Public Servant Lifestyle

According to new research, UK organisations are over spending by £1.3 billion every year on unnecessarily extravagant business trips.

Hotel chain Travelodge has revealed the astonishing results of a survey conducted among UK businesses: £1.3 billion is wasted every year on extravagant overnight domestic business trips.

With nearly half of all businesses failing to produce an official business travel policy, many employees today admit to booking what they want and, unbelievably, 88% claim not to be influenced by cost.

Stephen Alambritis, Chief Spokesman, Federation of Small Businesses, commented: "Business owners understand the importance of face-to-face meetings and consider personal contact with customers an essential part of generating new sales. But well run firms control the cost of business travel, setting budgets for both transport and accommodation. Controlling costs across the business underpins future growth and success."

A deeper analysis of the travel trends reveals booking budget accommodation, such as Travelodge, would reduce that expenditure by over £900 million.

With 84% of UK employees taking some 14 million** overnight domestic business trips each year, it's clear businesses still place a high value on face-to-face communication. Travelodge conducted this research in order to explore UK businesses' existing travel policies and highlight areas, such as accommodation, where a reduction in expenditure is both possible and beneficial.

The findings were alarming - UK businesses simply don't maintain financial control over employee business trips.

The wastage facts:

Nearly half (48%) of all organisations never set a business trip budget. This figure rises to 59% when relating to small to medium businesses

Over 40% of employees make their own individual business trip arrangements and claim that they can spend what they like on trips

An overwhelming 88% say they aren't influenced by cost

Almost a third (30%) of 18-29 year olds exploit business trips as perks

Only 12% of employees believe their organisations are interested in cost-cutting

This clear lack of control has left employees free to squander up to £1.3 billion of their employer's money every year.

UK businesses aren't helping themselves by not setting budgets and policy guidelines. For example, only one in ten (11%) companies have a policy enforcing the use of budget airlines, despite its widespread reputation today as a cost-effective means of travel. In addition, only 9% of UK employees will buy train tickets sufficiently far in advance to take advantage of APEX and Saver fares.

British businesses have least control when it comes to their employees' accommodation choices, making it the largest single drain on business travel budgets.

The biggest budget burden:

Over a third (38%) of UK businesses regularly stay in extortionately priced 4 or 5 star hotels

Only 11% of UK businesses spend less than £50 per night on accommodation

Just 18% will stay in budget accommodation

According to Guy Parsons, Sales and Marketing Director for Travelodge, "The UK economy shouldn't have to take such an unbelievable financial hit. Businesses need to set smart spend guidelines to tell their employees that booking an outrageously priced 4 or 5 star hotel just isn't necessary, particularly when all that's needed is a bed for the night. Let's face it, all hotel rooms are the same with the lights off. We Brits are typically cautious with our personal finances and we should apply that same mentality to our spend at work."

Employees know what they want: Results show that almost a fifth (23%) of employees would prefer to see the money companies can save on business trips going back into their salaries. Just under half (45%) would prefer to see the money going back into the business, emphasising that a few simple changes at a corporate level can positively benefit employees across the business.

Heed these helpful tips for organisations looking to trim their expenditure in this direction and curb those rising expenses bills!

1. Develop Your Business Travel Policy

You must explain what's acceptable when it comes to expenses during business or training trips. If you have a policy, ask yourself if you're covering the right areas and if your employees are fully aware of it. If you don't have a policy, you need to create one. You want your employees to have an acceptable level of service and comfort while away on trips within a reasonable cost to your company.

2. Content

Face to face communication is clearly still important today given 84% of UK employees regularly take overnight business trips. The business travel policy should therefore include guidelines for employees on how to organise and finance such a trip. This policy should be included in your company handbook - so all employees can access it and are aware of the situation before they travel.

Content might include:

Logistics. Set and agree a realistic budget for every trip.

Every employee should agree a budget with his or her line manager. This may sound admin-intensive but it's vital in order to reduce unnecessary over-spend.

Arrange the meeting so travel is avoided at peak times.

Appoint one person to co-ordinate all bookings. Letting individuals arrange their own business travel and accommodation is one reason why costs often spiral out of control - around 40 per cent of employees make their own arrangements today. The objective is for this person, be it a PA or office manager, to become familiar with all the best prices and providers.

Consider outsourcing business travel bookings to a third party. This is worthwhile if employees in your organisation travel extensively.

Always book as early as possible. This is a great way to get the best discounts and more effective cost management. Did you know only 9% of UK employees buy train tickets sufficiently far in advance to take advantage of APEX and Saver fares?

Book online. Make the most of reduced web-only rates.

3. Travel

Recommend operators - provide a list. Did you know only one in ten companies have a policy asking staff to use budget airlines, despite its reputation as a very cost-effective means of travel?

Travel economy, not business or first class where possible.

Think tube or bus, not taxi.

London Congestion Charging. Confirm who has responsibility for paying the charge and say it must be paid in advance or on the day to get the £8 fee. Did you know there is a surcharge of £2 if you pay after 10 pm on the day and that fines are £100, rising to £150 if not paid within 28 days?

4. Accommodation

Recommend accommodation providers - provide a list. Given the quality and central location of many budget hotels - like Travelodge - business travellers don't need to stay in a 4 or 5 star hotel. By simply switching to budget accommodation, UK businesses could collectively reduce the £1.3 billion wasted on overnight business trips by £938 million.

5. Internet/Email. When working from a hotel or home, employees shouldn't leave their laptop on permanent dial up. They should also think carefully before downloading large content.

6. Mobile phones. Even when away on business, request employees use a landline where possible.

7. Food and drinks claims. Reimburse employees for essential costs but make the point that business trips are not an excuse to spend company funds.

8. Expenses

Ask employees to submit travel expenses within a week of returning. This allows accounts to quickly process costs and plan ahead.

Check closely. It's the responsibility of the employee's line manager, or equivalent, to review all proposed trips before authorising. They must also examine the claim and ensure they've followed guidelines. Accounts Payable departments must also be vigilant when processing claims.

Guy Parsons from Travelodge concludes: "With the majority of organisations balking at the prospect of paying £250 for a domestic flight, it seems ludicrous to pay it for a hotel room. Travelodge offers clean, comfortable, centrally located accommodation and there's no compromise on quality, even though prices start from as little as £26. Booking budget would certainly address the issue of excessive spending; we calculated that if companies were to book Travelodge's £26 a night rooms, the saving among UK businesses would well exceed £900 million".

The Federation of Small Businesses is circulating Travelodge's cost-cutting guide among its members. Stephen Alambritis, Chief Spokesman, Federation Small Business, commented, "Business owners understand the importance of face-to-face meetings and consider personal contact with customers an essential part of generating new sales. But well run firms control the cost of business travel, setting budgets for both transport and accommodation. Controlling costs across the business underpins future growth and success."

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