How Rising Gas Prices Impact Business Travel and What You Can Do About It

Companies can optimize their hotel spend to make their travel budgets go further.
By Audrey Fairbrother
June 1, 2022

Gas prices have more than doubled in the past two years, which impacts business and leisure travel. While price often influences consumers’ travel decisions irrespective of the economic climate, during inflationary times, businesses approach travel more strategically, prioritizing investments based on their expected business impact.

However, most organizations don’t understand their company’s travel spend at a granular level because the details are trapped in various systems, such as the consumer travel sites used for booking. Since reconciling that information is so difficult, companies may understand the total dollars spent on hotels during a calendar or fiscal year, but not the details, such as who traveled the most or which properties were booked most often.

Especially when inflation rises, businesses become concerned about the value received for dollars spent.

Following are some tips companies can use to optimize their hotel spend to make their travel budget go further.

Business travel is returning, so now is the time to get ahead of spend allocation

When gas prices rise, so does hotel and other travel-related pricing. In response, organizations may limit who can travel, where, for how long and for what purpose. Though a lot of business has been transacted online since the COVID-19 pandemic hit, in-person meetings are becoming more common again, and there’s an entire universe of businesses working in the field, such as construction companies, that need to book hotel nights for crew members so the job can be completed on time and on budget.

According to Deloitte, while the amount of business travel is increasing, it isn’t expected to return to 2019 levels throughout 2022. Travel managers and teams can use the extra time to explore their options for the best pricing.

A pure cost-cutting strategy is probably unwise

While it’s always prudent for companies to manage their costs effectively, some cost-cutting measures can backfire, such as requiring employees to stay at lower-cost hotels or motels. The problem with that approach is that people tend to prefer staying in a hotel that is on par with or better than their personal living environment. Moreover, downgrading employees from three-star hotels to two-star or one-star properties conveys a lack of concern for employees’ welfare. The same is true for lowering per diems.

A better approach is to use a centralized system that consolidates all the necessary data from various lodging providers and provides insights into travel spend so businesses can make informed decisions about how to optimize it.

Regional travel can replace national or international travel

Business travel fell sharply during 2020 and 2021 as commercial buildings sat unused and white-collar employees worked from home. In a remote work setting, employees can usually work from anywhere they choose, assuming their productivity and availability warrant it.

During the pandemic, many organizations have hired new employees who aren’t located anywhere near a corporate office, and, as a result, there may be clusters of employees living relatively near each other, such as in Phoenix, Scottsdale and Sedona, Arizona. Some companies have started hosting regional get togethers versus national or international ones to reduce travel costs.

In fact, companies can send employees from various regions to local job sites and conferences, which is enabling many organizations to have a wider national presence.

Business travel can be transformed into a perk

Many employees would happily combine a business trip with leisure to explore a destination or to visit friends and family. Some companies are happy to let their employees extend their stays so long as the employee reimburses the company for expenses that fall outside the business trip, such as staying an extra day at a hotel used for business travel or keeping a rental car a few extra days. According to the 2022 Global Business Travel Association’s business travel index (BTI), global business travel in 2022 will top $1 trillion, which is still shy of 2019 at $1.41 trillion. Full recovery isn’t expected until 2024.

“Bleisure” is a win-win HR strategy because the company can offer bleisure travel as a “perk” without incurring any out-of-pocket costs. Employees like the idea because they have the freedom to enjoy a location without paying for a flight.

Another business benefit is that when employees extend a stay, they tend to travel to or from the location on a personal time off or vacation day. However, if the trip is strictly business, employees tend to travel on business days.

Avoid popular travel sites that offer consumer-level discounts

Most Americans know how to book travel online using a popular site like Travelocity or While those types of websites are easy to use, they don’t provide the kinds of volume discounts that large businesses can often negotiate themselves.

Small-to-medium businesses tend to lack the travel volume they need to negotiate the same deep discounts that larger companies enjoy, so they often turn to consumer travel sites for convenience. Irrespective of volume or company size, businesses often struggle to optimize their lodging expenses because the data they need to achieve that is siloed in the individual consumer travel platforms.

B2B lodging performance networks, like Hotel Engine, provide deeper discounts than consumer travel sites because their audience—businesses—book more travel than individual people do.

Moreover, that buying power is aggregated, so the discounts apply to all travelers using the network, not just the largest companies. Another benefit is centralized reporting of all business travel so businesses can better understand the trends, such as total number of bookings, total booking costs, most frequently used hotel chains and the most frequent travelers in the company—the kind of data companies need to optimize their travel spend.

Bottom line

The last two years have been a great departure from “business as usual” given health and travel concerns. However, business travel is returning out of necessity. Now is the perfect time to explore alternatives, particularly those which simplify and lower the cost of travel.

by Audrey Fairbrother

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