What is T&E in 2019?
Travel and expense can be one of the most complicated parts of business accounting. Understanding what can be deductible (and under what circumstances) is a challenge, especially when the way people travel, their options for tele-connecting, and what level of contact is necessary to do business changes all the time.
In this article, we're going to break down T&E in 2019 and how the latest trends may impact your business. We will discuss some of the challenges you may face managing travel expenses and explore the business implications that T&E presents.
What is T&E?
T&E stands for "travel and expense." It is a very small abbreviation for a concept that encompasses around 10% of company budgets on average and impacts your firm's ability to close sales and make deals. T&E can be hard to control, difficult to track, and impossible to cut for long.
Problems in Managing Travel Expenses
Cutting T&E costs will limit your ability to effectively work within your industry as business travel is a necessary part of doing business. Managing these costs effectively is becoming more and more of a challenge as workers demand more and the IRS allows you to deduct less. Let's look at some of the travel expense challenges your company may be facing and the trends surrounding those issues.
1. Business vs Leisure
The line between business and leisure -- "bleisure" -- is blurring as the expectations of today's workers change with the times. Millennials and Generation Z people have worked to shift perceptions and combine business with leisure as a way of being less stressed and more focused on each element of their lives. As those ideas have taken hold, workers of all generations are beginning to expect this leniency. Business travel policies that reflect this trend can improve employee satisfaction. A 2018 Hilton Hotels survey found that 75% of people say that travel is a major work perk and 39% would not work at a company that did not offer travel benefits. Further, around 56% of respondents say that they create reasons to travel and 80% are more excited about their position after traveling for the company.
However, bleisure creates unique challenges in tracking expenses. Determining what is a reasonable business expense and what is an employee perk can take some effort or smart automation.
2. Self-Booking vs Company Booking
Many travelers also want self-booking. They want to be able to choose the airlines, select their seats, pick the hotel, and so on. The reasons for this preference are varied -- some people want to rack up points to use later, others just like a certain section of town better than others -- but that doesn't make the demand for more autonomy in business travel any less real. Flexibility is one of the top trends in 2019 and it will only grow going forward because there are more choices available every day.
3. Travel Options vs Limited Choices
From lodging to transportation, today's travelers have more options than ever before. That difference might be a huge benefit when one of your employees is trying to catch a taxi and realizes that Uber is just a click away, but it creates a unique challenge for your company. Some of your employees may prefer staying in a home-like environment and want to use AirBnB or VRBO instead of your company's chosen hotel program.
Some hotels even offer day rates. Most lodging options will not allow check-in until the late afternoon, and that isn't always convenient when you are traveling for business. Day rates fill in that space from check-out to check-in. This involves booking one of your employees in a room for a few hours to give them time to rest after traveling, freshen up, rehearse the pitch, or take a power nap before a meeting.
4. Sustainable Preferences vs Cost-First Philosophies
Sustainability also comes into play. While you as a company may opt for more environmentally-friendly travel options, you may also find that your employees have strong preferences. According to research by Booking, roughly 55% of travelers prefer to sustainable travel options and over 70% of people believe that making eco-friendly choices now is best for future generations.
5. Stopovers vs Layovers
Another change that you can expect to see is the end of layovers and the rise of stopovers. Layovers are the time spent waiting for connecting flights. Often, this time is spent (aka "wasted") hanging out in the airport terminal. Work options are limited, either by the strength of the Internet signal or the security thereof so the time is often idle and stressful. As such, many travelers are opting to have stopovers instead.
Stopovers are essentially overnight layovers. For an additional fee, airlines will let your employees to take their connecting flights a day later, allowing them the opportunity to explore the cities of their connecting flights en route to their ultimate destinations.
One of the biggest problems with so many options for accommodations and pricing is that they take time to navigate. Thanks to dynamic pricing and the wide array of providers, pricing can vary considerably depending on when you check, where you look, and when your company actually receives the bill thanks to the timing of currency conversions. Some companies are turning to cryptocurrency to book travel, especially where foreign destinations are concerned, but that strategy doesn't address the sheer waste of time that unorganized travel arrangements cause.
"Planning business travel is like shopping online before Amazon.com," says Jason Wynn, Chief Commercial Officer of Upside Business Travel. "Employees waste time searching across a host of sites to find the best prices and convenient options." Point in fact, a survey from KDS found that 68% of people spend 30 minutes or more researching travel options and making arrangements -- that's time they could have spent working. To be effective, Wynn explains, business "travel needs a customer-first total trip solution, and technology is the only way we will get there."
Managing Travel and Expense
Technology-oriented tools can help you book and manage business travel expenses so that you spend less time making arrangements and researching options. The right system will allow you to set parameters for your employees' travel-related expenditures and approve requests automatically or on-the-go so that nothing slows your people down. Make your business travel expense management easy by choosing a T&E solution like Upside Business Travel that benefits both managers as well as employees.
How does your company keep up with the latest in T&E trends? We want to know! Comment below with your experiences and thoughts.