When traveling for business or leisure, most people are on a budget, an expense account or per diem, with many of the expenses budgeted in advance.
The problem with most travel budgets, however, is that they are never realistic. And, in today's travel environment, with fares, rates, fees and restrictions changing almost daily, it is hard, if not impossible, to project costs. Yet virtually every company (and every traveler) tries.
Even the federal government attempts to estimate daily expenses for travel. For example, the U.S. Department of State sets per-diem rates for government employees and their dependents traveling abroad on official business. The rates are based on what the department estimates is the cost of "adequate, moderately priced meals and lodging."
These per-diem rates include estimates on tax and tips as well as incidental expenses such as dry cleaning and laundry. The figures provide a basis of cost comparisons.
For example, the government estimates a per diem this month of about $140 in Moscow, slightly under $200 in Tokyo and $125 in Athens.
Comparing estimated costs now to five years ago, per diem in Moscow in 1985 was $100, while in Paris it was $80 (today it's $175). In almost each case the per diem has more than doubled in five years.
You can order the entire list of per-diem rates for $1.50 by sending a check made out to Superintendent of Documents, Government Printing Office, Washington, D.C. 20402-9371. Ask for the document "U.S. Department of State Maximum Travel Per Diem Allowances for Foreign Areas."
But while the State Department per-diem estimates provide a valid comparison of costs, do they reflect what other travelers will spend on trips? The answer is no.
Historically, State Department per-diem estimates have been very low. In addition, most per-diem allowances are for countries , not cities, and do not reflect individual differences in prices and rates, which can be substantial.
They do provide, however, a good measure of what travel costs will not be. Knowing this, many corporate travel planners take the government's figures and add about 40% for their employees.
Unfortunately, many of those figures no longer come close to costs. Specifically, U.S. lodging costs in the 1980s, according to the Consulting Services Division of Runzheimer International, a Rochester, Wis.-based management consulting firm, were much more volatile than meal costs.
Based on average prices for business-class hotels and restaurants, Runzheimer reported that lodging costs nationwide rose 107% between 1980 and 1989. Meal costs rose only 44%. A look at cities shows an even wider disparity.
In Washington, D.C., for example, lodging costs rose a whopping 176%. Boston business-class hotels raised their rates 155%. During that same decade the consumer price index (the nation's barometer of inflation) rose only 50.4%.
New York City, Chicago, Los Angeles and Atlanta also chalked up huge increases. Chicago and New York City lodging rates jumped 135%, Los Angeles and Chicago 112%.
Rental-car prices zoomed as much as 94%. Meal costs also moved up. Boston food prices jumped 72% and Detroit rose 66%.
Not all of the hotel and food news, however, is bad. According to the Runzheimer report, hoteliers in Dallas increased their lodging rates 53%, and in Minneapolis 78%, in 10 years. Also, it was cheaper to eat in Dallas. Business travelers to Dallas today are finding that meals increased in price only 26% in the last decade.
Obviously this means that most per-diem rates set by companies are unrealistic, and not in keeping with price increases in the various cities. Whenever possible, try to negotiate an air fare, a room rate or a car-rental fee in advance and confirm that fee in writing, even if it means putting down a deposit. If the rates go up, you're protected.
For example, one survey in Denver showed that in the fourth-quarter of 1989, fare hikes by airlines serving Colorado boosted travel costs by 21% compared to the same period in 1988.
If the rates go down , you can negotiate a refund or a lower rate before you travel. But don't count on it.