why the total cost of travel is our future

Why The Total Cost of

Travel Is Our Future

Evan Konwiser

Scott Gillespie

About Evan Konwiser

• VP Digital Traveler at Amex Global Business Travel

• Co-founder of FlightCaster and Skylark

• Advisor to start-ups, including Olset and Suiteness

• Challenger of travel industry status quo

• Travel industry writer and innovator

• Formerly at Bain & Company and Kayak

• MBA, Dartmouth

About Scott Gillespie

• CEO, tClara – Benchmarks for Travel Leadership

• 20 years consulting in travel procurement and analytics

• Challenger of travel industry status quo

• Early champion of Total Cost of Travel paradigm

• Author, Gillespie’s Guide to Travel + Procurement

• Speaker, trainer at travel industry events worldwide

• Former CEO, Travel Analytics; Principal at AT Kearney

• MBA, University of Chicago

After 20 years of

professional travel

management,

best practices are

well known

4

Consolidate TMCs

Consolidate T&E card programs

Consolidate travel data and reporting

Comply with duty of care

Use KPIs and benchmarking

80+ % online adoption

90+ % travel policy compliance

Apply strategic sourcing principles

Focus on negotiated savings

Procurement principles have led the way

The result?

Success is seen as

constantly lowering

suppliers’

transaction costs

Call this the “Transaction Cost” paradigm

6

The transaction

cost paradigm

locks travel

management in a

low-value future

A New Model Must Cope With These Factors

• Aging, shrinking

workforce

• Millennial attitudes

• Global travel risks

• Consumer travel

apps

Requires more focus on the traveler

How to

recognize a

better travel

model?

8

The Total Cost of Travel paradigm

meets all these criteria

Delivers quantifiable value to buyers

Recognizes traveler costs & benefits

Gains significant supplier support

Links to strategic business unit goals

Elevates the role of travel managers

The Total Cost

of Travel Paradigm

Procurement

Understands

The Total Cost

Concept

10

Why not do the same thing in travel?

Transaction Costs, e.g., airfare, hotel

Trip Quality (Travel Policy)

5 Star 1 Star

High

Trip Costs

Transaction costs depend

highly on the type of travel

policy and trip quality



5 Star 1 Star

High

Trip Costs

Human Cost, or Traveler Friction

But tougher travel policies make

travelers take on more wear and tear



5 Star 1 Star

High

Trip Costs

Human Cost, or Traveler Friction

Total Trip Cost

Optimal

Companies want the lowest total trip cost,

which is a truly optimized travel program

GBTA Ladders ‘15-16 Contest: Total Cost of Travel

Allison Davis

Ultramar Travel

Management

April Hoppe

AKA Wall Street

Oneal Avila

The Estee Lauder

Companies Inc.

Melinda Kirkham

Enterprise

Holdings

Michelle Collins

Sixty Hotels

Phillip Peña,

Mentor

Mandarin Oriental

Hotel Group

17 teams from across the travel

industry presented their take on

the Total Cost paradigm

The Winner: Team Phillip Developed a diagnostic tool to help firms identify and gauge their travel culture and how that aligns with their travel policy. See the winning presentation at

https://www.gbta.org/Membership/Pages/GBTALaddersProgram

https://www.gbta.org/Membership/Pages/GBTALaddersProgram

Transaction Costs,


5 Star 1 Star

High

Trip Costs

Traveler Friction

The Total Cost Model Needs New Metrics

We Can and Should Measure Trip Quality

Flights

Stops,

Cabins,

On time %

Hotels

Tier or Stars;

Guest Ratings

Ground

Transfers

Black Car or

Shared;

Rental Size

8.3 out of 10 Illustrative

Quantifying Traveler Friction

ARC’s 2015 Trip Friction® Benchmark Database

110,000 anonymous travelers randomly selected from 50 large firms

1 million trips, all US Point of Sale, including international trips

3 million nights away

3 million time zones crossed

10 million flight hours

• 8 million in Economy class

• 5 million on personal time

Trip Friction is a registered trademark of tClara LLC

Here’s What Really High Traveler Friction Looks Like

35 Trips

88 Nights Away

(4 work-months)

138 Time

Zones Crossed

267 Flight Hours

(nearly 7 work-weeks)

236 Hours in

Economy Class

(88% of flight hours)

147 Hours on

Personal Time

(62%; ~4 work-weeks)

*Averaged across 10,564 travelers who each were at or above the 75th percentile for each metric shown above

as measured by the ARC 2015 Trip Friction® Benchmark Database, covering 110,000 travelers in 2015

10% of all

travelers*

An Essential Travel

Metric Comes

From HR

Travelers are the

most important part

of a travel program

Road warriors are

the most important

group* of travelers

Road warrior attrition

is the most important

travel metric

31% of Travelers

67% of Air Spend

72% of Nights Away

* Source: ARC 2015 Trip Friction database; minimum 35 nights away

“Traveler Friction: Insights From U.S. Road Warriors”

• Big implications for recruiting, retention

• Sponsored by ARC, GBT and tClara

• Executive Summaries available at

American Express GBT and ARC booths

Must-read research for all

travel category stakeholders

For copies of the full report https://www.amexglobalbusinesstravel.com/content/traveler-friction-report-arc-

tclara

https://www.arccorp.com/email/Road_Warrior_Trip_Friction_Report_Final.pdf

Text TCLARA to 22828

https://www.amexglobalbusinesstravel.com/content/traveler-friction-report-arc-tclara











https://www.arccorp.com/email/Road_Warrior_Trip_Friction_Report_Final.pdf

Road Warriors Are Well Paid, Very Recruitable

$155K annual compensation

38 years old, male (62%), married (76%), 2 kids at home

Takes 26 trips a year, spends 84 nights away

51% want to travel significantly less in two years

64% say they could get a good job without much travel

76% are interested in job offers with same travel

frequencies and same travel policies

Source: “Traveler Friction: Insights from U.S. Road Warriors”, American Express GBT, ARC, tClara 2016

Travel Policy Is

a Major Factor

for Recruiting

Road Warriors

85% are interested in offers from firms with very favorable travel policies, with the same amount of travel as done now

83% say a firm’s travel policy would be at least equally or much more important than the new job’s pay and responsibilities


15% of Road

Warriors Are

Nearly

Burned Out

• Biggest cause: Nights away from home

• Biggest worries:

• 45% say impact on their health, happiness

or personal relationships

• 41% say impact on their families

• Negative consequences

• Lower travel policy compliance

• Less willing to travel

• Less effective trips


Burnout: Trip Quality and Travel Culture Matter

More Than Trip Quantity

Resilient (those not burned out) travelers are more likely to

Have stayed primarily at 5-star hotels

Have Business Class on flights over 4 or 5 hours

Have favorable travel policies, regardless of rank

Be more satisfied with their travel policies

Have more advance notice of trips

No statistical differences in nights away, number

of total trips, or number of international trips Source: “Traveler Friction: Insights from U.S. Road Warriors”, American Express GBT, ARC, tClara 2016

Traveler Friction Symptoms Are Common

46%

49%

47%

65%

72%

72%

76%

86%

Less effective during orright after trips

Hard to have a healthylifestyle

Worry about impact on mypersonal life

Sleep much better athome

Nearly Burned Out

Resilient

Share of respondents who agreed or strongly agreed; statements paraphrased for brevity Source: “Traveler Friction: Insights from U.S. Road Warriors”, American Express GBT, ARC, tClara 2016

Traveler Friction Symptoms Are Common

38%

41%

42%

45%

49%

62%

64%

68%

Afraid during some trips

Get sick or need time offfrom travel

Hard to keep up withworkload

Feel extra stress in daysbefore a trip

Nearly Burned Out

Resilient

Share of respondents who agreed or strongly agreed; statements paraphrased for brevity Source: “Traveler Friction: Insights from U.S. Road Warriors”, American Express GBT, ARC, tClara 2016

What

Road

Warriors

Want

10%

10%

11%

12%

13%

13%

18%

Work from home before orafter trips

Reimb. airline lounge, TSAPrecheck

Premium economy ondomestic flights

Paid time off after too muchtravel

Choice of better hotels

Business-class over 6 hours

Non-stop flights when available

Shown: Those with at

least 10% of top two

choices. Total across all

24 choices sums to 200%


Traveler-friendly

Environments Are

Good for Retention

5%

11%

20%

38%

27%

Little or no effect

Somewhat positive effect

A positive effect

Very positive effect

Extremely positive effect

“If your firm gave you each of the top four improvements

you just selected, what impact would that have on your

willingness to stay with your current employer?”


65%

Developing a Travel Strategy

Built Around Road Warriors

Link Travel Strategies To Business Goals

Recruiting

Reduce

time to fill

open road

warrior

positions

by two

weeks

Sales

Productivity

Increase

sales

among

road

warriors

by 5%

Health &

Safety

Reduce

work days

lost by

road

warriors

by 10%

Then measure progress on 4 key story lines

Retention

Reduce

road

warrior

turnover

from 12%

per year

to 4%

-4%

2%

Q1 Q2 Q3 Q4

Our prices are slightly

over our benchmarks

The Procurement Story Line

New Air Contracts

-4%

6%

2%

Q1 Q2 Q3 Q4

Our travelers are taking

higher-quality trips


over our benchmarks

The Trip Quality Story Line

New Air Contracts

12%

-4%

6%

2%

Q1 Q2 Q3 Q4



Our road warrior

attrition rate is falling


over our benchmarks

The Road Warrior Story Line

New Air Contracts

12%

-4%

6%

2%

Q1 Q2 Q3 Q4



Our road warrior

attrition rate is falling


over our benchmarks

The Business Goal Story Line

Our sales are growing

New Air Contracts

GBT’s

Perspective • Skilled, responsive travel counselors

• Proactive trip support

• Technology tailored for road warriors

• VIP/Road Warrior services

• Trusted suppliers

• Pre-trip planning

• On-trip safety and security

“Total Cost is

much more

than just a

good travel

policy”

Today’s

Insights

• Total Cost model includes traveler friction costs

• Road warriors pose significant attrition risks; travel

policy is a major recruiting factor

• 15% of road warriors are nearly burned out; trip

quality matters more than trip quantity

• Road warriors want better quality trips, recovery time

• It’s more than policy – must support travelers with

great service, technology and processes

• Engage HR, then key travel budget owners – focus

on supporting key business goals

Transaction Costs


5 Star 1 Star

High

Trip Costs

Traveler Friction Total Trip Cost

Optimal

Let’s Go From Theory…

…To Practice, and to Truly Optimal Programs

HR

Travel

Manager CTBO*

CPO, Key

Suppliers

Road

Warriors

* Chief Travel Budget Owner

For more information

Evan Konwiser

[email protected]

Scott Gillespie

[email protected]