Laura Busby is commercial director at UK-based Good Travel Managemet
Corporate travel is an essential facet of today's global business landscape but the cost of it continues to rise.
Global travel price forecasting reveals the average price of an air ticket will increase by 1.8 per cent in 2024, moving from £723 to £736 per flight. Meanwhile, the average rail ticket price will rise by 3 per cent, increasing from £84.46 to £86.99.
However, when considering approval solutions for trips, it’s not just cost that should be the main factor. Approval solutions can be based on so many elements including, company culture, environmental impact and risk management.
This is why demanding meticulous evaluation of a trip’s return on investment (ROI) is essential. One of the struggles companies face though is that the ROI of a trip can be determined in many different ways.
Companies usually try to pinpoint obvious measurable outcomes like the number of leads generated, new partnerships established, contracts secured or new markets explored.
However, ROI metrics vary based on the nature of each business trip and it's important to review the objectives and ROI for each trip based on what is important for each separate business department. For example, a trip focused on lead generation might have a different set of metrics compared to a trip aimed at relationship-building.
Quantifying tangible and intangible benefits
Assessing the benefits of corporate travel entails quantifying both tangible and intangible outcomes. Because, while some benefits can be precisely quantified with numerical data, others demand qualitative assessment.
Tangible benefits are the concrete, measurable and quantifiable outcomes that can be expressed in numerical terms. Measuring tangible benefits necessitates pre- and post-trip data collection, including metrics like sales revenue during and after a trip and new leads or contacts.
In contrast, intangible benefits, though challenging to quantify numerically, also hold substantial value for organisations. For instance, business travel can be a valuable learning experience for employees, enhancing their skills in negotiation, communication, adaptability and cultural understanding.
It can also provide opportunities for team members to bond, collaborate and reinforce company culture. Recognising and rewarding employees with travel opportunities can even motivate them to perform at a higher level. Studies show 83 per cent of workers see corporate travel as a perk of their job and 65 per cent of millennials consider corporate travel proof of their significance within their organisation.
Quantifying intangible benefits demands qualitative data collection through surveys, interviews and stakeholder feedback. This could also involve testimonials, success stories and improved communication insights gained from on-site interactions.
Evaluating alternatives
Assessing alternative uses for corporate travel budget provides another lens for measuring its value. This requires a comprehensive analysis of potential benefits, costs and risks associated with different options.
A big factor for many travel companies to consider is whether virtual meetings will be more efficient than the need for travel. In these situations, consider introducing reason codes for employees' trips. That means when travel is being analysed you can assess whether the reasons given are the most beneficial and whether it’s worth implementing certain caveats to in-person business meetings.
For example, if your reason code for employee travel is an in-person sales meeting, it might be that you decide individuals should travel to customers where they’re more likely to earn over a certain percentage of sales. Or perhaps you do fewer meetings, maybe only one a month, and prioritise your biggest potential business opportunities for each occasion.
Additionally, considering the cost of not investing in corporate travel – including its impact on relationship-building and intangible benefits – is imperative.
Leveraging tools and technology
To enhance decision-making in relation to corporate travel ROI, corporates will need to use a blend of tools and technologies for data analysis, tracking and reporting. Travel management software offers comprehensive solutions for managing travel expenses, bookings, itineraries and reporting. It delivers insights into travel patterns and expenses, aiding informed decision-making.
Tools like Microsoft Power BI are particularly useful as they enable organisations to create bespoke dashboards based on their ROI measurements. Companies can closely assess any personalised factors like changes in customer base, and how travel is enhancing company culture.
One thing to consider, is how is your business capturing the entire cost a trip?
Expense management software is useful because it can amalgamate all travel data with your expenses and vice versa. This means businesses can determine the holistic cost of trip, from the first coffee purchased at the airport to the cost of flights, hotels and any other additional purchases whilst on the road.
CO2 measurement for travel is becoming increasingly important for measuring business ROI too, but it can be challenging given that there are so many ways to measure it.
If this is a priority for your business, you will need to decide how you choose to capture CO2 data and ensure it is consistent across all departments and in all other countries.
We partner with Thrust Carbon which is an independent company, not funded by airlines. It builds upon multiple base methodologies and applies the most appropriate methodology given the data provided for a possible flight to calculate CO2 emissions. Others companies providing a similar service include Chooose and Squake.
By partnering with CO2 experts, businesses can introduce accurate approvals mechanisms dependent on CO2 emissions for planned trips. For example, if your software indicates a journey will go over your company’s maximum CO2 threshold, it could be declined. In these cases, an alternative solution should be found to ensure ROI is still achieved for that business opportunity.