The MacNair Travel Leadership Blog

I Don’t Know What I Spend on Travel, Where Do I Get That Data and How?

Posted by Mike MacNair on Dec 1, 2015 1:00:00 PM

I Don’t Know What I Spend on Travel, Where Do I Get That Data and How?.jpgIn a previous blog post, I talked about the six initial data points to use to measure your travel program. In many businesses, travel is a necessity for those who are seeking growth and increased profits. According to research issued in conjunction with the World Travel and Tourism Council (WTTC), three quarters of executives believe that business travel is “extremely” or “very” important to increasing profits (74%) and increasing sales (75%). With that in mind, it’s critical for businesses to have a clear picture of their annual travel spend and how it compares to their business metrics. Having the ability to understand what you are spending and where, creates a competitive advantage.Let’s take this a step further and talk about where you can find this travel spend data, and then more importantly, how it’s pulled together and communicated to best understand the benefit that travel brings to your bottom line. When you work with a travel management company (TMC) or have an effective online booking and expense management system, this data is provided through reports based on what’s needed for your budget. If you haven’t done so already, research the benefits of using a TMC or the business solutions available for travel and expense management – these tools are available to help your business. 

Following are the top travel data points and where to find these metrics. 

1. Total travel volume

The volume of travel can be gathered from a number of different and equally important areas.

  • Overall travel volume – how many employees are travelling over how many days, to how many different cities throughout the year? This “big picture” view of travel can display overall company impact of travel on the business.
  • Travel volume by specific product – this can include the amount of air travel, hotel stays, car or sedan rentals reserved over the year. Is there more being spent on hotels than initially expected? Are employees utilizing sedan services more than appears warranted?
  • Travel volume by department or cost center - this is a great way to determine a specific return on your travel investment. Did the big project for your client across the country yield the results that demanded the incurred travel costs? Is your sales department generating the appropriate leads and/or results based on their travel spend?

2. Average transaction cost compared to plausible benchmarks

Through your TMC or online booking tool, your finance department should be able to determine the average transaction cost per employee for travel. In addition, your TMC or other third parties like Topaz International, Concur or the Global Travel Association (GBTA) have access to the national and/or international “average” transaction costs to use for comparison. According to Concur’s Expense IQ Report, the average small business traveler spends $832.55 on airfare and $736.69 for lodging per quarter – and this is just for airfare and lodging. Data can be provided that includes dining, ground transportation and car rentals as well.

By taking this available benchmark data and comparing it to what your business spends on travel, you gain a clearer picture of how your transaction cost compares to the industry average.

3. Lost opportunity compared to lowest fare available

This data point is so important, and yet when a business does not have a strong travel management program, the wealth of information that can be gleaned by comparing itineraries is missed when analyzing travel spend.

The question is: what is the lowest fare for the itinerary compared to what was selected by the traveler? When you work with a TMC this data is readily available and can be used to communicate the importance of booking through your online system instead of travel web sites like Travelocity or Expedia. In 2014-15 we analyzed the work we did for our clients and found that for domestic tickets, the national average ticket price was $572. Our clients paid an average of just $447 per ticket – a savings of $125 per ticket.

In addition, Topaz International’s 2015 Agency versus Internet Study showed that by booking through a corporate travel program channel, the travelers saved over $275,000. When you don’t have access to what the lowest available fare might be, it’s tough to manage what possible lost opportunities for savings are available.

4. Preferred supplier performance and/or opportunities 

An important part of your travel management program is the procurement of suppliers for your travel needs. In order to secure the most appropriate supplier for your business, data is needed to assess current volumes within each category, i.e. airfare, hotel and car. Through your TMC or online booking system, this data is available. When travelers utilize the system and complete their itineraries, each and every piece of their travel plan is included and available for reporting.

This data is key when negotiating rates with your preferred suppliers. Is the use of your car rental program as robust as you thought it would be at the beginning of your contract? Why is your preferred airline being replaced with another airline, even though the amount of airline travel has not increased? Through completely analyzing this data, updates can be made to best utilize your preferred suppliers and may open the door to better opportunities.

5. Travel purchase by source 

Information regarding travel purchase source is important when deciding on the best use of your travel dollars. When you work with a TMC, they are easily able to report on how many employees used the online booking system, as well as how many employees called and spoke with the TMC agent. Your online booking system and/or credit card data can determine what alternate sources were used to book travel, such as public web sites or direct supplier sites.

Reviewing this data will show the purchase behaviors of your travelers. Are there more “rogue travelers” within your business than what you initially expected? How much money is being lost when an employee books outside the system – and in the same vein, how much money is being saved when booking through a TMC? Information such as this is valuable when analyzing overall travel spend. 

6. Policy compliance

Your travel policy was developed to not only educate your travelers on the company’s travel goals, but also to establish limits or thresholds on what travelers can spend on travel. When you’re able to aggregate data from your TMC or travel and expense management tool, data from these sources can then be compared to what the policy has stated. If your travel policy states that all airfare should be under $500, was that followed? And if not, why? Are there specific policies relating to per diem rates and were they followed? If not, why?

Again, analyzing and then comparing this data to business benchmarks can give a clearer picture of how your travel dollars are being used.

This data collection process is critical to success and to do it effectively requires a conscious commitment to the process. In addition, purposeful data collection allows you to effectively communicate and evolve the travel management process with your travelers and more importantly, your leadership team. When working within a managed travel system or TMC, the savings opportunity is between 10-20%. Knowing that travel is an extremely important part of businesses growth today, it’s imperative that this line item be vetted and managed to incur cost savings.

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