Ever wondered how realistic the savings reports supplied by your TMC are?

Such reports sometimes show savings achieved by comparing fares and/or rates booked against published airfares and hotel rack rates – ie, the most expensive ones.

So do the savings reflect your travel policy? Does the published fare/rack rate option comply with your travel policy? If not then these rates should not be the benchmark for savings.

The benchmark rate should always be the actual fare or rate that was requested to be booked within policy.

Actual savings can be identified by applying the following:

• Low rate: this represents the cheapest option that the user could have legitimately chosen to book that was compliant with your business travel policy.

• High rate: this represents the most expensive option that the user could have legitimately chosen to book that was compliant with your business travel policy. These measurements will enable you to identify realistic savings based on your travel policy.

• Missed saving: the difference between the benchmark rate and the low rate.

• Realised saving: the difference between the benchmark rate and the high rate.

Other savings measurements to consider are cost avoidance and process improvement. Cost avoidance refers to reductions that cause future spending to fall, but not below the level of current spending.

Cost avoidance often involves slowing the rate of cost increases. In other words, future spending would have increased even more in the absence of cost avoidance measures. An example of this would be to successfully resist when a supplier wishes to increase cost or reduce a discount.

Process improvement, meanwhile, is savings achieved through an increase in online booking adoption or implementation of technology to reduce process costs.

Added value savings: these saving are achieved through supplier negotiations, examples of which are hotel rates inclusive of amenities such as parking and wifi, or air fares with complimentary airline lounge access or baggage.

You should also consider benchmarking your costs. Benchmarking costs allows organisations to see whether they are performing better or worse than similar organisations, and is a helpful tool when it comes to negotiating and drawing up travel policies to build in future savings.