KPI Toolkit for Travel Managers

Updated Feb 2017

hierarchy-of-needs-kpis

Travel KPIs and benchmarks have not evolved much in the last 20 years.

Here’s a fresh, much more strategic look at what travel managers should be using to measure the success of their programs.

Start with an understanding of what business travelers need to do their jobs well.  That’s the Hierarchy of Needs, shown in blue.

Hard to argue that the ultimate goal of any business trip is to have a positive business impact, right?  So if that outcome depends on getting the road warrior through each level of needs, then travel managers should be working hard to ensure those needs are well met.

And that means measuring proxies for these levels to show how well said management is going.  Measure these KPIs, mange them well, and your travel program will achieve much greater impact for your business.  I’ll write about these travel benchmarks in more detail soon; for now, the basic ideas:

Risk Score combines the program’s overall readiness for managing travel risks, and the destination risk associated with the program’s travel footprint. Scale the results where high risk and poor readiness result in a high number.  Management will want to see this travel KPI driven down.

Trip Quality combines the quality scores for the flights taken and hotels booked by road warriors. Assign high quality scores to non-stop flights booked in first class, and low quality scores to flights with multiple stops and booked in economy class.  Same direction for hotels – the more stars, the higher the hotel quality score.

Road Warrior Attrition measures the annual rate at which the road warrior workforce loses its people.  Attrition is a very common HR metric…just need to tell HR who your road warriors are. Management probably wants to see this rate decline over time.

Trip Scrap Rate is the opposite of Travel ROI.  Here, we’re measuring the percentage of road warrior trips that in hindsight, the road warriors believe were not worthwhile.  The average is about 12%…clearly worth managing this number downward, right?

The most important of these four KPIs is Trip Quality, because it is a choice, a dial, that management can turn up or down.  Changing trip quality will affect travel prices in one direction, and will drive the other three KPIs in the other direction.

lets-manage-the-bigger-picture

Airfare Benchmarks Grow Up

Please don’t believe that having an old-school airfare benchmark from a peer set is going to tell you anything meaningful. Comparing your $555 average ticket price (ATP) to a benchmark’s $500 ATP is worthless…unless it’s been created from exactly your markets.

The Air Clarity airfare benchmark solves this problem, and goes two steps farther. Not only does it build a truly market-matched airfare benchmark at the overall program level, it breaks down the program’s percentage gap into two critical pieces:

The Product Mix gap measures the difference in airfare product features your program bought, versus those product features bought by the benchmark’s travelers. Product features include cabin, number of stops, days advance purchase, Saturday night stays, etc. Essentially, the Product Mix gap reveals how your travel policies and culture compares to your market-matched peers…an essential insight for policy-based savings estimation.

The Price gap measures the overall weighted difference in airfare prices, measured at the smallest practical level – same city pair, same airline, same booking class, e.g., Y, B, M, H, etc.  This single metric instantly reveals the potential for sourcing-based savings.

Air Clarity's 3 Most Important Airfare Benchmarks.png

Airfare Benchmarks in Price per Hour

For a much more executive-friendly way to discuss the cost of air travel, forget price per mile…really, what does 25 cents a mile mean to anyone not in the aviation industry?

See this post for a range of price per hour benchmarks in short haul (mostly domestic) markets and long haul (international) markets. The Air Clarity Price per Hour benchmarks also come by cabin…great context for those executive briefings.

KPI Toolkit for Travel Managers, as of 2012

Back in 2012, four of us took up Paul Tilstone‘s challenge to create a set of Key Performance Indicators for travel category managers.  Nicolas Borel, Torsten Kriedt, James Westgarth and I have been working on this project for quite a few months now.

We settled on twenty-one KPIs, complete with definitions and likely data sources.  Of course, you can’t have a KPI Toolkit without an Excel file, right?  So we designed an easy self-scoring worksheet that allows you to customize the weights of each KPI to suit your interests. Our KPIs focus on transient travel – the groups and meetings side was out of scope from the get-go.

Folks, these KPIs are suggestions – they are not industry-agreed standards.  They are meant as a thoughtful starting point for considering which KPIs are best for your travel program.

Updated: Here are the two files we created:

2012 KPI Reference Guide for GBTA This PDF describes the 21 KPIs in detail, and provides more information about the scope and limitations of this effort.

KPI Scoring Wizard This Excel file contains a simple worksheet that allows custom weighting and scoring of each KPI.

GBTA (Global Business Travel Association) members have access to the KPI toolkit via the GBTA website.  The KPI toolkit is but one ; many other valuable resources are available to GBTA members. If you are not yet a member, you may join GBTA here.

Here is a whitepaper from Advito, BCD’s consulting unit, on the role of KPIs in a strategically managed travel program: Strategic Travel Program KPIs from Advito

On a related note, here’s a post on the pitfalls of using KPIs.

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AirPlus Gets A+ on Ancillary Fees Report

AirPlus has cracked the code on reporting airline ancillary fees.

Travel managers will find these reports extremely useful.  You’ll know with great  certainty what your travelers are buying from each airline. You’ll be able to answer important questions, such as:

  • How much are we spending on Ancillary Fees (AF)?
  • What are the biggest sub-categories of AF – baggage fees, onboard fees, upgrades, extra mileage, etc. (and therefore, implications for negotiations)?
  • What’s the average Continue reading

Why Hotels Need Bar Codes

Talk to anybody who has tried to clean up corporate hotel data, and you’ll know they hate doing it. It’s a pain in the butt to take a company’s hotel booking data from its TMC, and merge it with the company’s paid hotel data from its corporate card.

The first and arguably hardest step is to normalize the hotel identities. Somehow, you have to recognize that a credit card transaction at the “Marriott Courtyard in Salt Lake” should be tied to the reservation made at the “Courtyard by Marriott in Saltlake City”.

The variation in hotel names, as captured by the travel agencies, GDSs and credit card providers, is nothing short of maddening. And we’re not Continue reading

Stairsteps to Data Heaven

Why is it so damned hard to get great value from the sea of travel data out there?

You’d think that corporate travel, a large and mature industry, would have cracked the code by now. And yet most buyers are still struggling to get anything more than mediocre value from their data reporting tools. Continue reading

Travel Benchmarking Done Well

Benchmarking is one of the most popular requests from travel managers – and one of the most difficult services to provide.  I’ve argued strongly that price benchmarking is wrong and worthless.  Not changing my tune on that one.

Performance benchmarking, however, has a big part to play in any up-and-coming travel program.  The problem Continue reading

Most Popular Reads of 2009

This blog’s most popular posts involved innovation, fighting words, myths and data sources.  Not quite sure what this topical variety tells me about the direction I should take with this travel management blog in 2010, but stay tuned! (Sign up here for immediate delivery of new articles via e-mail)

The most-read posts in 2009: Continue reading

Naked Airfares: Price, Quality and Value Revealed

Here’s a great way to see the full value picture when your travelers are shopping for airfares:

InsideTrip calculates a trip quality score for each flight that you’re considering. It factors in a dozen elements covering the itinerary’s speed, comfort and ease.  Even better, travelers can select only those factors that matter to them.

See the big numbers on the right-side of the web page?  Those are the TripQuality scores.  You can use them to sort your flight options, or sort by price, departure time, etc.

This site is, to my knowledge, the first to factor in the quality dimension of airfare purchases.  With price and a quality score, it is now much easier to see differentiated value. Continue reading

Review: AirPlus Data Reporting Tool

Credit card data is not the best source for airline sourcing projects.  I’ve said this for a long time (for example, here), but was challenged (nicely) by Jacques Lionnet at AirPlus to take a fresh look at AIM, the AirPlus Information Manager (AIM) tool.

Bottom line:  The AIM tool captures excellent airline data and is easy to use, but it has a few shortcomings that prevent it from delivering ready-to-source air spend reports.  These flaws (described below) should be easy to eliminate, and I suspect AirPlus will do so soon. Continue reading

Most Popular Reads for Nov. ’09

Here are last month’s most popular posts.  Three of them deal with innovation in the travel industry.  Two deal with travel data, and two have that magic word “free” in the title.  Just when I thought my content was getting good!  This month I’ll focus more on airline sourcing topics.

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Travel 101 – provides a short video introduction to the travel category, and four good articles covering travel data sources, scrubbing, reporting and analytics.

What’s Next In Travel Innovation – covers the trends I saw from the PhoCusWright conference on Travel Innovation last month, and the implications for travel procurement.

Future Innovations in Airline Distribution – gives my views on three major innovations that will impact how airlines distribute their product.

Unexpected Airline Innovations – highlights two interesting tools that show how airlines are thinking more broadly about their mission.

Free Webcast on Travel Data – presents a blue-chip panel’s views on how to use travel data.   You can see and hear the archived presentation until Feb. 15th, 2009.

Free Tools – a collection of tools and educational presentations all related to travel procurement or travel management.

Editor’s Choice: Pre-Trip Approval Done Right – my post summarizes the successful approach taken by Deloitte, but the real value is in Brian Nichol‘s rich comments.  He gives you the key success factors and friendly advice you need if you’re considering this type of travel tool.

Please let me know what topics you’d like to see covered in the future.  Thanks for reading!

Free Webcast on Travel Data

** Update:  The original webcast is no longer available.  Here’s the portion of the webcast that I presented.  It gives a few examples of anlyses that have some element of added value in them:

MasterCard ProMedia Webex v2 Continue reading