Spend Matters welcomes this guest post from James Filsinger, president and CEO of Yapta.
You don’t have to be a travel expert to know that hotel and airfare prices have a frequency all their own, constantly shifting up and down. The price you paid today could be dramatically cheaper tomorrow — or grossly more expensive in a week. But what can you learn by tuning into all this noise around travel pricing? You may be surprised at what these price fluctuations can reveal — or by the questions that can surface.
Are public rates actually lower than your company’s negotiated rate? Are your company’s travelers getting all the amenities they’re entitled to? Should your company be demanding better pricing from your suppliers?
For most large organizations — where travel is the second largest controllable expense, behind only payroll — the answer to these questions can either mean millions in savings or massive dollars lost. However, it hasn’t been until recently that the tools to measure and analyze price fluctuations have been available to corporations with heavy travel volumes.
With access to live pricing data at their fingertips, corporate travel managers can get a better handle on the dynamic pricing strategies used by the majority of today’s airlines and a number of hotels. Dynamic pricing allows these suppliers to quickly increase or lower prices based on the current market demand. By constantly monitoring these fluctuations in pricing, companies like Shell, GE and Macy’s have been able to immediately identify opportunities to save, either by working with their travel management company (TMC) to secure the lower available rate, a supplier refund (if, for example, the company had purchased a fully refundable airline ticket) or a credit for future travel.
These companies are also using this insight on pricing to negotiate stronger future rates with key suppliers — or to ensure that they are getting all the amenities that their travelers are entitled to, or that they’re not being billed for amenities that are unnecessary (like a “complimentary” round of golf that gets packaged with a higher-priced hotel room).
With business travel spending on the rise, having visibility into supplier pricing is going to become more and more critical to the bottom line. According to a recent report from the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), in the fourth quarter of 2015 alone, $72.4 billion was spent on U.S. business travel activity. The report also states that U.S. business travel spending is expected to increase 1.9% in 2016 to $295.7 billion. That’s more than the gross domestic product for all but 40 countries in the world.
In today’s business environment, the technology to dynamically monitor supplier pricing has become essential to travel managers. It’s like a compass to a sailor. You simply can’t allow them to navigate without it. Otherwise, your ship is forever sailing off course — while slowly sinking financially.