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Cost Savings

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Cost Savings

After 35 years in the travel management business, it has been our experience that few managers make effective use out of the reams of paper wasted on travel management reports. The fact is, most “savings” reports are virtually worthless unless the person reviewing the report (and more importantly corporate supervisors) are fully cognizant of what is being measured, and what it’s being measured against!

Measuring “cost savings” based on the differential between fare paid and “full coach” is truly meaningless unless considered as an ongoing benchmark indicator. Given today’s competitive world, full coach is an anachronism, since less than 10% of business travelers pay full coach fares even for last minute air travel.

Summit will ensure that the power of available reports is recognized and acted upon. After implementation, we propose quarterly meetings where the most salient findings are discussed with a team from YOUR COMPANY. The goal would be to identify cost-saving strategies which would make a measurable impact on gross expenditures and/or traveler satisfaction, and where appropriate, the company would then modify travel policy.

At Summit, we have the experience to understand where savings are possible. We can evaluate reports honestly and openly and present them to potential airline and hotel service providers, demonstrate the company’s ability to move market share and enforce compliance with corporate policy. (It is in this arena where most companies fail to execute on their well-intentioned plans). Measurement and reporting is the key to negotiation of mutually beneficial arrangements with travel industry suppliers.

We ask the question: On a typical trip, would you rather have a 10% “rebate” on a $200 hotel room, or a $160 hotel room. In the corporate world, the answer often depends on who is answering the question, and the respondent’s orientation towards true cost savings.

Sometimes, the procurement department may try to demonstrate “value” and pay the $200 room and show an illusory “savings” of $20 to superiors. We don’t believe this type of approach is a part of the YOUR COMPANY culture, because the nature of this “savings” depends on the assumption that all other options are identical in price. The procurement department at YOUR COMPANY, as well as finance department, both know the difference and will appreciate the value of the $160 room, all other things equal.

It’s very hard to know what “real” savings are when the procurement department doesn’t work with air travel, hotel room rates and car rentals on a daily basis. We may know intuitively that a $500 hotel room is outrageous, but the context of the transaction must also be known. In Moscow, where safety is an important issue and quality and location are critical factors, a $500 hotel room may turn out to be a bargain!

One thing we can guarantee to YOUR COMPANY is that measuring when measuring air travel “savings,” any report that measures the deviation from full coach fares won’t tell you much, except that the provider of the report isn’t going to help you achieve meaningful savings.

Your company may rely our management’s 100 years of cumulative experience in dealing with precisely these issues. We know when an expense is reasonable, and when it’s a rip-off. And we’ll work with DSP’s staff to be sure you know the difference as well.