Travel Stipends Guide: What You Need To Know
Taking a vacation can help your employees reduce stress and burnout. Here's how to support travel with a flexible stipend.
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Summer vacations are dwindling. Korn Ferry research highlights that 63% of professionals planned to take a shorter vacation in 2022 than previously, and twice as many employees expected to check in with work during their break.
But companies could miss out if their employees skip restorative vacations. Whether they book a soul-nourishing retreat, an action-packed adventure, or a blissful beach getaway, a vacation improves employee well-being and ensures everyone returns refreshed and on top of their games.
That’s why some employers offer travel stipends—an attractive perk that can be a valuable part of your compensation package. This guide digs deep into why travel is important, how travel stipends work, who offers them, and how to build your own travel stipend program.
A travel stipend is a grant or allowance supporting your employees with the cost of a vacation. Otherwise known as a vacation stipend policy, leisure travel policy, or travel reimbursement policy, the aim is to make an employee’s trip more affordable.
After all, taking a break can be expensive. The average annual vacation costs $1,919 per person per week, with 28% of travelers spending more now than in 2019. So, a travel stipend eases some of the financial pressures associated with personal travel.
Companies sometimes grant a cash-based travel stipend, but more commonly, they add travel stipend expenses such as hotel accommodation or travel tickets as optional categories within a flexible lifestyle spending acount. By investing in their employees’ vacations, employers may achieve some or all of the following:
Employees who take time off for rest and recuperation may be more productive and capable of hitting their career objectives when they return to work. Research from Project Time Off revealed that people who take fewer than 10 vacation days per year only had a 34.6% likelihood of receiving a raise or bonus in a three-year period. In contrast, employees who take more than 10 vacation days per year had a 65.4% chance of receiving a bonus due to their increased hard work.
Travel broadens the mind and can also enhance worker creativity. Research by CWT and Artemis Strategy Group found that 77% of Millennial travelers felt more creative and productive when traveling.
Taking a break is good for your workers, with multiple studies linking vacation time with improved physical health. A University of California study analyzed the impact of resort vacations and meditation retreats on workers’ stress and immune systems. Scientists proved that employees who went on resort vacations were more energetic and less stressed after their break. Similarly, people who went on a meditation retreat displayed increased antiviral activity.
If this isn’t enough proof that employers need to invest in their employees’ health, a 40-year European Society of Cardiology study concluded that employees who take less than three weeks of annual vacation have a 37% greater chance of dying than those who commit to rest.
Offering paid time off is one way to attract talent to join your organization. But this isn’t particularly enticing if your employees can’t afford to go anywhere during their vacation time—enter stipends as a game-changer. The Flexjobs Annual Super Survey found that companies offering employee travel stipends as part of their compensation package are more likely to attract Millennial candidates. Why? 70% of Millennials describe a desire to travel as a primary reason to work, second only to paying for necessities.
Besides being the right thing to do, companies that invest in DEI are more profitable and 35% more likely to outperform competitors, according to McKinsey. Enabling your employees to travel can support or even accelerate your diversity initiatives by encouraging cultural awareness. Mahesh Desai, Head of EMEA at Rackspace Technology, explains:
“Traveling has been an incredible way to broaden my horizons, gain new perspectives, and discover the beauty of different cultures. But it’s not just the personal benefits that make travel valuable—it’s also helped me create a more inclusive culture at work. By valuing and celebrating diversity, we can create an environment where everyone feels respected and valued. An inclusive workplace culture is one that values open communication, collaboration, and respect for different perspectives. So, if you’re looking to create a more inclusive culture at work, consider traveling and learning more about different cultures. You might be surprised at how much you can learn and how it can positively impact your workplace culture.”
Part of any successful diversity program should be developing cross-cultural communication so employees from any background can confidently forge relationships with one another. Alan Shaw-Krivosh, Breaking News Editor & Political Domain Expert at Dataminr, explains why travel is key to developing this skill:
“With travel, you will develop cross-cultural communication skills that can help you navigate international negotiations, build relationships with foreign partners, and work effectively with colleagues from diverse backgrounds.”
As we all know, unexpected industry or global events can rock the stability of any company. Calm and resourceful employees are essential for keeping the company afloat during such times. Travel can challenge an employee’s comfort zones and build resilience, as described by Alan Shaw-Krivosh:
“Unexpected challenges are par for the course. Through traveling, you will grow your adaptability and resilience skills that can help you handle unexpected situations and setbacks with ease.”
As a flexible benefit, a travel stipend can include any expense associated with personal travel or vacation time. Some common categories include:
Travel stipends are a great way to attract and retain talent, but as an optional benefit, you may choose to limit who you make them available to. Consider whether to offer them to:
Here are some examples of how some companies approach stipends for different types of employees:
This Ramada by Wyndham opportunity seeks a Chief Eats Officer to travel the world sharing global culinary delights. The compensation includes:
In this case, a personal travel stipend is necessary as global travel is part of the role. However, the Chief Eats Officer has the freedom to book and experience travel according to their preferences.
Evernote, a software company, offers an annual vacation stipend for employees to recharge their batteries. The company provides $1,000 to employees who book an annual break of at least five days or more.
This travel stipend is available for all employees, regardless of rank or position, which reflects the company’s inclusive nature.
Thirty Madison, a healthcare company, offers an annual vacation stipend of $750 for breaks of five or more consecutive days.
This travel stipend is available to all employees regardless of tenure, which signals that the company prioritizes well-being from onboarding onward.
Travel stipends used for personal travel are considered taxable income, and employees will need to pay withholding taxes on used funds.
However, an employee’s personal tax liability depends on the purpose of the stipend and whether your company has an accountable or nonaccountable plan. In a nonaccountable plan, travel stipends are taxable, but employees don’t need to keep proof of expense documentation.
No federal or state laws require you to offer a travel stipend. As an optional perk, you can build your policy from the ground up to suit your specific company culture and organizational goals. Follow these steps to roll out a successful travel stipend policy:
Determine who is eligible to receive your travel stipend. Consider factors such as employee level, length of service, or performance-based criteria.
Clearly outline the purpose and limitations of the travel stipend. Specify whether it covers transportation, accommodation, meals, or other expenses related to travel.
Example: Consider a minimum vacation duration to avoid your employees booking a single night at a luxury hotel that won’t give them enough of a break from work.
Determine the maximum amount an employee can receive as a travel stipend. Consider the company’s financial resources, compensation structure, and allocation of other employee benefits to create an attractive stipend policy your business can afford.
Get started by downloading our Benepass Benefits Benchmarking Guide, which provides detailed breakdowns of perks trends and an overview of how other companies structure their Lifestyle Spending Accounts.
Outline the process for requesting and approving travel stipends. Define who is responsible for reviewing and approving requests, and establish any necessary documentation or deadlines.
Next, communicate the travel stipend policy to all employees, and explain how they can access it. While some companies make employees submit receipts for travel expenses, others might leverage a card-first approach to simplify spending and reduce administrative burden.
Example: Adding your travel stipend to a flexible lifestyle spending account such as Benepass gives your employees the power to choose various spending categories to use when planning and paying for their vacation. Some employees may put their travel stipend toward hotel costs, while others prefer to book a cruise. Seres Therapeutics allows its employees to roll over LSA funds from one month to the next, enabling them to save for a vacation before the funds expire at the end of the year.
Decide how often you’ll distribute employee stipends to cover personal vacation expenses. Typically, this will be an annual allowance that should run in tandem with your vacation calendar—for example, January to January.
Consult with tax professionals to understand any tax implications of providing travel stipends, and advise your workforce on complying with relevant tax regulations.
Regularly review your employee travel stipend policy to ensure it aligns with your company’s goals and remains competitive. Make adjustments based on feedback, uptake, your company’s budget constraints, or changing business needs.
A travel stipend program demonstrates that you care about your employees’ well-being. Providing PTO is step one, but offering the financial incentive to book a vacation truly ensures that your employees receive a much-needed physical and mental break from work.
Ready to send your employees on vacay? With Benepass, it’s a cinch to add travel and vacation expenses to your lifestyle spending account. Book a Benepass demo today or contact firstname.lastname@example.org to discuss the details. Read up on other stipends that can complement a travel stipend and further support employee well-being: