Fresh Signs of Travel’s Recovery

No doubt you’re searching for credible signs of the travel industry’s recovery.  Well, you’ll want to bookmark this site, BCG’s TRIP, with a bunch of gold stars.

Use this no-cost site to gain clickable global, regional and country-level insights about:

  • Consumer sentiment and intent to travel
  • Recent trends in travel searches and ticketing
  • Forward travel build-ups based on searches and tickets
  • Covid case and death rate trends by country/region
  • Country-to-country travel dependencies and current search/travel indicators
  • Government restrictions and economic indicators

* The Travel Recovery Insights Portal (yes, TRIP) is designed and produced by BCG in collaboration with ARC and 3Victors. TRIP will be updated weekly with fresh data. For those not familiar with these firms, ARC is the airlines’ clearinghouse for tickets sold by U.S. travel agencies; BCG is a leading global management consulting firm, and 3Victors is a big data company specializing in GDS searches and airfares.

This site is a classic example of key industry players working together for the common good.  This complimentary site will be available indefinitely – likely until the shape and pace of the travel industry’s recovery becomes much more clear.

Δ Innovation kudos for:

  • Displaying GDS search data – talk about a leading indicator!
  • Including nights away as a metric – very helpful for the hospitality crowd
  • Country-level travel partners – quick way to gauge international travel recovery prospects

If you like TRIP ‘s information, but want more detailed data or passenger demand estimates for major markets, please contact

TravelRecoveryInsights@bcg.com

Making the Business Case for Better Travel

The most common question I get after speaking about the benefits of reducing traveler friction is “OK, we get the idea, but how are we supposed to sell this to senior management?”

Here’s the answer:

The whole idea is to balance the costs and the benefits of better business travel, right?  So that means we need a way to quantify those things, in a way that makes sense to senior management.

The good news is that there is now enough research out there to help us frame the question with some clear logic and pretty good assumptions.

Gillespie’s Travel Policy Impact Model

I’ve developed a simple – and free – approach that any travel buyer can put to work right away. It’s an Excel model (see below) that asks you to fill in 16 things.  Do that, and you’ll see the results. Your results could look like this:

“If we spend an extra $35K per road warrior to give them better quality, lower-friction trips, we’ll get back a net gain of $90K each, for an ROI of about 260%”

Credibility Is Key

Travel managers,  you’ll be able to plug 10 of the 16 data things into the Cost section pretty much off the top of your heads.  You’ll probably need help with the 6 things in the Benefits section. Continue reading

A Challenge To My Travel Procurement Friends

 Is it time to think about your category goals for 2018?  Yep.

Are you hoping to somehow increase the size of your savings next year?  Of course.   Are you optimistic about meeting that goal?  Probably not.

Would you like to show senior management that you’re adding significant strategic value to the travel category? That your approach is fundamentally aligned with the needs of the business?  Therein lies my challenge.

For the last 20 years, travel procurement has measured its success by the size of its savings. Travel procurement takes the path of least resistance, happy to measure what’s easiest – ticket prices, room rates, TMC transaction fees, and the all-important discount.

This traditional cost-focused goal is no longer sufficient.  It’s not strategic, and it isn’t sustainable. Travel procurement needs a bigger, bolder goal.

Step 1: Understand The Cost of Traveler Friction

Continue reading

The Hourly Cost of Air Travel

plane-thru-glass-with-peopleRoad warriors, by definition, do a lot of traveling. All their airline tickets add up to some pretty big expenses, as do the hours they spend inside airplanes.

Why not take those two pieces of data and show what it costs business folks to fly per hour? Let’s face it, talking about price per mile might be great for aviation pros, but it’s not great for briefing management about travel expenses.

ARC’s Definitive Data, Air Clarity’s Innovative Analysis

Air Clarity, my firm’s air spend benchmarking tool, crunched a few million airline tickets from ARC’s corporate ticket database to get the answers. Since ARC stores all travel agency tickets sold in the U.S. on most every airline (excluding Southwest and a few other low cost airlines), this data is as good as it gets.

Here’s what the price per flight hour looks like, based on the average hourly prices paid by roughly 2,100 corporate travel programs:

price-per-hour-Air-Clarity

The quick answer: About $80 an hour for short haul (domestic) flights; about $110 an hour for long haul flights

Doesn’t that make for a much easier conversation about the cost of air travel?

For context, this study by American Express GBT, ARC and my firm found that the average road warrior earned about $80 an hour, assuming 2,000 work hours per year.

Travel managers, try talking to your business stakeholders about the price per hour of air travel, and see if that doesn’t make for more engaged discussions.

Custom Industry Peer Group Benchmarks

If you’re wondering what your company’s price per hour is, and how that compares to other firms in your industry, good news…tClara is organizing industry peer groups to help provide even better value from our Air Clarity benchmark data. Here are the groups we’re starting:

benchmark-industry-groups-list

If you’re a travel manager interested in one of our industry peer groups, follow the group by signing up here…no cost, no obligation.

More information about Air Clarity’s benchmark reports for corporate travel managers, TMCs and airlines is here.

Some limitations and definitions around these price per hour  numbers:

Continue reading

Delta Makes On-time Bet; Leads on Total Cost of Travel

Remember when Delta capped commissions twenty years ago?  It shocked the industry. Transformed corporate travel programs into cost centers.   Re-wrote the buyer-TMC business model. Ushered in professional procurement practices. Overnight.  Wow.

Well, Delta has done it again.  Much less drama here, but with even more long-term  impact on our industry. For airlines, yes, but also hotels, ground transport and TMCs.  We all need to pay attention to this.

Why? Because Delta is forcing the quality question front and center into the travel procurement decision.

This is a big deal.  By guaranteeing that its on-time performance will be better than its two main rivals, Delta is making buyers factor in the quality of its operations as part of Delta’s value proposition.

Delta shows buyers the value of cancelled and delayed flights – and lets buyers set their own values.  The argument is sound and simple.  “Delta saves you this much over our two rivals by completing more flights.  That’s why we should get even more of your business.”

So now buyers also need to factor in the quality of Delta’s rivals.  On a very measurable metric.  That matters a lot to travelers. Which has been “free”, or at least unlinked to price. Or explain to management why this quality stuff  doesn’t matter.

I think this is the first clear and ever-so-practical step taken by a major travel supplier to get buyers to focus on the total cost of travel. Not just the up-front price paid, but a pretty big piece of the whole enchilada.

In effect, Delta is unbundling the price of on-time performance.  In a way that wins them friends, not enemies.  It’s brilliant, and I love it.

Measuring quality in each travel category is possible, but few buyers make much effort.  It’s much easier to assume (or pretend) that “they’re all the same”. That’s a classic procurement play.  It reinforces the commodity nature of the suppliers, leaving them little choice but to compete on price.

Now, the analytics behind any negotiation have to include the value of each airline’s quality.  Today,  the metric is system-wide performance.  Tomorrow, who knows which factors the industry will want to compete on?

Here’s the thing: putting quality into the procurement equation is like bringing a puppy home to your kids.  There is no way you’re ever going to take that puppy back.

That’s why this is such a big deal for the entire corporate travel industry.  Think of the consequences:

United and American now have to compete harder on this dimension of quality, and/or find other important quality factors which favor them.  They too will have to put some money on the line. And then there are Air France/KLM, British Airways and Lufthansa…hmmm.

Hey, what about hotels?  Quality matters there, too, right?  Maybe Marriott puts its average TripAdvisor rating up against Hyatt’s and Hilton’s…you can see how this will unfold.

More money at stake means more buyer bandwidth for linking quality to price.

I spoke about this very concept last week at GBTA’s Advanced Airline Sourcing session.  (NB: I had no advance knowledge about Delta’s on-time guarantee.)  In that session, I showed why buyers need to evaluate trip quality along with price, and how this could be done with the airline category.

Here’s the slide that shows how easy it is to link an airline’s price to quality:

Quality-normalized Prices

The point is that we can readily link price and quality, and we should.  Only by rewarding suppliers who deliver higher value can we expect both buyers and suppliers to win in the long run.

For more information on linking price to quality, see this deck, slides 7-23. You’ll see why the total cost of travel is the key to true travel program optimization, and why these airline  prices are per hour, not per mile or kilometer. (Oh come on, let’s all admit it –  price per hour is a way better metric for non-airline folks.)

Delta, thank you for putting quality squarely into the procurement decision. That’s the kind of innovation we can all appreciate.

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Why Data Predicting Trumps Data Reporting

Predict What Matters Quick – name a travel metric that your CFO would pay a lot of money to predict reasonably well.

Next year’s travel savings? Maybe. Next year’s travel spend? Maybe.  But he won’t pick your firm’s future travel policy compliance rate, or next year’s average airfare, or your traveler’s future satisfaction with your online booking tool.

My point is that while firms spend a lot of money on travel data reporting, the core value that those pretty dashboards deliver is not very high – not in the grand scheme of your firm’s business.

Here’s why: Data reports are the result of the 20th-century management dictum “Measure what matters”.

Within the boundaries of a travel program there are dozens of things that matter.  And so we’ve figured out how to measure them. In order to report them.  In order to manage them.

But all those dials and gauges and stop lights really do is simply give you signals.  Signals that you have to interpret to keep your travel program  between the white lines of your side of the road.

What those travel dashboards don’t do is tell you how to get to a better travel program.

They can’t, because they have two big flaws:

  • Data reports are stuck in the past
  • Travel data reports are stuck in the world of travel

Gas Gauge vs. GPSSo that’s the data-driven solution to getting better travel programs – deal with the future, and deal with data well outside of travel.

Enter Predictive Analytics

The key is linking travel’s impact to business outcomes.  Outcomes that matter on a much bigger scale, like sales, customer satisfaction, employee attrition, health/safety costs, etc.

This will fundamentally change the way you view and manage a travel program.

Instead of seeking to minimize travel costs, you’ll be trying to maximize sales, or perhaps minimize employee turnover – by putting a travel program in place that clearly contributes to those goals.

If sales are trending down, or employee turnover is trending up, what should you, the travel manager do to help fix these problems?

Obviously, you’ll need some new lights on your dashboard – lights driven by data from Sales and HR.  More importantly, you’ll need to know how to impact those non-travel metrics.

That’s where predictive analytics comes in.  You need to have a data-driven understanding of how things like cabin policy and hotel tiers impact bigger, non-travel metrics like employee productivity, health and safety, and attrition.

You need to predict with confidence that by changing a variable in the travel policy, it will cost $X and improve the non-travel metric by Y%.

You’ll do this in one of two ways.  If your travel program is big enough, you’ll be able to mine your own data and build these models.  If your program is too small to offer enough data, you’ll depend on benchmarks and case studies from the larger firms.

Data Reporting vs. Predictive AnalyticsEither way, you’ll find yourself importing non-travel data into your travel dashboards, and exporting pro-active, fact-based advice on how to drive to your firm’s bigger goals.

Management theories evolve.  Dictums change.  It’s time to move on from measuring what matters to predicting what matters.

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A Brighter Way to Measure Travel’s Impact

For the amount of money firms spend on travel, surely they’d like to know the impact. There is an incredibly practical – and pretty easy –  way to answer this question.

Forget about ROI – it’s too theoretical.  Skip Big Data – it’s irrelevant.  Instead, focus on what matters and what’s measurable.

Think about the issue this way: At what point is too much travel counter-productive?

Spend too much time on planes and you’re not selling.  Cross too many time zones and you’re not giving clients such good advice, or making such good decisions on that oil rig. Take too many redeyes in coach and you’re seeing a doctor for a cranky neck or worse, deep vein thrombosis.

It’s about cause and effect; travel and impact. So the approach is simple.

First, identify the road warriors in your firm, and their business unit leaders.  Ask those business unit leaders which business metrics matter, and might be affected by too much travel, and are measurable.  Think sales, hours billed, customer satisfaction, safety, etc.

Go to HR, and ask which HR metrics matter, and might be affected by too much travel, and are measurable.  Think absenteeism, engagement, disability costs, retention, etc.

Now use your travel data to find a comparable group of employees that has done much less travel than your road warrior group.  So now you have a cohort of low-travel employees and a cohort of high-travel employees.

We’re almost there.  With a bit of analytical muscle, measure each cohort’s average result on each metric.  Then compare the two groups, testing for statistical differences. Something like this, perhaps:

Slide2

Voila!  You now have a fact-driven analysis of travel’s impact.  The impact on your business, and the impact on your people. The implications will be clear.

Too much turnover, absenteeism and disability costs among your high-travel group?  Cut back their travel workload and/or loosen your travel policies for the road warriors.

No meaningful differences between the two groups?  Your travel policies are probably fine, but then what is all that extra, possibly excessive, travel really doing for your firm?

Either way, having these facts gives travel managers, HR executives and business leaders a clear-eyed view of travel’s impact.  Making solid business cases for changing travel workloads, travel budgets and travel policies is now ever so much easier.

The best part?  Travel category managers get to lead on this issue.  For you folks that are frustrated by delivering diminishing returns from mature sourcing and policy compliance, you should be first in line to drive this type of study in your organization.

For those interested in jump-starting a travel impact study, tClara and I can help.  We can quickly score your travelers’ Trip Friction™ levels, create the cohorts, and benchmark your firm’s travel intensity to those in our database.

I’ll be at the ACTE Global Conference in Miami at the end of this month, and hope to connect with many of you there.

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Road Warrior Burnout: A Worthy Problem

Too much travel can cause anybody a load of stress.   Exhibit A is Brad Feld, one of Silicon Valley’s best-known angel/venture capitalists.  He lives in Colorado and was traveling 50-75% of the time.   He hit a wall.  Knew he couldn’t keep it up and still lead an emotionally healthy life.

His solution?  He quit traveling for business – cold turkey.  The Harvard Business Review interviewed him here, and Brad writes about it here.   Not traveling seems to be working for him.

The question is, how many of your firm’s road warriors are in danger of hitting this kind of wall?  The consequences can’t be good.

An Alarming “What If”

Imagine if the top ten percent of your frequent travelers called a long-term strike on business travel, like Brad Feld did.  What would happen to your customer relationships,  business development, staff development, collaboration, innovation, etc, etc.? Not to mention the cost of replacing those no-more-travelers  with folks who will travel a lot (or so they say).

What Are The Signs?

Surely your frequent travelers make up some, maybe much of your firm’s top-rated talent.  So who is watching for the early warning signs of traveler burnout?  Who even knows what those signs are?

And if you see those early warning signs, what’s the right response – less travel? Better quality or less stressful travel? Travel recovery days? Dinner for two on the company’s dime?

Who Owns The Problem? Continue reading

Travel Data and Airline Sourcing Education Decks

You gotta love the 40 good folks who gave up a beautiful Sunday in San Diego to talk travel data.  I delivered a 6-hour workshop for GBTA on this topic, and am proud to report that not one person fell asleep!  Here’s the handout file we used. Topics included:

  • Sources and uses of travel data
  • Boring data reports and stupid statistics
  • Making good data-driven presentations
  • Key concepts needed for travel analyses
  • Using derivative data to answer seven key questions
  • GBTA’s KPI Resource document (as a handout; we didn’t have time to discuss it) Continue reading

I’m back in the analytics game with tClara

tClara logo

Many of you know that I sold my last company, Travel Analytics,  back in 2006.  I had a 5-year non-compete, and filled my time doing a fair amount of speaking and training, and of course writing here on whatever caught my eye in the travel industry.

Along the way I met some great guys at Diio, the aviation data intelligence firm. They know aviation data inside and out, and have an amazing group of really smart software engineers who – and this is vital – are very focused on providing great customer service.

Long story short, we’ve joined forces to offer on-demand analytics for the corporate travel industry.  Our firm is tClara, pronounced tee-CLAIR-ah, a riff on “clarity”.  You can check out our site here.

Our sweet spot is delivering customized reports in three areas: Airline category analysis, travel policy decision support, and trip friction scoring and benchmarking. Continue reading