Bite-sized insights: Essential advice for meal allowances

Meal allowances can be easily overlooked while you scour your travel policy for improvements, but travel managers everywhere will hear about it if it’s out of alignment with your travel programme.

As a key area of policy that’ll quickly feel outdated, allowances can significantly impact the travel experience for your employees. Add that to what we know of cost increases and market fluctuations, it’s clear that allowances need to be regularly reviewed to stay relevant. So, let’s take a closer look and see if your allowances are keeping pace with the ever-changing market.

Rising costs: Breakfast and beyond

The cost of breakfast in hotels has seen notable increases. From 2023 to 2024, the cost of breakfast in London hotels has risen by 9%, with a 5% increase in other regions. However, customer breakfast allowances — where specified — have only seen a 2% increase. If your expenses policy hasn’t been reviewed annually, now is an opportune time to ensure your breakfast allowances are keeping up with these rising costs.

But breakfast isn’t the only area where allowances might be falling short. Tray charges, often overlooked, are another critical factor. Currently, only 45% of our customers allow travellers to claim tray charges on top of their dinner allowance. The rest require this cost to be included within the dinner allowance itself. With the average UK tray charge at £4.91, this can consume about 18% of the average dinner allowance. In practical terms, this means your travellers are left with around £22 for their meal and drinks - a challenge depending on their hotel, and one that could negatively impact the quality of their dining experience.

Wellbeing and meal quality: A balancing act

There’s more at stake than just the cost, wellbeing is a crucial consideration. Some travellers may feel more comfortable dining in their rooms rather than in a bustling hotel restaurant. The question is, does your current policy support this? Does it allow your travellers to enjoy a healthy, balanced meal, or are they forced to opt for cheaper, less healthy options due to restrictive allowances?

A one-size-fits-all approach simply doesn’t cut it anymore. A thorough review of your policy is essential to ensure your allowances not only keep pace with market changes but also cater to the diverse needs of your travellers.

Supplier insights: The cost pressures continue

Rising costs are a recurring theme in our analysis of rates and expenses. Food costs, for instance, surged by 22% in 2023, driven by several factors, including labour shortages, import border checks, supply chain disruptions from Eastern Europe, and rising oil prices, all of which have pushed up food distribution costs. These pressures continue in 2024, impacting the prices we see today.

For example, Premier Inn announced that the average price of a continental breakfast has increased by 12.5%, a full breakfast by 10%, and meal deals by 8% across the UK in 2024. Similarly, Lime Venue Portfolio noted a20%-25% increase in the cost of a pizza from 2022 to 2024, and a 33% - 37% increase in the price of a medium latte since 2019.

Then there’s the cost variation by location, with menu costs in London on average 18% higher than in the regions. And don’t forget about potential services charges (12.5%) or tray charges (£4.91) for anyone choosing to have dinner in their room, which can add a further 12.5% - 19% to the overall bill.

Key trends: The impact on travel allowances

Let’s take a closer look at how these rising costs translate into allowances and why it’s important to keep a close eye on allowances:

• Breakfast allowance: Overall, breakfast allowances have only increased by 3% against 2023, with allowances ranging from £5 to £20. In London, the average cost of breakfast is now £18.20, and in the regions, it’s £14.17, based on over 5,000 rate submissions for 2024 and 2024/25. Breakfast costs have increased by 9% in London and 4% in the regions for 2024/25.
• Tray charges: On average, 45% of hotels offer complimentary tray charges as part of a corporate program. However, where charges apply, the average cost is £4.91. This is a significant expense to consider when setting meal allowances.
• Dinner allowances: Since May 2023, 11% of customers have adjusted their meal allowances. Of these, 1% have reduced their meal allowances by an average of 25%, while those who increased their allowances did so by an average of 22%. Notably, the average overseas allowance has remained static at £39.38, while the average UK allowance has seen a modest increase of 1.2% to £26.91. For travellers staying in London, the average allowance has increased by 1.6% to £33.25.

The big question: How do your allowances stack up against actual costs?

Given the changes in the market and the increasing costs, there may well be a discrepancy between allowances and the bottom line of the bill. Now is the time to review your travel policy, ensuring your allowances don’t just align with policy profiles, but are aligned with the current market conditions. Doing this can enhance your travellers' experience, support their wellbeing, and help them to comply with a realistic and appropriate policy.

Get in touch for a full travel policy review, including where our insights suggest your meal allowances should be sitting to support your travellers.