Rocketrip 2016 Business Travel Spend Report
Rocketrip’s data science team has analyzed expense records from thousands of business trips to see how travelers spent on flights, hotels, trains, and rental cars in the past year.
The data set provides a unique view into the spending habits of business travelers, who account for a fifth of travel volume, but a third of overall travel spending.1 That disproportionately high spending is explained by the fact that business travelers are generally price insensitive. However, the business travelers in Rocketrip’s data set demonstrated a remarkable ability to utilize affordable travel options when they were able to share in the savings generated.
Rocketrip reduces a client’s travel costs by giving employees custom trip budgets and incentivizing them to spend less. Our analysis of spending in 2016 shows business travelers’ actual purchase decisions in the context of market prices, availability, and the spending guidelines outlined in their companies’ travel policies.
Each traveler received a custom budget based on an algorithmic prediction of what a given itinerary should cost. If the traveler spent less than budget, he or she kept half of the savings. We focused on the spending patterns of U.S. business travelers: most trips were domestic, with some international trips included to provide a point of comparison.
Read on below for some key takeaways from Rocketrip’s 2016 Business Travel Spending Report, and download the complete infographic to see more.
1. The average overall cost of a business trip was $1,068.
The majority of business travelers spending went to airfare: round-trip airfare cost an average of $651. Business travelers saw an average hotel costs of $256 per night. Most business trips required only one or two nights away, but longer trips are far from uncommon. In fact, the overall average duration for business trips was 2.9 nights away.
2. Business travelers managed to save over $250 per trip.
When business travelers were given an incentive to spend less than their trip budgets, they found ways to save significantly. The travelers in Rocketrip’s data set demonstrated strong willingness to spend less than their allotted trip budgets when they could keep a portion of the savings generated.
How much less? $259 per trip. In other words, these business travelers spent 24% less than their budgets.2 Here’s how they did it:
Top Flight Saving Methods
- Coach Instead of Business Class – Travelers opting to fly coach instead of business class had the greatest impact on spending. On average, this accounted for $2,705 less spending per round-trip flight, or 60% against budget. Though business travelers were not eligible to fly business class on most flights (less than 3% of all flights were deemed “business class eligible”), when company policy allowed it, more than half of all them (53%) chose to fly coach instead and keep part of the savings.
- Use of a Low Cost Carrier – Flying with a low cost carrier resulted in average savings of $185 per round-trip flight, or 34% against budget. Corporate travel booking tools often don’t list options from low-cost carriers such as Southwest, but for 9% of bookings in Rocketrip’s data set, business travelers saved on their airfare by using these vendors.
Top Hotel Saving Methods
- Staying with Friends – One of the most compelling pieces of evidence that business travelers were willing to go above and beyond to beat their budgets was how many chose to stay with friends or family instead of at a hotel. By doing this, business travelers reduced required hotel nights by 13%, saving an average of $257 per night (100% against budget).
- Booking a Lower Star Class Hotel – Less dramatic, but also highly impactful was business travelers choosing to stay at lower star class hotel than those allowed in their company travel policy. This saving strategy applied to nearly a fifth of all hotel nights booked (17%), and resulted in savings of $76 per night, or 28% against budget.
3. Airbnb saved business travelers more than $100 per night.
Airbnb has become a cost-effective alternative to traditional corporate hotels. Airbnb accounted for 9% of business travelers’ nights on the road. Business travelers who stayed at an Airbnb instead of a hotel saved $108 on their nightly accommodation budgets (41%). Here’s a closer look at the ways in which Airbnb usage is up among business travelers:
- There was a 54% increase in the number of companies that have had employees book an Airbnb in 2016 compared to the same period 2015.
- Airbnb bookings per company were up 54% in 2016 compared to 2015, and the average amount per organization spent with Airbnb was up 39%.
Other Notable Findings
- Advance Purchase Window – Business travelers typically book their trips closer to the date of departure than do leisure travelers. On average, business travelers observed by Rocketrip made flight and hotel reservations 20 days before their trips. This is longer than would be suggested by widespread perceptions of business travelers always waiting until the last minute to book.
- Rental Car Usage – Rental cars cost business travelers an average of $64 a day. Business travelers were willing to find ways to save on their rental car costs, primarily by opting for smaller car classes. Average savings were $15 a day, or 23% of budget. Still, only 14% of business travelers required rental cars on their trips in 2016. Uber and other ride-sharing services are likely eating into the rental car market.
- Highest Individual Savings – One business traveler in the Rocketrip data set saved an astounding $8,844 on a single business trip from New York to Sao Paulo. He flew coach instead of business class, and stayed with a friend for the duration of his stay.
To find out more about how business travelers spent and saved this year, check out the infographic version of Rocketrip’s 2016 Business Travel Spending Report.
1U.S. Travel Association, Travel Answer Sheet.
2 24% average savings based on a range of Rocketrip clients who saved between 15% and 35% per trip in 2016.