By: Shelley Fletcher-Bryant, Vice President, Sales & Client Relationship Management
There’s no doubt about it: corporate travel costs have surged across markets in the last several years, and many organizations are feeling the pressure.
That means some tried and true tactics for managing travel supplier relationships don’t yield the same results they once did. Now travel managers, procurement teams, and finance leaders have a new playbook for achieving travel program savings.
Some organizations have already updated their roadmap to cost-savings, creating a set of proven strategies that you can leverage to achieve results.
Success story #1: Combat rising airfares with a data-driven strategy
For airlines–and all travel suppliers–data has become increasingly central to their pricing strategy. These multibillion-dollar global companies employ thousands of people and the latest technology to mine and analyze data that reveal exactly what price they should be charging for a given route on a given day.
You may not have an army of analysts, but there are tools and strategies to help corporate travel programs track data and reveal cost savings opportunities. Dynamic Performance Management (DPM) runs ongoing optimizations in your travel program based on the latest data from both your own program and the market as a whole, so that when it comes to cost savings, you and your airline suppliers are both working from the same set of information.
More and more often, Advito is hearing stories like this one: After it was time for annual contract negotiations with a long-time airline supplier, one Advito client faced significant cost increases. It was clear traditional methods of cost management were not going to work.
Instead, Advito identified 21 competitive markets with strong pricing from other airlines, then devised and implemented a holistic engagement campaign to notify travelers of these competitive options. That meant reminding and nudging travelers across multiple communication channels. For example, via company newsletter, on the travel program’s intranet page, and within their OBT (booking tool) by using merchandising strategies like strategically placed banners to guide travel bookers to savings.
The result? Within just 12 weeks, the airline’s average share had dropped from 32% to 21% in favor of more cost-effective carriers, reducing overall program spend.
Success story #2: Drive hotel program savings with rate targets
The traditional approach has been to focus on the 80/20 rule for hotel sourcing. In other words, sourcing 20% of your hotels used to cover 80% of spend and room nights. A simple look at your hotel spend data would likely reveal that approach is no longer efficient for driving real hotel program cost savings.
The most effective route to cost savings is what we at Advito call the “reduce and diversify” strategy. A laser focus on the top 10% of hotels can drive the highest return on investment. Prioritize your top tier markets while striving for 65% of your room nights and spend in tier two and three markets with market rate targets and watch the real savings roll in. Unlike rate caps, which set a hard maximum price and flag any booking above that as a violation, rate targets act as a guide. They display a competitive dollar value within search results, signaling to travelers what an acceptable price looks like and encouraging bookings at or below that amount. This approach gives travelers flexibility while steering them toward cost-effective choices.
For one Advito client, this simple shift helped transform their hotel program efficiency, driving cost savings while also saving on invaluable effort. We began with our reduce & diversify strategy, supplementing corporate negotiated rates with alternate hotel content to streamline the program and cut out-of-policy spend. Then, we leveraged Advito’s data intelligence dashboards to pinpoint high-risk markets and influence traveler behavior. Working with our Engage by Advito team, we introduced banners in the booking tool to reinforce in-policy booking and set rate targets at the top of search results.
The result? The first three months of target rate banner implementation delivered nearly $45K in savings from 7,000+ room nights.
Success story #3: Cut costs and carbon with rail
If rail hasn’t become a key player in your travel program, it’s high time to change that. Thanks to rail’s competitive pricing, integrating rail into your travel supplier mix can lead to significant cost savings. For example, the average rail fare for Advito clients is 47% lower than average airfares on comparable air routes.
There’s also the bonus externality of carbon savings. Flying is one of the most polluting activities your travelers can choose, and for many companies, it is the biggest contributor to Scope 3 emissions. That means finding alternatives to flying not only saves money; it also helps move your company closer to your carbon goals.
Making this switch is one of the most straightforward options you have in your cost-savings toolkit. In the case of one global Advito client, they successfully shifted their top 20 routes in Europe from air to rail.
The result? They not only achieved 310 tons of CO2 savings, but also €300K in budget savings.
Success story #4: Emissions reduction saves on costs, too
Shifting from air to rail is one simple way to save on both dollars and carbon. But one rule of thumb that many travel program managers may not know is that often a more sustainable travel program is a more cost-effective travel program. Train travel is one way to save, but so are tactics like:
- Choosing newer, more fuel-efficient aircraft
- Flying coach/economy or premium economy over business or first class
- Choosing to meet virtually for internal or non-revenue driving business trips
Through these strategies, it’s clear that building a more sustainable business travel program doesn’t have to mean sacrificing financial performance. In fact, our data shows that some of the most impactful emissions reduction strategies often deliver the greatest cost savings, too.
For example, one Advito client set out to drive down spend on air travel. A key route for them between New York and London had grown increasingly expensive in recent years, and so their travel team needed a solution. By shifting 15% of share on this route to a new preferred airline, they not only saved $68k in air spend in just a few short months, but also saved 60 tons of CO2 by shifting to more fuel-efficient aircraft.
In any industry, change is inevitable, and some will be more seismic than others. But change doesn’t have to lead to confusion. At Advito, we’ve kept a finger on the pulse of these changes, updating our tools, tactics, and guidance to ensure that whatever comes, we can lead our clients to their goals. To go in-depth on the ways corporate travel has changed–and how your cost-savings strategies must change with it–download our free report: Your Roadmap to Travel Program Cost Savings.
To understand more about how your unique travel program can benefit from Advito’s guidance on cost savings and beyond schedule a call today.