Last Updated on: March 7, 2023 at 9:27 am
Getting good value from your travel programmes has never been more important. Business travel remains difficult because of the current pandemic and the loss of revenue experienced by most companies. It is essential that all travel programmes are safe, achieve their goals and are cost effective. Are you getting optimum value from your travel management?
In this article, we'll take a look at:
Business travel is challenging now and will be throughout 2021. A recent study by S& P believes business travel will not bounce back to 2019 levels for five years, but this information was released prior to positive vaccine news. Large corporates are building their 2021 plans around vaccine availability and are optimistic that a large part of business travel will resume this year. Company travel managers report travel spending to currently be 5- 15% of 2019 levels (McKinsey) making it essential that every travel programme is safe, cost effective and achieves its goals.
Ed Bastion, CEO of Delta Airlines feels that the ‘new normal’ in travel spending will be in place later in the year and only be 10-20% down. In contrast, Bill Gates has declared that 50% of business travel has disappeared for good. We share the typical reasons why companies spend 20-50% more than they need to on business travel.
Many corporations with weakening profits have ear-marked business travel for cost cutting measures. However, this could prove short-sighted as spending the right amount of money on carefully designed travel programmes brings huge value to your company. An econometric analysis in the United States found that for every dollar spent on business travel, the average company saw $12.50 in increased revenue. A significant economic return, that travel management must consider.
In the 2009 study by Oxford Economics many important facts emerged in favour of business travel. In the United States, if the average-sized company ceased all business travel, there would be a 17% drop in profits, in the first year alone and it would take three years for the company to recover.
Both company executives and business travellers estimated that 28% of their business is generated by face-to-face meetings. They also estimated that 40% of
prospective customers are converted to new customers by an in-person meeting, compared to 16% conversion rate without such a meeting.
If you are one of the many managers who feels that you are not achieving this kind of ROI, we are here to help you to achieve it. With us you will be able to optimize your travel spend to achieve 20-50% savings, or, if you chose to re-invest, a major benefit to your top line.
The baseline we work to is the minimum viable cost of your travel plans. This means the lowest cost for a given standard of travel – and we compare this with the actual current cost. We call the minimum viable cost the “working” spend and the gap between the minimum viable cost and actual cost the “non-working”; i.e. the spend you want to remove or reduce.
To help us identify the right tools to reduce or remove non-working travel spend, we start by analysing spend and categorizing appropriate. Below is an example of how non-working spend can quickly build up and have major impact:
Once we understand where the spend is going. We can start to look at how we optimise spend. Not all our clients have the same type of non-working spend, which is why our App Store helps clients build the right solution for them:
.
Business travel remains crucial in 2021 and business trends still mirror this. Being prepared with the right travel partner can make your travel budget stretch further. Book a demo to discuss travel cost saving methods or create an account with us and have a look around!
TruTrip streamlines booking, management, and reporting for hassle-free business trips.