As business travel has returned to pre-pandemic levels, we’ve seen a significant increase in the cost of hotels and flights. Hotel room rates increased by double digits in many domestic and international cities during 2023, and are set to continue growing - albeit slower - in 2024. Flight prices rose at a lower level, but the current tensions across the Middle East could lead to significant volatility in oil prices - a major factor in the cost of airline tickets.
While all organizations are impacted by higher flight and hotel costs when employees travel for internal business purposes, law firms must also be responsible custodians of their clients’ billable expense budgets. This challenge has been made more acute for firms with technology clients, as they face increased pressure to increase profitability and reduce spending.
Against this backdrop of higher costs and greater financial scrutiny, clients increasingly call for their firms to rein in billable travel expenses. But how? Larger and mid-sized firms that have managed travel programs will likely have negotiated preferential rates with airlines and hotel chains. Client agreements may also include a travel policy or guidelines that specify the class of hotel and flight for associates and partners.
With a limited amount of leeway to lower costs using more traditional approaches, how can law firms thread the needle between an optimized experience for their associates and partners while minimizing the cost of travel expense reimbursement for their clients? Here are three ways that firms can leverage technology to reduce spending while maintaining high travel standards.
1. Spend analytics to track negotiated rates
Negotiated rates can deliver significant discounts over published prices, but they must be applied when a booking is made for a firm to benefit. This can be difficult to track, especially for a larger firm that books thousands of room nights each year - finding anomalies across huge volumes of reservations is time-consuming and has limited benefits.
Running travel spending through your expense management system’s analytics solution allows the finance department to review all hotel expenses and identify pockets of wasteful spending. Was a room rate higher than negotiated? When the firm’s contract with the chain specifies free parking, did a property charge for parking? Are firm personnel forgetting to apply corporate rates, or booking with hotels that don’t have negotiated rates?
Automated analytics of travel bookings and auditing of supplier contracts enables firms to quickly and easily spot these issues and claim back for extra charges, or in the case of internal policy non-compliance, provide guidance for future bookings.
2. Benchmark against your peers
You may have negotiated rates with your air and hotel partners, but that doesn’t guarantee the best deal. Discounts depend on travel volumes, so that large firms will get better rates than midsize firms. But there can still be variations between two similarly-sized firms. Your travel partner won’t know how your rates compare, so how can you ensure you’re getting the best deal?
Benchmarking services track spending across various variables and incorporate data from hundreds or even thousands of companies to make like-for-like comparisons simple to determine. For flights these variables could include how far out a booking was made, city pairs, class of travel and airline. Hotel variables include chain, city, hotel class, and when it was booked.
With millions of individual data points and hundreds of companies to compare to, benchmarking services can provide valuable ammunition for rate negotiations.
3. Travel reshopping
Flight prices and hotel rates often fluctuate between the booking and travel dates, depending on demand. When demand falls, rates may drop, sometimes for only a few days or hours. It’s not feasible for an assistant or travel manager to review travel partners’ sites for lower fares, meaning that many firms could be leaving savings on the table by failing to cancel and rebook at these lower rates.
Hotel and flight reshopping solutions import travel bookings across an organization, and scan hotels’ and airlines’ websites to identify lower rates. When these are identified, the software will automatically rebook at the lower price and cancel the existing higher-priced booking. These are made on the same flight or hotel as the original booking, so the travel booker doesn’t need to do anything to take advantage of the lower rates.
In an era where client-billable expenses continue to come under scrutiny and lawyers demand a high-quality trip experience, the ability to cut spending without impacting the standard of travel could be a significant differentiator in maintaining strong firm-client relationships.
If you’re looking to give your law firm a better suite of corporate travel software and make your clients even happier, drop us a line - we’d love to hear from you.