How to Cut Travel Expenses and Make Your Employees Happy About It

If business travel has become a zero-sum game at your company, you’re not alone. Travel is usually a company’s second or third largest expense, after payroll and perhaps rent, which means travel managers are often under intense pressure to reduce costs.

However, if you impose tough travel policies and cost restrictions, they will likely backfire. Business travelers will resent the red tape, max out their budgets, and grow bitter. 

This catch-22 is completely avoidable. In fact, cutting travel expenses can actually improve morale, rather than cause friction, if you reward employees for saving.

Here are six steps you can take to build a travel culture that motivates employees to cut costs:

1. Address the Elephant in the Room

If business travel is a source of friction at your company, everyone knows it. Rather than let employees stew over travel costs, you should talk about it. 

In a small company, you might host a meeting about travel, announce that you plan to transform the entire system, and ask for direct feedback on your current approach. In a larger company, you could ask department or team leaders to do the same and report back, or you could issue a survey (less personal, but more efficient).

The key is to make employees feel like they have a say in the cultural change you’re trying to bring about.

2. Focus on the End and the Means

In my experience helping companies with travel management, cutting costs by 20-30 percent within six months is realistic. To accrue savings quickly, expand the booking options available to employees. 

For instance, let employees take advantage of the sharing economy. Airbnb usually has options below the hotel rate that are just as comfortable and convenient, and Uber almost always costs less than a taxi or black car.  

Think beyond the usual airlines or hotel chains your travel policy currently pushes. What if your employees could stay with friends and family? What if they could book the cheapest flights on their favorite booking sites? What if they booked 20 days in advance instead of five? 

3. Reward Saving

Boost morale and incentivize savings by offering employees a percentage of the money they save. For example, let’s say a fight from Dallas to New York costs an average of $350. However, there are flights available for $200 on a budget airline. If you split the savings in half — as in, the employee would receive $75 for choosing the $200 flight — saving would become an attractive option. In fact, if you make that half-and-half deal across all travel expenses (flights, hotels, rental cars, etc.), then employees will save aggressively. The more employees save on a given trip, the more they should get back in rewards. 

4. Get the Executives to Participate

A rewards-based travel system is doomed if you use the savings of rank-and-file employees to subsidize first-class cabins and five-star hotels for executives. The people at the VP level and above must lead the effort. I know CEOs that book on Airbnb, buy groceries, and invite their team members over for homemade dinners. These gestures not only deepen team bonds, but also build respect for company leadership and the new travel system. 

5. Shout Out and Celebrate 

Acknowledge the individuals and teams that save the most on travel. You could put a leader board in a common area or send monthly emails recognizing the top savers. Many travel managers add a fun perk for big savers, like a free team dinner, golf outing, or tickets to a sporting event. 

Company leaders in particular can help celebrate the savings. The best example I know is a group of executives who pool all their travel savings and donate the total to the American Cancer Society at the end of the year. It’s a good deed, and it motivates everyone in their company to save.

6. The Cheapest Travel Option Isn’t Necessarily the Best Option

To lower travel expenses while still improving employee morale, put employees before savings. If you only reward the cheapest options, employees will grow tired of the connecting flights, red-eye travel, and dingy hotels. The idea is to find a balance: determine what a trip should cost, then reward savings below that mean cost. If employees start sacrificing comfort, morale will falter.

So, reward employees for saving, but let them determine how they will arrive under budget. This will transform business travel from a zero-sum game into a win-win for all.