It’s easy for you and your team to feel like rock stars when you’re travelling for business. Paid flights, hotels, transport, the works. But most businesses don’t have the budget for 5-star treatment.
Australian SMEs spend approximately 8-12% of their annual budgets on travel-related expenses (Australian Federal Budget 2024, Analysis & insights (KPMG). Amidst rising demand and costs for business travel in 2024, it’s becoming more important for businesses to find better efficiencies in managing their travel expenses, whilst still achieving their business objectives.
One of the best ways to manage travel expenses is to implement a travel policy. Think of it as the bible of a company’s travel program, helping to manage costs and decision-making. Here’s why your business needs one and how to write it:
What is a travel policy?
“It’s a tool that helps businesses take control of business travel planning. It outlines what employees can and can’t do when traveling for work, covering things like how to book flights, what kind of accommodations are allowed, how much they can spend,” says Grant Balfour, Sales Manager SME, Virgin Australia.
A travel policy is individual to the business, and the best are “absolutely” aligned to a business’ culture and objectives, says Grant. It’s about cost- effective decisions for the business that consider travellers’ health and wellbeing.
“For some companies, their value proposition is they look after you by getting you home to tuck the kids into bed. Others value due diligence, so their policy might dictate which airlines are approved because of safety records. A health company may have a policy which says its team travels on airlines where business class beds lie flat for wellness purposes.”
Yours could reference Virgin Australia and Virgin Australia Business Flyer if your business is looking for value, flexibility, choice, comfort and rewards for your business and the traveller*.
What is its purpose?
“To ensure consistency and keep travel costs under control,” says Grant, a native New Zealander who worked for a global travel group before moving to Virgin Australia in 2022 to build out the Virgin Australia Business Flyer Program.
“That means there are checks and balances on someone booking the penthouse for an awards night in Melbourne. And on the flip side, it means nobody is stitched up and put on a 5am flight and in a two-star motel.”
The policy “protects the traveller as well as the business,” says Grant. “And if there’s any conflict between, say, a booker and a team member, the travel policy acts as your mediator and a policing mechanism.”
Top three things a travel policy does:
1: Saves money. Because it’s tempting to travel in style, saying upfront what’s allowed and what’s not helps make sure travellers don’t send your business broke with unnecessary spending. It may be more beneficial to leverage a carrier that provides your business more consistent discounts.
How significant is the ongoing value of a travel policy to an SME in maintaining business travel costs and any contractual spend obligations?
“Companies want to save money and you’re giving guidelines to do that. And giving clarity.”
For businesses new to travel policies, Grant suggests pressure testing it with the team.
“Ask what scenarios are important to them. Think of things like ‘best fare of the day’, which a lot of policies may have. Understand that doesn’t mean the cheapest fare of the day, which might be the $70 fare at 4am. It means the best fare for you and the company.”
“You need to be specific—say, ‘it’s the fare between this hour and this hour which will get you to your meeting on time’. Your policy should be dictated by what’s best for both the bottom line and the team.”
2: Makes booking travel more efficient: With predefined guidelines, employees spend less time searching for flights and accommodation. A travel policy means travellers know exactly where and how to book, ensuring compliance with company preferences—and they avoid constant check-ins with their manager about details.
3: Ensures safety and compliance: A travel policy ensures the traveller has access to vetted, secure accommodation and flights.
“Businesses have a duty of care for travelling team members,” says Grant. “A travel policy means you know where everyone is and that they’re being looked after.”
How to write a travel policy and what to include:
Here’s Grant’s step-by-step guide to creating a one-page, best-practice travel policy. The goal? Include everything you want employees to know and be accountable for when it comes to business travel.
1. Define what’s important:
Involve relevant departments such as finance, procurement and HR and outline key business priorities to ensure travel aligns with company goals, budgets and operations, and supports safety and productivity.
“This helps employees make smart decisions that keep the company’s finances, brand, and efficiency on point while covering essentials like safety and staying productive,” says Grant.
2. Decide how travel should be booked:
Tell employees your preferred method, whether it’s a travel management company, internal travel coordinator or approved online tool.
“Travel Management Consultants are great at optimising costs and managing logistics, but it might be more cost effective to manage things yourself if your travel budget is under, say, 10K a year,” says Grant.
“An online booking tool streamlines things. Many staff members prefer booking via apps or websites, so having the policy enabled through these platforms helps with ease and compliance.”
3. Leverage existing partnerships:
Use current partnerships to maximise cost savings, secure better deals and strengthen relationships with preferred suppliers. This will ensure consistency in service quality.
4. Set travel budgets in categories including:
Airfare—State the preferred airlines such as Virgin Australia, when employees can fly (for distances over X miles) and establish limits for flight classes, ticket types, and pricing.
Accommodation—Provide guidelines on hotel choices such as preferred brands. Set maximum nightly rates based on the destination or hotel category. Be clear about the approval process if a longer stay is required.
Ground transportation—Specify the type or size of car they can rent. Include caps for taxis, ride-sharing services and public transport.
Meals and per diems—Define daily spending limits for meals and incidental expenses.
Entertainment and client meetings—Set guidelines for spending on business-related entertainment.
Miscellaneous expenses—Include a set amount for minor or unpredictable expenses such as internet access or parking.
5. Be very specific about expense reimbursement:
Outline clearly what can be expensed (flights, hotels, meals) and what can’t (personal entertainment.)
6. Have defined approval processes and compliance details:
Clarify when travel needs to be booked and approved and by whom, and the lead-in time for advance bookings (ie 14 days) as this can affect price. Describe how employees can request exceptions to the policy. Clearly state the team is expected to comply with the policy and the consequences of violations.
7. Outline health and safety guidelines
To protect and prepare employees, consider including emergency contact numbers for support during travel crises, ensure your corporate insurance policy covers employees when travelling, and lists resources for stress management and support.
8. Set a review date:
“Checking the policy regularly means it stays relevant,” says Grant. “Annually is fine.”
9. Document and communicate the policy to your team:
“When it’s finished, it should be easy to read and in layman’s terms,” says Grant. “If it uses jargon, something like ‘flights must be booked on VA using a TMC on the best fare of the day, it means nothing.”
Getting your team to read the policy can be the tricky part, Grant warns.
“I suggest emails, your office intranet or even stick a flyer on the office fridge. You could do a town hall, get the managers to do it individually. More than one way is better!
“Maybe hand out cookies with a policy stapled to them. I might try that myself.”
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Existing members, access flight discounts2 and earn Velocity Points with Virgin Australia and our network of International Partner Airlines3 via our Business Booking Portal. Travel safe out there!