How To Leverage Industry Data to Optimize Your Corporate Travel Spend
Corporate travel is a $1 trillion global industry. As a result, it’s probably not surprising to know that tons of industry data exist to help you evaluate your corporate travel program. The difficulty that comes with so much access to data is knowing what to use and who to trust.
The best place to start is to determine the business purpose for collecting the data. What are you trying to measure? What are you trying to show? Who is the audience? What do you plan on doing with the results? Since our inception, KesselRun has been utilizing industry data to help provide meaningful and actionable advice to our clients and these are always the questions we start with prior to drawing from the myriad resources available to us in the industry.
Here Are The primary Questions We Are Asked:
My travelers keep telling me that they can find cheaper deals online. Can they really? How do I prove them wrong or right?
By far this is the biggest question that relies on key industry data to answer. In most cases, the corporate travel manager or business owner will ask the traveler to provide a screen shot or some back-up of the “better” rate they found. In many cases, this data never comes but when it does quite often the analysis becomes a simple matter of not comparing “apples to apples”. In other cases, the data shows that, in fact, the traveler did find a better deal. While there may be several reasons for this (another blog entirely), the broader question is how do we show if the rates we are getting through our TMC are generally better, the same, or worse than the rates our TMC is providing.
A natural next step is to ask our TMC to help benchmark our rates. The central flaw in this thinking is that the TMC is only benchmarking your rates versus other corporate rates it is booking; whereas, what we really want to understand is how the corporate rates stack up against rates the traveler may be able to find on the “spot market” such as Expedia or Delta.com, for example. Here, our study needs to be holistic. Airline Reporting Corporation (ARC) provides data across all ticket and source types and represents the single best resource for assessing airline rates across the universe of booking channels. Another great industry source is the Department of Transportation.
Again, using DOT as a data point provides a more holistic view of airline tickets notwithstanding corporate or leisure-based bookings. The key in trying to assess whether or not your TMC is providing the best deals is to understand the price gap between corporate and leisure type bookings for a given city pair. In the case where the city pair represents a typical business route, you will find the delta small. In the case where the business destination is also a typical leisure destination, you may find the delta larger and worth further investigating.
Are my negotiated supplier discounts good?
On the face of it, this question may sound similar to the first question posed above? Ultimately, it’s about getting a good deal, right? Possibly. One might assume that if your company is utilizing well negotiated rates than the likelihood of a traveler finding a cheaper deal is minimized. While this may be true in some cases, it’s important to understand that negotiated corporate air and hotel programs should not necessarily be judged on a booking by booking basis.
Most studies show that a well negotiated air and hotel program save the company between 10-20% over the long term versus buying on the spot market. What this means is that while over the long term, the organization realizes savings but that doesn’t necessarily mean you will find the best price every time. The trap many organizations fall into is clinging to a few bad examples and fail to see the big picture. Here, utilizing the above data sources is still very valuable because it will help assess whether or not even having preferred corporate discounts is worth the effort.
However, the best place to start is by utilizing industry data that is more specific to corporate travel and corporate travel habits. Corporate travelers are unique in many ways from leisure travelers – they tend to book with less advance purchasing habits, may book in upgraded fare classes, have a tendency to change flights, etc. All of these factors and more play into cost and to some extent it is unfair to compare how a corporate traveler books to a leisure traveler. In terms of airline deals, utilize your travel management company to assess and benchmark your program versus similarly situated clients. Use a third party consultant for further analysis. Keep in mind that a travel management company is remunerated by the airlines for volume and market share commitments so while the travel management company data is valuable, it should be put in proper context. Once you have verified you have favorable corporate rates, benchmark against the sources mentioned above. There will be blips and inconsistencies but you should see savings overall. In terms of hotel, much of the same applies.
One major difference is that the benchmarking data for hotels is much better than for air. In addition to utilizing travel management company data, it may be extremely helpful to utilize a consultant or go direct to industry sources such as Lanyon or TripBam, both of which can provide property level pricing comparison data for corporate negotiated rates. The exercise can get expensive so this may not be a good benchmarking strategy depending on the program. Other sources such as STR Analytics provide good city level data which is provided by hotel type and tier but doesn’t provide details at the property level.
Ultimately, it’s important to know your audience – what am I trying to find out and what do I plan to do with the information. Once you have a handle on this, industry data is available to help in your search for answers.