What is the average cost of business travel?
If you’re responsible for managing corporate travel expenses, you may be wondering about the average cost of business travel. What […] The post What is the average cost of business travel? appeared first on TravelPerk.
If you’re responsible for managing corporate travel expenses, you may be wondering about the average cost of business travel. What should you expect to budget for your travel program, and how can you judge if a travel proposal is reasonable?
As you can probably guess, there’s no simple way to measure the average cost of business travel. Business travel costs can vary widely depending on where the travelers are going, and how long they’ll be away. However, there are certain factors you can consider to help give you an idea of average travel expenses.
Estimating the average cost of business travel: what is a reasonable cost for a business trip?
Average cost of business travel by region
Travel expenses are different in various regions of the world. But you may be surprised to learn which countries spend the most on business travel, and which are the most expensive for business travelers. Here’s a quick rundown of what you can expect:
Business travel costs in the US
According to World Bank data, the US is a global leader in business tourism spending, with $322.42 billion spent on business travel in 2021.
A Runzheimer report from 2019 revealed that the average US business trip cost $1293. This report showed that business trip expenses had been increasing, and that the most expensive states for business travel were Hawaii, Massachusetts, and California. Of course, costs differ significantly between international travel and domestic travel. Research from that same year collated by Expert Market showed that the average cost of a domestic trip in the US was $990, while the average for an international business trip was $2525.
The impact of the COVID-19 pandemic caused a fall in global business travel. However, demand (and prices) have increased in 2022, and the Global Business Travel Association (GBTA) projects a full recovery by 2024. So while the 2019 figures above may have changed over the past few years, they’re still a useful benchmark for understanding the average cost of business travel in the US.
Business travel costs in Europe, the Middle East, and Africa (EMEA)
Germany is the largest market for business travel in EMEA, spending $91.86 billion on this activity in 2021. In 2020, the average business traveler in Germany spent €161 per day, according to Statista.
Since the EMEA region includes dozens of countries with vastly different economies, business travel costs can vary widely within this region. Some of EMEA’s most expensive cities for business trips include Geneva, Stockholm, and Stavanger (Norway), while relatively cheaper cities include Dubai, Amsterdam, and Helsinki. Daily costs in Geneva average $547, while in Helsinki daily costs are $422, according to Expert Market. Overall, EMEA cities are some of the most expensive in the world for business travelers.
Business travel costs in the Asia Pacific Region
China is one of the biggest global players in business travel, with $230.91 billion spent on business tourism in 2021. Typical daily business travel costs within China range from around $29 to $145, according to Swift Passport Services.
Within the Asia Pacific region, some of the most expensive cities for business travel include Hong Kong, Singapore, and Sydney. Daily costs in Hong Kong average $523, while average daily costs in Singapore are $478, according to Expert Market.
A few of Asia’s cheaper cities include Kuala Lumpur, Delhi, and Tianjin (China). Daily costs in Tianjin average $242, while in Delhi daily costs are $245.
Business travel costs in the Americas (outside the US)
Outside the US, business travel costs are fairly low in the Americas. One notable exception is Caracas, Venezuela: business trips there cost $611 per day, making them some of the most expensive in the world. Acute economic crisis and hyperinflation in Venezuela over the past five years, along with security challenges in Caracas, contribute to the sky-high costs.
Other than Caracas, the most expensive cities for business travel in the Americas include Rio de Janeiro, Calgary, and Sao Paulo. Some of the cheapest cities are San Jose (Costa Rica), San Salvador, and Guatemala City. Daily costs in Rio de Janeiro average $371, while in Guatemala City daily costs are $209.
How to budget for business travel: understand and track corporate travel costs
Hopefully, you now have a better idea of the average cost of business travel in different parts of the world. But how can you apply this directly and create a realistic business trip budget for your company?
The costs of corporate travel and small business travel depend on a number of different factors. Here’s what to keep in mind when budgeting for business trips:
Types of business travel expenses
1. Accommodation: Will travelers be staying in high-end, mid-range, or budget hotels? What kind of hotel prices do you expect? Would you also consider alternative accommodation options (such as Airbnb?)
When booking accommodation, you’ll need to consider:
- Price point
- Proximity to destination
- Amenities (such as internet, printing, 24-hour reception)
- Comfort of travelers
- Privacy (will individuals have to share hotel rooms or other spaces?)
2. Transportation: How will travelers reach their destination city (plane, car, train, bus?) What should you budget for airfare, etc.? Once they’ve arrived will they need a car rental, or will they take taxis or public transit?
When deciding which types of transportation to use, consider:
- Price point
- Time spent in transit
- Commitment to sustainability goals
- Comfort and safety of travelers
- How many meals will travelers need to have?
- How expensive is food in the destination city?
- Will travelers have additional food and beverage expenses (for example, business dinners with clients?)
4. Insurance and Safety:
- Do all travelers have appropriate health insurance for the destination, or will they need temporary travel insurance?
- Does the destination carry an elevated health or safety risk that might incur additional expenses (e.g. private security, pre-trip vaccines or medications)?
- What is your policy on travel mishaps and emergencies (such as missing a flight and having to book another one last-minute?)
- Do any travelers need a visa or travel permit? What are the costs of procuring these?
6. Additional Expenses:
- Conference and other event fees
- Paid internet (e.g. on trains or in hotels)
- Roaming charges from mobile providers (if using a company phone)
If employees will be traveling internationally, don’t forget to factor in the foreign exchange rate when calculating total costs.
Ways to reduce business travel costs
As you can see, there are a lot of factors involved in planning for business travel. But if your travel booking tools (or travel management company) don’t allow for expense reports, you might not even know how much you’re currently spending, and how business travel costs are impacting the bottom line.
If you’re looking to get a better handle on your travel budget and expense management, it may be a good time to upgrade to a dedicated business travel management software. With Travelperk, you’ll have a complete overview of all your costs with our real-time reporting feature.
You can also use our dynamic budgets feature to set more accurate and realistic caps on each travel and accommodation vertical (flight costs, hotel costs, etc.) In the travel industry, prices and hotel rates can vary significantly as travel trends change throughout the year — this tool is designed to help travelers get the best deal they can in any given time period.
Certain countries allow travelers to reclaim the Value Added Tax (VAT) paid on purchases made during a trip. While recovering VAT manually often involves complex and time-consuming paperwork, you can simplify the process using TravelPerk’s VAT solution. And you’ll only pay for TravelPerk on a per-trip basis, so you won’t have to worry about subscription fees when you’re not using the service.
Other ways to reduce business travel costs and improve your expense management include making sure you have the right travel policies in place, and tightening up your business travel approval process. Fortunately, business travel spending tends to offer a great ROI: an Oxford Economics study showed that companies enjoyed a $12.50 return for every dollar invested.