Business Travelers Increasingly Pick Up Own Tabs
On nearly every trip DaWane Wanek takes for work, he finds himself reaching into his pocket to pay for something that he can't — or won't — charge his employer.
Sometimes it's a generous tip for a particularly good waiter. Other times, it's a cab ride when he could have taken a free shuttle. If the USB key he uses to get on the Internet is too slow, he'll pay for the hotel's faster Wi-Fi and forgo a reimbursement because he considers it double-dipping.
"I'm never going to get hung up on $30, $40 or $50," he says. "It adds up, but that's my choice. … I'm making the choice for quality of life."
The days of martini-guzzling Mad Men on unlimited expense accounts have long gone. For the last few years, companies have been reluctant to even let their employees travel for work. Now, they're unleashing them again, but reining in their expense accounts.
Many business travelers say they've gotten used to spending their own money on the road. At times, it's voluntary. If they go over budget, whether by chance or by choice, they take care of it themselves. Other times, the companies refuse to cover all their costs.
"Companies are focusing on getting the value out of their trips," says Joe Bates, senior director of research at the Global Business Travel Association, made up of business travel managers and planners. "They want to make sure their travelers are being mindful of the amount they're spending to watch the bottom line.
"When I talk to travel managers, they're wringing their hands, saying, 'We try to balance the needs of the traveler — keeping them healthy and happy and well-fed and content — and also the needs of the company.' "
According to a recent Global Business Travel Association study, the number of business trips taken in 2011 dropped 22.7% from the decade before to 445 million. The average amount that business travelers spent on a trip was $564 in 2011, up from $422 in 2000. Inflation accounted for 64% of that increase, the study says.
Travel managers say trips have gotten more expensive. In particular, they point to rising airfares and new airline fees, such as those for checking bags. With the advance of technology, other new costs have popped up. For instance, should a company reimburse an employee for Wi-Fi on a plane when the flight was too short to get much work done?
Fewer Upscale Perks
Travel perks are now few and far between. Flying first or business class became a reward rather than a right during the height of the recession. Now, upscale dining and hotel stays are more frowned upon.
According to American Express Business Insights, small-business employees were more likely to shun fine-dining establishments and luxury hotels for quick meals and economy lodging last year. They spent 6.4% more on quick-service dining in 2011 than the previous year and nearly 30% more on economy lodging. At the same time, spending on fine dining and luxury hotels increased less than 1% and 1.9%, respectively.
Joel Wartgow, senior director of CWT Solutions Group for the Americas, which does corporate travel consulting, says he sees more business travelers making the choice to pay for their own upgrades or perks. "Travelers have to make a decision: Are they comfortable paying for that on their own, or (do they) accept the policy?"
Two-thirds of travel managers have established per-diem allowances for meals and incidentals, according to the Global Business Travel Association. There's no data available showing how many business travelers exceed their per diems. But many road warriors acknowledge doing it regularly.
"When entertaining potential and existing clients, it isn't unusual to treat them to a nice meal or a round of drinks," says Derek Hunter, a national sales manager in Los Angeles. "However, while I don't hesitate at expensing a customary, personal dinner after a long day of work on the road, should I desire a second glass of wine or a nightcap, that expense falls on my shoulders, not my company's."
When employees exceed their daily allowances, companies have a choice: reimburse them, or let them fend for themselves.
"Overall, they're still going to cover those expenses, but the key for the travel managers is to educate the traveler as to why the policy is in place and to get them to comply the next time," Bates says.
Staying Within Budget
Martin Lagler, head of accounting and travel at information technology company T-Systems, says that in the USA and Canada, his employees get $50 a day for food.
"We appreciate the employees who are going to travel on business," he says. "We want to encourage them to travel if it helps us."
That said, he says the company won't reimburse employees if they go over their meal allowance. They've tried to make it easier for them to stay within their allotment by negotiating agreements with hotels to include breakfast in room rates.
"If you let it slide with one employee and then the second, that goes around," Lagler says. "You have to be tough."
Jennifer Weaver, travel coordinator for a car racing team in Warsaw, Ind., says her per diem isn't enough. This year, she cut costs by having the team fly out of Indianapolis, three hours away, instead of a nearby airport, because it saves $100 a ticket. She saves on car-rental fees by booking hotels near airports. "It's a fine line trying to keep the team happy and the costs down," she says.
Marti Mayne, a consultant for bed and breakfasts who lives near Portland, Maine, says she almost always loses money on trips because many clients are small businesses with small budgets. "At the end of this month, I'll be traveling more than 500 miles round trip to another meeting, and all travel costs will come out of my pocket again," she says. "It's just the cost of doing business, I guess."