Companies that incentivize business travelers to book less expensive trips can increase policy compliance and save the company money — a win-win-win for corporate travel, finance, and employees.
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Average airfares have increased by more than 25 percent compared to 2021 and more than 6 percent compared to 2019, and rates for all types of accommodations are up significantly over 2019 as well. As a result, companies are more closely scrutinizing travel costs and need to align travel planning, payments, and expense reporting while concurrently encouraging employee compliance.
New technology has provided numerous opportunities for corporate travel and finance departments to enable more efficient trip planning, simplify payments, and streamline expenses. The most effective strategies involve the travelers themselves, which is why employee rewards have become an important mechanism for companies to save money and achieve real ROI on business travel.
Dive deep into a data-driven analysis of how technology is influencing corporate travel trends in the new research report from Skift and TravelBank, “Essential Software for the New Era of Corporate Travel.”
How Corporate Travel Rewards Programs Work
New corporate travel policies shouldn’t foster an adversarial relationship between corporate travel, finance, and employees.
That’s why employee rewards programs that offer gift cards, prizes, or other incentives to business travelers who meet specified company goals around travel can play an important role. According to Skift and TravelBank research, 26 percent of companies have adopted employee rewards programs, and another 35 percent said they were planning to put such a program in place during the next year.
Corporate incentive programs are proven, highly effective ways to bring down costs and improve ROI for business travel, while giving employees the opportunity to gain personally and feel like they are contributing to the company’s well-being.
For example, a company could offer its employees 50 percent of what the traveler saves against the budget limit. If travelers are typically allowed up to $300 for a hotel room within policy, and they spend $200, they’d earn $50, or half of the $100 they “saved.” And the company still spends $50 less than it would have if the employee booked up to the maximum allotted budget.
According to Jennifer Leshkevich, a producer with Jumpcut, her company saved an average of about $126 per booking, or 16 percent, when they enabled employee rewards.
“Driving a culture of savings with a carrot, not a stick, will give your employees a better business travel experience,” said Duke Chung, CEO and co-founder at TravelBank. “Using a rewards program can align your employees and finance teams when it comes to using your business travel investment wisely.”
Getting Employees to Buy In Using Behavioral Science
When incentivized, business travelers are more likely to choose a less expensive travel option, book travel earlier, search outside their favorite loyalty programs, and select exclusive deals when they can earn rewards.
The promise of money back seems like a pretty easy choice for employees. But even when the benefits are clear, change management always accompanies policy updates. For example, business travelers may enjoy the ability to earn loyalty points for airlines and hotels, and may not be so quick to choose the most cost-effective option if their preferred travel provider is in policy and within budget. A travel rewards program may not supersede the value of the potential miles or hotel points.
In other words, it can be about the money, but it’s not only about the money. Every organization — and every employee — is unique, and there’s not a one-size-fits-all solution to reach a critical mass of compliance.
So before companies roll out employee rewards, they should consider behavioral science to better understand their employees and provide them with the best options that will push them to the desired outcomes.
Employees don’t all have the same motivating factors, and therefore companies shouldn’t settle on a single type of reward. However they come by it — by surveying employees, or looking at booking and spending habits, for example — using data to understand what their business travelers are mostly likely to do can drive the success of a rewards program, and ultimately achieve the best outcomes for corporate travel and finance.
One option might be to combine employee rewards with virtual cards, which allow companies to issue credit cards with customized spending limits. Since reimbursement can be a pain for administrators and employees alike, many travelers will welcome the added convenience. The ability for employees to actually earn money without any impact on their own bank accounts while helping the company save money is likely to settle many concerns. That ease of use, combined with the savings, hits the sweet spot.
“We’ve seen employees jump on board [with virtual cards] because they’re not fronting their own money,” said Tory Passons, vice president of commercial card partnerships, U.S. Bank.
Gamification could work too. For instance, using the TravelBank platform, a company can display the average spend for a hotel room at the top of the search results. This gives employees a benchmark for what their colleagues have chosen to spend, jointly providing some pressure to stick closer to that price, as well as some motivation to compete and “beat” the lower price.
“Outside-the-box” incentives won’t necessarily be the right fit for every company, which speaks to the importance of using employee data to understand fully what will best encourage ideal behaviors. However, the examples illustrate that a program helping employees clearly understand their role in achieving important company financial targets can be a useful tool as an option alongside wider, traditional expense management controls.
“By incentivizing employees to spend company money more wisely, everyone wins,” said Chung.
For more information about software for the new era of corporate travel, download the recent research report from TravelBank and Skift.