From solo vacations to group rewards, corporate travel incentives show people they're valued. Corporate travel programs can be a reward for employees, vendors and loyal customers. But how do you plan ahead for the cost of these travel incentives? Having a strategy from the start is important.
Different Types of Corporate Travel Incentives
Corporate travel incentives don't need to cost a lot of money. Rather, the majority of financial concerns center on predictability. For business purposes, you need to know how much corporate travel incentives are going to cost. And this can be a more complicated question than it seems. For a start, corporate travel incentives can comprise a significant number of things:
● Group trips associated with employee performance. These are often company run events that also include training and culture refreshers. There may also be costs associated with housing and feeding employees, as well as keeping them entertained. Group trips can be as short as a day or much longer.
● Individual airline tickets, cruises, excursions or events. These rewards usually go to exemplary employees who have performed very well. Departments may also receive them as a reward for solid group performance. Either way, it's usually not a company event but a recreational activity.
● Per diem spending or flight upgrades. Many employees may also experience corporate travel incentives through better business travel. The best sales people will get higher per diem spending and better flying standards.
Most corporate travel incentives target employees and serve as a way to get them to perform their best. A broad spectrum incentive program may include all the above types of travel incentives. These programs can take advantage of the bundles a travel company can provide.
The True Cost of Corporate Travel Incentives
Why is it difficult to narrow down the cost of corporate travel? There are a few factors that can make it challenging:
● Flexible spending amounts. When it comes to out of pocket expenses and employee spending, it can be difficult to drill down to the actual amount. You can't always predict exactly how much an employee will spend, but you can come close.
● Unpredictable travel costs. Travel costs vary depending on demand, time, and other unpredictable factors. Securing travel costs early through incentive programs can somewhat mitigate this.
● Additional, associated expenses. Corporate events often have associated costs that will depend on both budget and goals. A corporate cruise may need to decide on refreshments, entertainment, and other elements. Planning for these should take into account the company's current performance.
None of this means that it's impossible to narrow down spending amounts. It's simply more of a challenge to do so than with many other expense line items.
A Step-by-Step Guide for Calculating Corporate Travel Incentives
Begin with your prior year expense sheet. Don't begin with the budget for the last year, but instead focus on your actual expenses.
Identify changes to your corporate travel program. Are you giving out more incentives this year? Are your employees traveling for business more often? Are different departments performing better?
Compare like-kind expenses. If employee per diem spending was about $2,000 total per employee and there are four more employees, $8,000 more would be a solid rough estimate.
Get quotes early when applicable. Travel incentive companies can give you an excellent ballpark figure regarding cruises and other company trips. Don't assume they will be the same cost as the prior year, especially if any changes are happening, such as the date.
Always leave a buffer in the budget. For example, incidentals can often cost up to 10% of the overall budget.
It's challenging to budget for anything to do with travel. Luckily, as your corporate travel incentives become more advanced, your organization will get a better feel for their true cost. There will always be some variance in a travel program. Planning ahead of time will make sure that it isn't too expensive.