Supply Excellence recently ran a guest post from Scott Gillespie, who pens Gillespie's Guide to Travel Procurement. The above-linked article is the first installment of a four-part series intended to provide expert travel-related spend saving tips. Travel is a spend beast unto itself. Not unlike services procurement given that it's traditionally been administered by specific experts inside a company rather than by the broader procurement function, travel brings an entire set of nuances. For example, I bet you can't name all the types of middlemen driving up the price of hotel rooms, can you (hint: it's often two or more)? Moreover, getting at travel spending data is nowhere near as straightforward as getting at types of information from other spend categories. But where's a good place to start?
Scott suggests that the "trick with travel data is knowing where to get it and how to use it". For example, when it comes to airline spend, the best place to start is your travel management company or TMC. But this only works if employees are booking air tickets using your preferred and approved booking channel. Think credit card data is enough? It's not. "The main reason is that credit card data generally lacks the details needed for airline sourcing [including] dominant fare class, logical O&D, one-way or round trip indicator," Scott writes.
Hotel spend requires the ability to aggregate data from two external sources: TMC information and corporate card data. That's because in most companies today, "Roughly 50% of all corporate hotel reservations are made outside of approved corporate booking channels". One of the challenges of credit card data, however, is that in many cases, you can't get a "detailed break-out behind each hotel charge (called "folio" data)" that provides a room-rate. But by "scrubbing" both TMC booking data and credit card data and merging the two, it becomes possible to get this information.
Tackling hotel spend can be quite complicated in practice (outside of just gathering and examining the data). Earlier this year, I traded emails with Jari Tavi, a former Basware executive who now serves as CEO of Hotel Spend Management provider Travelzon. One particular rate audit they conducted, as part of a program with what everyone thought was a highly savvy global client, gave some surprise findings. Here's what they found: "The level of maverick buying varied hugely from country to country (up to 60% of maverick buying in some countries); those countries that had a strong culture for internet and on-line were better than those where "Landline phone" is still the preferred tool; contract compliance, measured by guaranteed availability and rates, varied from 20% to 100% (the US was at the 80% level); some hoteliers were not executing the negotiated contracts at all; and measured performance and savings varied from 5% up to 30% depending on level of maverick buying and contract compliance."
Stay tuned for further coverage of travel spend savings ideas and benchmarks on Spend Matters.