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Why is ROI so important in business travel?


Why is ROI so important in business travel?

One of the questions we are asked by clients and prospective clients is how much we charge for our services, with this often used as the key barometer for comparisons and measuring the value driven from travel providers.

Traditionally, during a typical tender process TMC value was measured through comparing transactional fees on a product by product basis, often with the TMC charging the lowest fees or annual costs, securing the contract.

However, when looked as part of total travel expenditure, transactions fees and management fees charged by travel management companies only cover a tiny proportion of travel expenditure, usually around 3% of total spend. So, whilst it is key to make sure you are getting best value from the cost of using a travel management company (TMC), it’s also important to also dig deeper to identify where the travel management company can help you drive cost reductions and added value to offset TMC service costs.  

In addition, using a business travel agency, especially for the first time, should also reduce the amount of time spent managing and organising company trips within a business, and these time savings should also be measured and included within any ROI calculations.

The return on investment for most B2B service companies can be measured in two areas, direct cost savings delivered through using the supplier and the value of increased employee efficiency through using the provider (time savings). Within the business travel environment, these can cover a variety of areas including:

Cost savings

Reducing the cost of travel, through accessing the improved range airfares and hotel rates available via the travel management company through their specially negotiated supplier deals. In addition, your travel company should provide access to an Account Manager, who's role it is to help you drive the best value possible from your travel expenditure.  

Part of the role of a TMC is also to help ensure all your travel bookers are purchasing travel as cost-effectively as possible. Key to this is ensuring your travel policy is given to your travel company and they will then police this on your behalf, helping you to minimise any overspending on business trips. This is also one of the areas that companies moving to a travel management company for the first time often see the biggest cost saving gains.

We’ll then help you measure these on an out of policy expenditure report and identify any trends or areas of development for your travel and expense policy.

Click here to download our FREE Travel Policy Template

Time savings

Using a travel management company can save a huge amount of time for your employees if you are currently self-managing business travel. A good travel management company will take away all of the hassle related to the booking of business trips and comparing costs and timings for flights on one website alongside checking hotel availability on another, recent research has shown that this can take up to 90 minutes to complete.

And then if your planned meeting changes you then need to go back in and change everything you previously booked, increasing the time spent on booking travel for the business trip even further. Just two calls or emails to your travel partner will ensure all of this is managed on your behalf, providing you with two hours of time back in your week. 

Once you are on your trip, the benefits when booking via a Travel Management Company continue. Remember the recent disruptions caused by the storms across Europe? travellers who booked through a TMC didn’t need to wait in the information queues snaking around the airports in Amsterdam, London or Paris. They just made a call or email to their TMC who took care of any flight re-booking or arranging an airport hotel, saving a huge amount of time and providing peace of mind.

At Good Travel Management we always work hard to demonstrate the full return on investment that we deliver to our clients, which is presented during our client review meetings as one of our key performance metrics. 

We do that by transparently presenting what it cost to use our services, but also measuring this against the savings we have delivered, through smart procurement of airfares, hotels and other products, combined with the control and savings delivered through driving compliance to our clients travel policies.

For those companies, we haven’t met yet, we’ve created a handy ROI calculator that you can use to work out how much you should (or could) be saving from your current travel provider.

You can access the FREE ROI calculator HERE if you would like to try it for your business.

LinkedIn ROI Calculator Gif

About Kevin Harrison

Kevin is our managing director and business travel veteran! Kevin has worked within the industry for over 30 years and spent 20 of those at one of the UK’s largest travel management companies. Kevin leads a dedicated and passionate team who strive to make a difference to our customers’ businesses by improving their approach to corporate travel.
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