Small businesses are playing the role of big spenders on the road. A new study found that small businesses spend more on travel than big business.
The Concur Expense IQ report covering 2012 reveals that small businesses spend about 24 percent more per year on these expenses than bigger companies. The report is a survey of Concur users and how much they spent annually on travel and entertainment.
The study also specifies some reasons for that disparity:
Negotiating leverage, driven by scale and sophisticated spend management strategies, continues to give large market companies significant advantages in controlling their T&E spending.
Air Travel
Items like baggage fees on flights and other ancillary charges for business travelers nearly doubled in the last year, the study found. Concur users spent $58 million on these fees in 2012, compared to $30 million the year prior.
Despite the amount of these fees, which are the same for big or small businesses, it’s small businesses that are paying more often. The report also found that small businesses purchase 37 percent more airline tickets in a quarter than big businesses.
Food and Lodging
Even if your business travel doesn’t require flight, small businesses are paying more for hotel rooms and rental cars, too. The average small business traveler will spend about $736 per quarter, compared to a big business traveler’s $608 per quarter for lodging. Other expenses on the ground also hit small businesses harder.
A small business traveler is dining out about 40 times a year and spends around $340 every three months on take-out or restaurant meals. The big business traveler eats out less often and typically spends less too.
The study found that each small business traveler will spend about $500 more per quarter than a big business traveler. And every expense involved in travel – from airline tickets to hotels to food – is typically higher than what a big business traveler would pay.
Concur provides integrated travel and expense management solutions to 18,000 business customers around the world serving 20 million end users.
Image: Concur Expense IQ Report
Editor’s Correction: the above article was corrected to reflect updated customer and user counts.
Joshua,
I agree with the research’s reason for disparity – it’s all coming back to the economic of scale. With more bargaining power, big businesses get the perk.
Indeed, it’s a big pressure for small business owners – with limited budget, the rising travel costs will put them on more pressure.
Perhaps it’s time for small biz to embrace tech more and use the all-affordable tools to help them do business wherever they are. They can consider using G Hangout, Skype for communication… signing documents using online tools like HelloSign… sending fax using MyFax… all will cut your need for travel-for-business.
The most interesting thing that Elena, from Concur, stated in her blog was that it’s not about a budget or the perks – it’s more about how businesses account for their travel and expenses.
Read her 3 insights here: http://www.concur.com/blog/en-us/3-insights-for-small-businesses-from-the-concur-expense-iq-report
Bethaney
This is interesting, I definitely would have guessed big businesses spend more on travel!
Anita Campbell
Hi Bethaney,
This appears to have more to do with the prices that small businesses have to pay when traveling. Unfortunately, small businesses pay through the nose. No in-house travel department to negotiate rates … no bulk discount contracts with providers. It’s brutal. 🙂
– Anita
Anita, you are absolutely right that small businesses do not have the leverage or man power that larger businesses have. However, there are ways that a small business or any traveler for that matter can level the playing field. I hope that I am not out of line, but this is exactly how Connexion World Travel got started. To provide travelers with a way to get the best rates on travel while earning cash back on their reservations. Small businesses do not have to do it all on their own. They just need to know where to look for help.
-JP
It’s the small business going to see the big business to get their business.
Anita Campbell
Hi Bonnie, It took me a moment to “get” what you said. And it’s probably true! 🙂
– Anita
Very interesting! Wasn’t aware of this disparity though. I wonder if the small businessmen should start mulling a serious shift of business mode by taking aid of more technological facilities in the coming year!