Over the past few years, factors such as Covid-19, economic slowdown, and political instability have severely affected business travel costs. Hence, it is no doubt companies are now looking for ways to ensure Return on Investment (ROI) and save costs.
According to Business Travel News, accurate ROIs for travel spending remains an elusive goal for most businesses.
Return on investment (ROI) is a critical metric businesses and organizations use to measure financial success. In business travel, travel ROI is a metric that measures the profit gained from each business trip.
By calculating the ROI of a particular project or initiative, companies can evaluate the potential profitability of business travel and make informed decisions about their business travel process.
ROI is calculated on a per-trip basis as follows:
ROI=Business travel outcome/ Total travel costs
So, to increase ROI when traveling for business, you need to either increase the business outcome or decrease travel costs, or both.
There are several ways that companies can ensure a Return on Investment (ROI) from their employees when they are traveling for business. Let’s look at some of them:
Getting comprehensive travel data analysis is crucial to make good business decisions. Therefore, most companies seek better visibility in travel spending and reimbursement to identify how much is spent on each trip. With the help of business travel analytics, you can track essential travel KPIs that will help improve your ROI and business travel management process.
You can do this with the help of modern travel management software that offers advanced data analytics. The software consolidates all the travel data on a single dashboard, giving you complete visibility of all the travel spending and reimbursement for different trips in one place. For instance, you can get to see the top spenders, percentage of last-minute bookings, frequently traveled destinations, etc.
These insights help you identify areas of cost leakages and thus adopt measures to improve travel-related expenses.
While booking a business trip, business travelers usually don’t take into consideration flight and hotel prices. Hence, there is a fair chance that they may end up booking expensive flights or hotels. This can lead to an increase in business travel expenses and, in turn, affect your travel ROI.
One way you can avoid this is by incentivizing the employees to book the most cost-effective option.
For instance, let’s say an employee is allowed to book flight and hotel packages up to $250. However, he chooses to book an economic travel package of $200. A part of the savings, which is $50, is given to the employee as a reward. This way, you can ensure cost savings while also rewarding employees.
When an employee raises a request for trip approval, the first thing that is bound to cross your mind is how you can reduce travel costs and ensure a good ROI. Your travel managers must constantly look for good flights and hotels, keeping in mind the employees’ preferences while also optimizing the travel budget.
When you have employees frequently traveling for business trips, it becomes necessary that you partner with specific flights and hotels. This will help you negotiate with them for the best deals and discounts.
Also, business travel partners, such as ITILITE, help you negotiate with various flight and hotel vendors and provide you with a wide travel inventory at affordable prices. This helps you in saving a lot of money.
Decision makers, especially business owners and travel managers, must set up policies where employees must report the business outcome of a trip before requesting it. Asking for the monetary outcome of a trip request before approval can help companies improve their travel ROI in several ways:
Cost-benefit analysis: By evaluating the monetary outcome of a business trip before it happens, you can understand whether the benefits outweigh the travel costs.
Performance evaluation: Companies can also use the monetary outcome of a trip as a performance metric for their employees. By tracking the ROI of each trip, they can evaluate the effectiveness of their employees’ travel and incentivize them to make more cost-effective choices.
Benchmarking: Comparing the monetary outcomes of similar trips can help companies identify trends and patterns in their travel expenses. You can benchmark your travel ROI against industry standards. Moreover, you can identify areas where you can improve your performance.
It is without a doubt that technology has developed tremendously over the years. Therefore, many companies have realized that they need modern technological support to ensure high ROI. One way companies can ensure ROI is with the help of an advanced T&E solution which gives access to a virtual travel consultant.
Virtual travel consultants such as Mastermind compare your travel and expense data against industry standards and suggest where you could have saved more. It uses machine learning and predictive analytics to analyze your employees’ spending behavior, policy violations, and last-minute booking, among many others.
Hence, you can make important travel decisions and save costs through actionable insights.
Chief Financial Officers (CFOs) play an important role in cost management as they are responsible for managing the financial aspects of a company.
CFOs can help you identify and manage potential financial risks that could impact the travel ROI. They analyze the impact of external factors such as economical situation, inflation, and regulatory changes on the company’s finances.
Moreover, they are aware of the current industry trends. Hence, they can provide tips, guidance, and support to optimize costs and ensure travel ROI.
Companies must focus on boosting employee satisfaction in order to ensure a good travel ROI. Here are a few ways how employee satisfaction can ensure ROI:
Increased productivity: When employees are satisfied, they are more likely to be engaged and productive. This can increase efficiency during business travel, thus resulting in a higher ROI.
Taking Feedback: You must also consider taking feedback regularly from your road warriors in order to ensure a good ROI. When you take feedback from them, they feel valued and thus, resulting in employee satisfaction.
Enhanced Creativity: Satisfied employees are more likely to be creative and innovative in their work, which can lead to new ideas and approaches for travel-related activities. For example, they may suggest alternative travel arrangements or ways to reduce costs while achieving the desired outcomes.
In the business travel industry, ROI is significantly important as it involves companies spending on travel, lodging, and other miscellaneous things. However, ensuring a good ROI requires careful planning, analysis, and ongoing evaluation. By following the tips outlined in this blog, you can minimize costs and ensure better ROI.
If your company is looking for ways to improve your travel ROI, ITILITE can help you with that. ITILITE’s integrated travel and expense management software can give you an eagle-eye view of your company’s travel spend based on employee level, department, destination, transport, etc.
Additionally, our virtual consultant ITILITE Mastermind will help you identify cost-saving opportunities, thus ensuring better travel ROI for your company.
Get a free demo of ITILITE to know more about our advanced features.
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