The Biggest Problem Faced by Travel Managers

Here’s an interesting look at how challenging it is to determine whether your company’s travel program is working effectively. We have 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 Solution

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 Price 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 then beat the budget by going out of their way and spend less. Rocketrip rewards the traveler for doing so, which leads to an overall actual cost reduction for the company. 

Rocketrip’s algorithm encourages the use of cost-effective travel options and is 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 the Rocketrip budget, they’re more likely to be cost-conscious and spend less since they’re been given a fair estimate of what the trip should cost before they book. The budget anchors their idea of what’s an appropriate amount to spend. Travelers who use Rocketrip generate savings of 30%+ compared to their Price to Beat, but even greater savings when compared to average trip costs 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