you’re crafting a company travel policy for your team, be sure to make clear which incidentals are covered and which they will be expected to pay for.
Whether business travellers are taking park-and-ride public transport to an all-day convention or using a secure hotel garage, it will probably come at a cost. This isn’t necessarily a hidden fee, but it might come as a surprise if you assume free parking is included with accommodation.
Does the company phone package include international roaming charges? If not, your finance department could be in for an expensive phone bill. One study found that U.S. businesses pay up to $693.50 in international roaming charges, per employee, per overseas business trip. And in Europe, companies spend an estimated £2.4 billion per year on roaming costs.
Roaming charges may apply to each minute and megabyte of phone use, and with business travellers required to stay connected, this really adds up.
Wi-Fi is readily available in most public areas, including airports, train stations and hotels. It’s not always free of charge, however. Access passes in public areas could cost £10 to £15 extra per day.
When business travellers use a credit or debit card overseas, they could be charged a foreign transaction fee. This varies by card issuer and financial institution, but typically costs anywhere from 1% to 3% of the total transaction value. While that may not seem like a lot, imagine that a team member is allocated £1000 on their company card for a business trip. At a rate of 1% this would cost an additional £10 in transaction fees, and at 3% that goes up to an extra £30.
Taxes are one of those hidden travel costs that get left out of the budget. Chief among these for travellers is VAT, or value-added tax. These rates depend on the country you’re travelling in and its own tax regulations, ranging up to 20% of the total cost of food, lodging, and transit. While in most cases the company can reclaim this VAT if it was used for business trip expenses, this isn’t always the case.
Sales tax is another hidden cost that ramps up the total expenditure while travelling, added to retail goods.
Whether it’s due to weather or mechanical issues, flights get delayed, and hotel bookings cancelled. Business travel insurance is always a good idea to cover the cost of cancellations and delays, but this comes with its own added cost.
If your company has had a schedule change that requires rebooking, one thing to note is that cancellation fees vary widely by supplier. Always read the terms and conditions before booking, choosing flexible travel options where possible.
Corporate travel is big business worldwide, costing companies billions. In China, the total annual spend on business-related tourism was $372.5 billion, while the United States spent $361.6 billion and the UK $51.5 billion.
With this post-pandemic rebound effect, the travel industry is taking full advantage. Costs of flights have soared as airlines try to recoup lost profits, and demand is high. All this means that businesses need to keep an eye on travel budgets more than ever, particularly SMEs that may be working with tighter margins. Every penny counts, and all these seemingly small hidden costs add up to put strain on your budget.
Awareness of things like excess baggage charges and hotel service fees is the first step towards avoiding them. Follow our tips to reduce hidden travel costs and bring down your business trip expenses:
Business travel expenses encompass any purchases made by employees while travelling for work. As such, the biggest expenses are dependent on your team’s itinerary. When employees fly long haul in first class for a weekend event, transportation could be the biggest travel expense. For business trips closer to home, accommodation tends to be the biggest work travel expense.
Apart from flights and accommodation, additional business travel expenses to work into your financial planning include:
Read more about typical business travel expenses in our guide to mastering your travel budget.
According to research, Sunday is the most expensive day of the week to fly. This is due to all the weekend travellers headed home, increasing demand. Days before and after major holidays like Christmas and New Year’s Eve will also spike transport costs.
When forecasting business travel expenditure, factor all these extra charges into your budget to avoid costly surprises.
Flight cancellations, last-minute bookings, and hotel service charges can quickly inflate even the most meticulously planned budget. Awareness of the most common hidden costs is the first step to managing travel budgets more effectively and keep expenses from spiralling out of control.
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