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Managing The Total Cost of Travel

A New Paradigm

Scott Gillespie

CEO

tClara

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About Scott Gillespie

Leading expert in corporate travel analytics, travel procurement and Managed Travel 2.0

CEO of tClara, a travel data consultancy

Speaker and trainer at worldwide travel industry events

Former Founder and CEO of Travel Analytics (now SAP)

Former AT Kearney principal and travel sourcing leader

MBA, University of Chicago

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Setting the Human Resource Scene

The European and U.S. workforces are getting older

Is voluntary turnover on the rise here? (It is in the U.S.)

Replacing key talent is really expensive

High performers deliver ~40-70% more profits, productivity

and revenue than average performers

3

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High performers need plenty of freedom

4

Source: McKinsey War on Talent survey of 6,000 executives from the Top 200 in 77 large U.S. firms from a variety of industries. 1998

58% 56%

51%

19%

8%

1. Values and culture2. Freedom and autonomy3. Job has great challenges

16. Geographic location

18 Job security (next to last)

Share of Top 200 executives rating a factor as absolutely essential

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Where were headed today

The Path Forward for Travel Managers

Quantifying Traveler Wear and Tear

The Total Cost Paradigm

The Need for a New Travel Paradigm

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Four Major Travel Management Paradigms

Transaction Cost

1995>

Total Cost

2015>

Total Impact

2030?

Profit Center

Pre-1995

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After 20 years of professional travel category management, best practices are well known:

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Consolidate TMCs

Consolidate T&E card programs

Consolidate travel data and reporting

Apply strategic sourcing principles

Comply with duty of care

Use KPIs and benchmarking

80+ % online adoption

90+ % travel policy compliance

Focus on negotiated savings

Procurement

principles

have led the

way

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Transaction Costs, e.g., airfare, hotel

Trip Quality (Travel Policy)

5 Star 1 Star

High

Trip Costs

Trip costs from suppliers depend highly

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5 Star 1 Star

The simplistic

procurement view

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Transaction Costs

Trip Quality (Travel Policy)

5 Star 1 Star

High

Trip Costs

Good

Best!

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The result?

Success is seen as constantly

This is the trap of

the Transaction

Cost paradigm

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Human Cost, or Traveler Friction

Lost productivity Reluctance to travel Negative impacts on recruiting & retention Traveler health, safety issues

Why? Tougher travel policies make

travelers take on more wear and tear

Transaction Costs

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5 Star 1 Star 5 Star 1 Star Trip Quality (Travel Policy)

High

Trip Costs

Source: Scott Gillespie

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Companies want the lowest total trip cost,

which is a truly optimized travel program

Total Trip Cost

5 Star 1 Star Optimal

Human Cost, or Traveler Friction

12

Trip Quality (Travel Policy)

5 Star 1 Star

High

Trip Costs

Transaction Costs

Source: Scott Gillespie

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The transaction cost paradigm has served the industry well, but now

Returns are small and diminishing and not sustainable

Suppliers chafe at heavy focus on price rather than value

Transaction cost model offers no strategic value, and

It offers travel managers a limited career path

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The transaction

cost paradigm

locks travel

management in a

low-value future

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The corporate travel industry needs a new paradigm one that:

Delivers quantifiable value to buyers

Gains significant support from suppliers

Brings important stakeholders into play

Elevates the role of travel managers

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The Total Cost of Travel paradigm

meets all these criteria

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The key

strategic goal is reducing the

Total Cost of Ownership

We must do the

same in travel

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Quantifying Traveler Wear and Tear

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tClara quantifies Trip Friction

6-hour red-eye flight, with a 4-hour layover, connecting on a regional jet, both legs in Coach, arriving home on Saturday morning, after 5 nights away

Trip B

6-hour non-stop in Business Class, arriving home on Friday afternoon, after 2 nights away

Trip A

300 Trip Friction Points

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Joe Road Warriors Last Year

10 weeks away from

home

Over 200 hours in flight, 65% done on personal time

More flight hours on own time than

annual vacation time

Crossed 80+ time zones

Source: tClaras Trip Friction database

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37%

20%

17%

15%

13%

9%

7%

43%

42%

43%

44%

41%

34%

25%

I sleep much better at home than I do when traveling

I find it hard to have a healthy lifestyle when traveling

I worry about the impact of traveling for work on my personallife

Travel often causes me to be less effective during or right aftermy trips

I find it hard to keep up with my workload while traveling

I occassionally get sick or need time off because I travel somuch

I get afraid during some of my trips

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Survey results: Road warriors show strong indicators of travel friction

32%

43%

54%

59%

60%

62%

80%

tClaras survey of 100 random business travelers who travel at least 3 nights a month, ages 25-65, full-time employment, minimum $50K income per year. Conducted November 5th, 2015

Strongly agree

Agree

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10%

36 10 I am or have recently been close to

being burned out on travel 46%

The eye-opener:

Are half of your road warriors at risk?

tClaras survey of 100 random business travelers who travel at least 3 nights a month, ages 25-65, full-time employment, minimum $50K income per year. Conducted November 5th, 2015

Strongly agree Agree

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Trip Friction is clearly correlated with

higher road warrior turnover

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3% 3% 6%

10%

16%

Low TripFriction

ModerateTrip Friction

Fairly HighTrip Friction

High TripFriction

Very HighFriction

Illustrative Traveler Attrition Rates

Source: tClara studies covering ~3,900 travelers from multiple clients over a multi-year period

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Replacing executive talent is very expensive

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50% to

200% of the

annual

salary

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The Path Forward for Travel Managers

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http://www.flickr.com/photos/nicolawhitaker/111009156/

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1. Get the HR Facts

Identify your road warriors in each of the last 3-4 years

Ask HR how many have left, and when

Ask HR to estimate the cost of replacing these folks

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2. Line managements interest?

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3. Focus on business goals

Recruiting Reduce time to fill open jobs by two weeks

Retention Reduce turnover from 12% per year to 4%

Productivity Less wasted time, more and better sleep

Health & Safety Reduce work days lost by 10%

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Among Road Warriors

Increase Sales by 5%

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Less or

Shared Travel

Easier,

Safer,

Healthier Travel

Hard

Trip Bonuses

Recognition,

Rewards

Recruiting,

Retention

Analytics

Tiered Policies Travel Culture

4. Develop traveler -focused strategies

Traveler-specific

allowances

Traveler-focused

Strategies

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Meanwhile, lets talk about which of your road warriors are about to quit.

28

0

10

20

30

40

50

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Number of Travelers Who Quit Forecast Actual Goal

Traveler Risk

Score

Risk

Trend

D. Okamoto 10

Z. Pinkston 10

A. Eagan 10

B. Haapala 10

R. Lunn 9

J. Toon 9

R. Rollman 9

K. Maier 8

D. Kephart 8

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The Wrap-up

Our current travel management model is a dead end

Senior management wants the lowest total cost

Travel friction is costly and quantifiable

Travel managers must now focus on business goals

Its time for the Total Cost of Travel model

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Thank you! Scott Gillespie

scott@tclara.com glad to connect on LinkedIn