A recent report by Corporate Traveller titled "2024: The Year SME Travel Comes of Age" reveals the necessity for a substantial increase of at least 20% in corporate budgets.
Bonnie Smith, general manager at Corporate Traveller, notes that although the expenses related to business travel and events are not experiencing the same steep incline as seen in 2022, they are steadily moving upwards.
Factors such as fuel costs, sustainability initiatives, and fleet upgrades will continue to affect airlines, leading to projected fare increases ranging between 3% and 7% in 2024.
Additionally, hotels are expected to implement rate hikes of 3% to 8%, as indicated by research conducted by Corporate Traveller's sister company, FCM.
Despite projections showing a decrease in interest rates and inflation from 6.8% in 2023 to 5.2% in 2024, businesses are advised to prepare for moderate increases in their corporate travel programmes.
Smith emphasises that South African businesses remain susceptible to currency fluctuations, “Travel budgets will need to account for currency fluctuations, airline tickets – both locally and globally – and even food and beverage increases.”
The trend extends beyond South Africa, with a Global Business Travel Association Outlook Poll revealing that nearly three-quarters of buyers anticipate either an increase or no change in their travel budgets for the year. Most respondents also believe that economic issues will not hinder business travel at their companies.
To justify these budget increases, the report suggests reframing travel as an investment rather than an expense.
Business travel plays a crucial role in market expansion, client and supplier relationship maintenance, and negotiation for profitable terms.
“The key is to then relook business travel as you would any other investment -- to put the money where you’re most likely to see the returns you want. Maximising the return on a travel budget is to prevent low-value trips and invest in high-value trips,” Smith added.
This can be achieved by tightening travel policies, implementing clear approval processes, and collaborating with a Travel Management Company (TMC) to leverage cost-saving strategies.
Here are five tips to maximise the ROI on travel spend:
- Define clear goals for each trip aligned with business objectives.
- Implement and enforce a travel policy with approval workflows.
- Utilise preferred supplier rates and corporate discounts through a TMC.
- Encourage traveller responsibility and accountability.
- Monitor travel spend before, during, and after trips to inform future decisions.