As you take a look at your business, you might be wondering why the price of corporate travel has gone up so much during the past few years. It might have been a while since your company had to travel for work regularly, but as many things are starting to go back to normal, your company might find itself traveling regularly once again. You need to invest in a corporate T&E management program if you want to keep your expenses under control. With the price of plane tickets and hotel rooms going up, what are a few factors playing a role behind the scenes? Are these high prices here to stay?
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1. The Price of Gas Is Going Up
One of the first reasons why corporate travel has gotten so expensive is that the price of gas has gone up significantly. During the past few years, many oil companies scaled back because they saw that not as many people were driving and flying everywhere. Now, the circumstances are changing. There are a lot of people traveling, and there are problems with getting oil from some of the biggest suppliers in the world. This has led to an increase in the price of gas, which makes everything more expensive, particularly for those who need to fly for work. Until the price of gas comes down to earth, corporate expenses for travel will remain high.
2. Demand Is Surging Significantly
The next reason why corporate travel has gotten more expensive is that the demand for plane tickets and hotel rooms has also gone up. During the past few years, there were not a lot of people who were flying. Few people were staying in hotel rooms. This has led to a lot of pent-up demand, as many people have started to unleash it on the market. With a lot of people trying to book plane tickets right now, the prices are going up. The same can be said for hotel rooms, adding to corporate travel expenses.
3. There Is a Shortage of Staff Members
Furthermore, there is a shortage of staff members in a lot of locations. Some of the biggest hotel chains in the world laid off a lot of people during the pandemic. A lot of airlines also laid off their pilots and flight attendants. Now, these companies are having a hard time getting these people to return to work. When they cannot do so, they do not have enough staff members to meet demand. Because there is such a shortage of employees right now, businesses might have a hard time finding the flights and hotel rooms they need.
4. Supply Chain Havoc Is an Issue
In addition, supply chain issues have wreaked havoc on just about every industry. This includes those related to travel, such as airlines and hotel rooms. Many airlines are having a hard time getting the parts they need to keep their planes in the air. Some hotel companies are having a difficult time getting the equipment they need to run an efficient operation. Even though it is true that much of the world has gone back to normal, it is also true that supply chain issues are still a problem in some parts of the world. Supply chains run across the globe, and their unpredictability leads to greater overhead expenses.
5. New Regulations Could Be Adding to the Issue
Finally, there are new regulations in place that could be adding to overhead expenses that hotels and airlines face. Then, these costs get passed down to the consumer. For example, some hotels might have to follow strict protocols to minimize the risk of someone getting sick. Some airlines might have to pay penalties and fines when they underperform regarding delays and cancellations. These are penalties that get added to their overhead expenses, which could be passed down to their passengers, including business travel customers. This factor could be driving up prices for corporate travel as well.
Make Sure You Keep Your Overhead Expenses Manageable
Clearly, there are a lot of factors playing a role in the cost of corporate travel. You need to work with the right program if you want to keep track of your overhead expenses and make sure they remain manageable for the foreseeable future. The companies that are able to keep control of their overhead expenses are the ones that will survive in a new, competitive world. Consider reaching out to a professional if you need help controlling your overhead expenses.