Business expenses have evolved from a pre-pandemic consistency to a COVID-driven inversion, to a post-pandemic current state. CFOs must continue to be mindful not only of how to ensure proper governance, budgeting, and forecasting around expenses but how overall expense trends have shifted.
Business travel remains a critical component of company morale — 60% of those surveyed by Mastercard said it is a bedrock team bonding — but as it has increased post-pandemic so have the associated costs.
TravelBank, a travel and expense (T&E) platform, examined 15,000 expense reports from July 1, 2022, through August 24, 2023, and found business travel expenses are still one of the most difficult to manage, especially in a fully remote or hybrid work environment. According to the report, Uber and Delta are the two most-expensed merchants over the period, with American Airlines, Lyft, and hotel franchises Hilton and Marriott also among the top nine.
A particular trend that has emerged in 2023 is that more workers are opting to use their personal vehicles for business travel rather than renting a car. Though Uber is still at the top of the expense list, its overall share of ground travel expenses has fallen 21% in the past year, according to TravelBank. Meanwhile, usage of personal vehicles had a 64% share, up from a 25% share in pre-pandemic 2019. One possible reason could be that, with the inflationary pressures that have arisen over the past two years, workers see an opportunity to add more cash to their own bank accounts via business travel mileage reimbursement.
Additionally, business travelers appear to be adding more personal entertainment to their trips. Examining individually-expensed software, TravelBank found most software licensing was for business-related applications like Adobe, LinkedIn, and GitHub. However, in a shift from 2019’s expensed software ranking, 2023 featured personal entertainment software, including SiriusXM, Audible, and Amazon Prime Video.
One thing that has changed little is a weary business traveler’s need for readily accessible caffeinated products. While America may run on Dunkin’ (#5), Starbucks has taken over the top spot for business meals, toppling McDonalds in 2023. That rise by the Seattle-based chain corresponds with its most recent Q4 results, showing nearly 18,000 domestic stores and 12% year-over-year revenue growth.
A surprise in the report’s findings is that grocery stores and C-stores have made their way into the top 10 of business expenses, supporting the idea that the hybrid model has created worker self-sufficiency in home offices.
Artificial intelligence (AI) is expected to play an increasingly large role in forecasting and management of T&E expenses. However, one challenge may confound AI — whether to consider Hooters (#6) as “meals” or “entertainment.”