The Biggest Problem Faced by Travel Managers
This post is part of Rocketrip’s series on business travel overspending.
Here’s an interesting look at how challenging it is to determine whether your company’s travel program is working effectively. A survey conducted by Scott Gillespie, managing partner at tClara travel consultancy, identified the biggest analytical pain points faced by corporate travel managers. At the top of the list: “quantifying savings.”
The Trouble With Travel Savings
Travel savings are difficult to quantify for two reasons. The first is data quality. Depending on how employees book trips and report expenses, a travel manager might only have access to incomplete or inconsistent spending data. Getting a comprehensive sense of a company’s travel spending requires integrating data from multiple sources, such as its travel management company (TMC), online booking tool (OBT), and most problematically, from wherever employees book their trips on the open market.
Even when spending data is available, what’s a travel manager or corporate controller to make of it That’s the second difficulty of quantifying travel savings: defining what travel savings actually are. To know how much it’s saving because of its travel management program, a company has to know what it’s spending, and how much more it would have spent in an alternate scenario.
Traditionally travel managers have based savings calculations on the discounted rate they negotiate with hotels and airlines. Realized negotiated savings is a useful indication of how much a company saves through its travel procurement efforts. However, it’s not a complete look at how well the company is doing at minimizing its overall T&E spend. For instance, a negotiated rate with a given hotel might be significantly less than the quoted market rate and still be higher than what could be achieved by allowing employees to book elsewhere.
The Rocketrip Method
It’s a mistake to think of travel savings purely as a function of the procurement process. On the most basic level, a company can only reduce its overall travel spending if employees spend less on their individual trips. Rocketrip’s method for calculating travel savings starts with this simple premise.
Our algorithm produces a Budget to Beat based on real-time pricing data and the specific parameters laid out in a company’s travel policy. It’s the most accurate estimate of how much an employee would spend on a trip in the absence of any incentive to save. A business traveler can only beat her budget by going out of her way to be frugal and spend less, so Rocketrip’s savings figure shows actual cost reduction.
Rocketrip’s algorithm encourages use of cost-effective travel options, and are generally quite tight. By design not everyone will find a way to beat their budget. But even when a business traveler doesn’t come in under her Rocketrip budget, she’s more likely to be cost-conscious and spend less since she’s been given a fair estimate of what the trip should cost before she books. The budget anchors her idea of what’s an appropriate amount to spend. Travelers who use Rocketrip generate savings of 30%+ compared to their Budget to Beat, but even greater savings when compared to average trip cost outside of the Rocketrip platform.
Motivate employees to spend less on business travel by letting them keep half of what they save. It’s not rocket science, just Rocketrip. To learn how it works, schedule a demo today: