While business travel certainly has some perks, at the end of the day, deciding whether travel should be a part of your company's strategy comes down to dollars and cents. Travel is expensive, and you need to be able to determine whether your investment is worth it. How on earth do you go about figuring out what travel costs your company? Fortunately, there are great resources. By devoting just a little time to crunch the numbers, you can get a pretty good ballpark on your expenses from determining average business travel expenses.
As you might expect, travel costs vary depending on the location. Throughout, I'll share some helpful resources that can give you average costs for different locations. Once you know where your business travel destinations will be, you can use these resources to fine-tune your own costs.
Airfare can be a big component of average business travel expenses. For domestic travel, the Bureau of Transportation Statistics has a handy tool that lets you compare three cities or metro areas at a time.
For example, for the second quarter of 2019, the average airfare for the United States is $357.10. For the greater Dallas/Ft Worth area, it's $389.54. In the Washington, D.C. area, it's $360.84, and in the San Francisco area, it's $383.09.
For international travel, the price range is simply enormous. According to the U.S. Passport Service Guide, in 2019, the average international airfare is $1,368, but in order to assess your business travel costs, you need to narrow your focus to include your actual departure point and destinations.
In addition to your airfare, you're going to incur additional business travel costs. So many variables go into these expenses that it's maddening to try to tabulate them for a range of locations.
You need to be able to refer to the bottom line when you're assessing your company's travel strategies and goals.
My rule of thumb is to add $100 a day for miscellaneous travel expenses. This figure can cover cab or ride service fare, rental car, parking or public transit. Some locations will exceed this $100 average, and some will come in under budget.
Once you've figured out your potential airfare costs, you need to tally up a couple more categories before you can assess the total cost of your business travel expenses. The U.S. General Services Administration provides location-specific per diem rates for lodging and meals that you can use as a general guide for figuring costs and determining average business travel expenses. (A note: You'll see results broken down by month, as some locations have significant seasonal variations.)
Even for domestic travel, where you do business will have a big effect on your business travel costs. Let's look at domestic cities for reference again. Dallas/Ft Worth varies from $150-$160, depending on the time of year. Washington, D.C. goes from $169-$256 and San Francisco is $244-$334.
For international hotel costs, you can use another tool found at the U.S. Department of State's website to help determine average business travel. You'll see a range of prices here, too, as you'd expect. The maximum allowable lodging for government travel is $391 in Paris, $259 in Shanghai and $196 in Stockholm, Sweden.
No matter where you are, you gotta eat! Actual expenses will probably vary the most in this category, as business travel costs may include entertaining clients, which will drive prices up considerably. But just in terms of ensuring you and your employees are covered for basic meals, let's go back to the U.S. General Services Administration and State Department tools.
When you look up meals for our example domestic locations, you get a total per-day price, along with the component figures for breakfast, lunch, dinner and incidental expenses. In Dallas/Ft Worth, you're looking at $66 per day. In Washington, D.C and San Francisco, the per diem meals and incidental price is $76.
Overseas, the meal and incidental rate is $169 in Paris, $143 in Shanghai and $145 in Stockholm.
One Trip Total
To put business travel costs into perspective, it's important to look at your entire trip cost.
Let's say you're sending your top salesperson to San Francisco to make an important presentation to clients. It's a three-day trip, so you have two nights of lodging.
When you add up airfare, lodging, travel and the government meal cost, you arrive at $1,400-$1,500. Throw in the cost of entertaining a couple of clients for dinner (an extra $1,000) and you're looking at roughly $2,500 for the trip.
Talking Travel Expense Etiquette With Employees
Controlling expenses is key, and a return on your investment is the goal.
Make sure every member of your staff understands your expectations and limitations on legitimate business expenses. In some industries, a $1,000 client dinner is expected. In others, that would be an outrageous sum. Be clear, and you can avoid any business travel expense etiquette difficulties.
Travel ROI: Track your expenses against any revenue
It's not enough to simply hope that your business travel will pay off. You need to be able to refer to the bottom line when you're assessing your company's travel strategies and goals. Tracking your ROI gives you the data you need to determine how successful your travels have been.
And finally, selecting the right business travel rewards credit card can go a long way to making your journeys more profitable. Earning cash back or free hotel stays can bring down costs and make each trip more worthwhile.
Read more articles on managing money.
Photo: Getty Images