Why Business Travel And Entertainment Related Expenses Are Boardroom Issues

The recent announcement of the operationalising of the fourth runway at Delhi airport making it capable of handling 2000 flights a day is a sign of the uptick in business travel. While the pandemic, almost replaced air travel with video meetings and remote work practices, the resurgence in business travel in 2023 is being noted in board rooms across India. 

In a survey commissioned by American Express India with the Centre for Economics and Business Research (Cebr), one in three businesses (33%) consider business travel and entertainment spending among the top three largest controllable expenses, a higher share than those that selected advertising, sales or marketing, or wages & salaries.  

Agility is key in current times and companies that put ample emphasis on well-managed processes are also able to keep costs under control, not to mention are more agile. On the other hand, cost management and innovation - both are key boardroom topics and have a direct corelation to technology, again a topic being increasingly finding a hot spot in boardroom discussions.  

Among the 511 financial decision makers who the survey engaged with from a mix of smaller (excluding sole traders and micro businesses) and larger businesses (defined as those with turnover of INR 600 crores+) across India, the need for a paradigm shift seems to be apparent.  

Businesses expect travel activity to rise by an average of 25% in 2023, showing an increased appetite for business travel. This result was even higher for businesses with 1,000 to 4,999 employees (34%) and for those with 5,000 employees or more (34%). 82% of businesses surveyed have stated they have 250 employees or more. 

The surveyed businesses said that over half of their employees had travelled for work over the second half of 2022. Mumbai was the most visited city for domestic trips during this period (selected by 50% of respondents), while the United States was the most popular destination internationally (44% of respondents).  

In a counter-intuitive way, while the pandemic has undoubtedly changed the travel landscape, with businesses conducting more meetings online, the top reason for business travel in the second half of 2022, selected by 41% of businesses, was attending, hosting or presenting at conferences, or events. Hence, the focus on travel and entertainment to build the momentum of post-pandemic growth.Across business sectors, the average business surveyed stated that international business travel between July and December 2022 was at two-thirds (66%) of the level it was before coronavirus restrictions. Businesses in education and healthcare sectors said that international travel was closest to pre-pandemic levels, at 78%, while businesses in accounting & finance stated that international travel for business was at just 46% of pre-pandemic levels. 

On average, the businesses in this survey said that just over half (53%) of their employees had taken an international or domestic work trip in the six months to December 2022. Nearly one in five (18%) of larger businesses stated that 70-79% of their employees travelled for work in the second half of 2022. 

The average business in the survey said that international business travel in the second half of 2022 was at two-thirds (66%) of the level it was before coronavirus restrictions. 

BUDGETS AND PAYMENT 

This brings us to the nub of the boardroom debate where Business travel and entertainment expenses which include travel, accommodation, food & beverage, local transport, and business event related costs have become the top three controllable expenses ahead of sales and marketing and wages and salaries. While 79% of Indian businesses surveyed said they use business travel data analytics to assist with travel booking and expenditure, showing how important technology has become for managing costs, 75% also stated they currently use travel management software. 

So right from budgeting, which 94% of businesses in the survey said they have, financial decision makers in Indian businesses will likely invest in travel expense management solutions to most effective spend on efficiencies while increasing their budget. Travel expense management software that helps with visibility, transparency, reconciliation as well as customer care and support are enabling companies plan, review and monitor their business travel expenses. 

TECHNOLOGY 

With the advent of AI and machine learning algorithms, the travel technology sector is expected to leapfrog with predictive analytics and optimal route discovery based on specific business travel objectives leading to higher efficiencies, cost savings and positive impact on the bottom line. And while, India’s economic growth story is being recognised as the global bright spot, inflation and currency risk needs to be factored in. This has been reflected in the view that 43% of financial decision makers surveyed shared; the use of better software to manage expenses and travel is a key innovation.  

77% of businesses that are expecting to increase their travel budget will need to deploy travel expense management solutions that provide data feeds, analytics and automation for process efficiencies.  And while 83% of larger businesses and 75% of smaller businesses shared that they currently use business travel data and analytics, the impact of higher technology integration at each stage right down to payment solutions will underpin their competitive strategy for future business growth. It’s no surprise then that 81% of larger businesses also said they are using a seamless expense approval process integrated into enterprise resource planning systems. 65% of smaller businesses showed an intent to integrate similar systems in the future. 

Conclusion: 

As the American Express survey shows, while corporate boardrooms are prioritizing business travel as a significant factor for the growth and sustainability of their businesses, a greater focus is emerging on how to manage those expenses with a higher emphasis on expense management solutions and data led insights to streamline the processes. 

By optimising spends through greater data integration, analytics and seamless integration with payment systems, travel expenditure can be effectively optimised to achieve business goals and stay competitive. With data analytics emerging as a key insight generator for board room decision making, the right expense management solutions that provide a seamless experience is becoming the next innovation frontier. 

As businesses adopt best practices and strategies for managing travel budgets and payments based on their unique needs and priorities, the advantages of utilising insights across functions from both within the organisation as well as industry sectors will become imperative not only for benchmarking, but also for promoting innovation.