How to benchmark travel spend: what to compare, and with whom
Benchmarking in corporate travel is the process of comparing your travel programme's performance metrics with those of other organisations, to identify areas of strength and opportunities for improvement. It only helps when the comparison is like for like. This guide covers why it is worth doing, what makes it hard and where the comparison data comes from.
Why benchmark a corporate travel programme?
Metrics Comparison
Identifying Best Practices
Performance Evaluation
Goal Setting
Strategic Planning
What are the challenges in conducting benchmarking?
Benchmarking in corporate travel is clearly useful, but anyone wishing to build this capability needs to work through several challenges:
Data Consistency and Quality:
Access to Comparable Data:
Changing Industry Standard:
Complexity of Travel Programmes:
Integration of Different Data Sources:
Where does travel benchmark data come from?
Travel benchmark data comes from 3 kinds of source: published market reports on hotel and air prices, studies run by a travel agency or consultancy across the companies it serves, and pools in which companies share summarised booking data with each other. A market report tells you what a city or a route costs in general. A study or a pool can tell you what other companies actually paid, which is the comparison a supplier conversation needs.
"Similar companies" can mean 2 different things. It can mean companies like yours, of the same size or in the same sector. Or it can mean companies buying the same thing: the same hotel chain in the same city and month, or the same airline on the same route and in the same cabin. For rates, the second is the stricter test, because a price only means something beside what others paid for the same purchase, in the same place, at the same time.
That stricter test is the one Vantage by PredictX applies to corporate travel benchmarking against your peers: hotel rates compared by chain and metro, airfares by airline, route and cabin, with at least 3 companies behind every peer figure.
FAQs
Common questions about benchmarking a corporate travel programme
Benchmarking in corporate travel is the process of comparing your travel programme's performance metrics with those of other organisations, to identify areas of strength and opportunities for improvement. The usual metrics are what you pay, such as average nightly hotel rates and average ticket prices, and how your travellers book, such as how far ahead and through which channel.
Benchmarking is crucial as it helps you understand how your travel programme stacks up against the competition, identifies best practices, and informs strategic decisions to enhance your programme's efficiency and effectiveness.
Because they compare different things. One benchmark may use an average, which a single large buyer can pull up or down; another may use the median, the typical rate paid. One may compare a hotel stay with the same chain in the same city and month; another with any hotel in the city across the year. Before acting on a gap, ask what was compared, over what period and how many companies stand behind each figure.
Take it to the supplier. A rate above what other companies paid for the same hotel chain in the same city, or the same airline on the same route and cabin, is the starting point for a negotiation. A booking habit that differs from other companies, such as booking later, can explain part of the gap, and that part is yours to change.