T&E Decision Tree. Understanding corporate spending patterns. A strategic approach to travel and expense analysis

Transcription

1 T&E Decision Tree Understanding corporate spending patterns A strategic approach to travel and expense analysis

2 Executive summary Contents The return on investment (ROI) of business travel is a fundamental topic in the travel industry. The first estimations of a trip s ROI are typically made by travelers and travel approvers before the trip - at trip approval stage. This paper discusses several key aspects of the trip approval process. 1. Executive summary... The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also 2. travel Introduction approvers, which.. allows us to obtain insight into the approval practices from both the traveler s and the approver s 5 perspective.. T&E Decision Tree analysis.... With regard to the composition of the approver group: A Travelers direct managers make up 8% of all approvers, and the higher levels of management account for an additional 1%. Level 1: Trip and Non-trip spending.. 7 A Compared to Level the regular 2: Auxiliary business spending travelers,... approvers occupy higher levels in the organization, travel more frequently, 8 are older on Level average : and In-channel are more and likely Off-channel to be male. spending.. 9 Level 4: TMC-booked and Extra spending.. 10 A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. 4. T&E A In Decision 60% of the Tree cases, framework the approval applications process takes place.. via a tool. exchanges are the next most widely 11 used practice, accounting for 25% of the responses. A Approvers declare Total cost it is of both mobility quick and... easy to follow the approval process: on a scale of 1 to 5, the average 11ratings are 4.0 (speed) and.8 (ease), respectively. Extra spending in air, hotel and car subcategories.. 12 A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while another 68% Additional challenge applications the requests of only the when T&E the Decision trip costs Tree are analysis too high.. or the trip booked is non-compliant 1 with 5. Conclusions A Approvals are. granted for 90% of the trip requests processed References A The approval rate also depends on the traveler s department, and, to a smaller extent, on the approver s job 16 level. 7 In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between 2015 PAGE 2

3 Executive summary 1. Executive summary The return on investment (ROI) of business travel is a fundamental topic in the travel industry. The first estimations of a trip s In many companies Travel and Expense (T&E) spending represents a significant expense: controlling it is ROI are typically made by travelers and travel approvers before the trip - at trip approval stage. This paper discusses several crucial to business operations and success. key aspects of the trip approval process. Understanding T&E spending can be reduced to understanding three fundamentals about each expense item: The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also The type of service or product bought travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s The spending behavior of the employee perspective. The business driver (context) of the expense With regard to the composition of the approver group: To put it simply, one needs to look at the what, the how and the why behind each expense line. Today, basic A T&E Travelers analyses direct managers present make a cost up breakdown 8% of all approvers, by the and type the of higher service levels bought, of management while more account advanced for an additional 1%. studies focus on employees compliance with the corporate spending policy. A Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently, In this are publication older average we propose and are more a new likely approach to be male. to analyzing T&E costs. Besides taking into account the type of service or product purchased, this approach naturally weaves in business drivers and employee behavior When looking from at the trip very approval start of process: the analysis. Our method involves two steps: A 70% Expenses of travelers are need sorted approval into for five every categories trip they take, using and a most decision approvers tree process framework trip Specifically, requests every our month. T&E A In Decision 60% of the Tree cases, consists the approval of a series process of four takes algorithms place via a tool. which establish exchanges whether are the the next expense: most widely used practice, o accounting (1) occurred for 25% while of the traveling responses. o (2) was associated with a regular travel supplier (air, hotel, car) are 4.0 (speed) and.8 (ease), respectively. A Challenging o () trip was requests made is through common in the the Travel approver Management group: 11% of Company approvers (TMC) challenge all requests received, while another o 68% (4) challenge was different the requests from the only TMC when amount the trip costs recorded are too at high booking or the trip time booked is non-compliant with Each category is then broken down into subcategories, with the emerging spending pattern The outcome investigated of the approval to identify process specific is mostly areas positive: for optimization. The Afirst Approvals step allows are granted immediate for 90% of high-level the trip requests view processed. on where T&E money is spent, while the second step takes A us The closer approval to rate the drops actions to 84% needed for those to improve approvers spending. who always These challenge actions trip requests. include adjusting the business drivers (modifying the amount of travel or expenses), improving employee purchasing behavior and policy compliance, as well as negotiating new partnerships with certain suppliers. To These illustrate results, how gathered the from T&E a Decision large respondent Tree approach base, offer a works useful in framework practice to we better will understand use two trip applications: approval. one related to the total cost of a trip and the other focusing on the costs of ancillary services. In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip We believe this method will guide finance, procurement and travel management professionals to an successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between improved understanding and optimization of T&E costs PAGE

4 " The complexity and sheer volume of T&E information make it challenging to process, manage and interpret "

5 Executive summary 2. Introduction The return on investment (ROI) of business travel is a fundamental topic in the travel industry. The first estimations of a trip s Travel, procurement and finance professionals are looking to get more value out of T&E ROI are typically made by travelers and travel approvers before the trip - at trip approval stage. This paper discusses several data [Ref. 1]. key aspects of the trip approval process. However, The research the presented complexity here is based and on a sheer wide-scale volume traveler survey of T&E (almost information 10,000 respondents) make administered it challenging by Carlson to process, Wagonlit Travel manage () and between interpret. May and To September deal with this A quarter complexity, of the travelers Carlson surveyed Wagonlit declared Travel they () are also has travel developed approvers, which a allows T&E us Decision to obtain insight Tree into that the approval compiles practices T&E from information both the traveler s into and a the dynamic approver s framework. perspective. The algorithms in the framework go beyond the traditional cost analysis by combining massive amounts of data into a handful of spending patterns, helping to understand why and how money is being spent, thereby bringing traveler behavior into the With regard to the composition of the approver group: equation. A Travelers direct managers make up 8% of all approvers, and the higher levels of management account for an additional 1%. The T&E Decision Tree produces intuitive results that can pinpoint those areas of T&E requiring A Compared specific to the regular focus business and action. travelers, We approvers believe occupy this higher approach levels in the organization, will help travel decision-makers more frequently, are older on average and are more likely to be male. make the most of their spending while contributing to enhanced safety and security, higher policy compliance and a better traveler experience. A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. are 4.0 (speed) and.8 (ease), respectively. A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while A Approvals are granted for 90% of the trip requests processed. NOTICE In a future Please publication, note we that will report while results the figures from studying and results the ROI contained of a business in trip. this The report knowledge are based of what makes a trip successful will on give a real travel sample approvers of corporate another handle data, in making they are their meant decisions, to and be will illustra9ve. shed light onto They the help direct link between a company s simulate travel program how the and T&E achieving Decision its strategic Tree business works and objectives. what output it produces. Every client spending profile naturally yields different results and thus different ac9ons required for T&E op9miza9on PAGE 5

6 1. Executive summary The T&E Decision Tree As The illustrated return on investment in Figure (ROI) 1, the of business T&E Decision travel is a Tree fundamental uses a topic series in the of travel four industry. algorithms The first to estimations break down of a trip s T&E spending ROI are typically into five made main by travelers categories, and travel reflecting approvers the before demand the trip for - at travel trip approval and traveler stage. This behavior. paper discusses Starting several from the key base aspects of of the the tree, trip approval these are: process. Travel management company (TMC) booked services: typically air, hotel or car reservations 1. The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson Wagonlit Extra Travel expenses: () between subsequently May and September added by the traveler A quarter to the of the TMC-booked travelers surveyed services. declared they are also travel approvers, These include which allows for example us to obtain air insight ancillary into fees the approval or GPS navigation practices from charges. both the traveler s and the approver s perspective. Off-channel purchases: air, hotel or car reservations not made through the TMC. Auxiliary spending: incurred during a trip but not booked through an airline, hotel or car rental With regard to the composition of the approver group: company. Some examples are meals, printing costs, parking or taxi fare. A Travelers direct managers make up 8% of all approvers, and the higher levels of management account for an additional Non-trip spending: office supplies, short commutes or travel using personal car. 1%. A Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently, are older on average and are more likely to be male. A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. are 4.0 (speed) and.8 (ease), respectively. Air/Hotel/Car A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while In-channel A Approvals are granted TMC for 90% of the trip requests processed. A The approval rate booked 1% 2% Extra drops to 84% for those approvers NOTICE who always challenge trip requests. Trip TOTAL T&E In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between In a nutshell, the T&E Decision Tree sorts transactions into five main categories. Once categorized, spending is further broken down into subcategories to single out specific areas of optimization; this will be explained in the next section. 14% 100% 15% 8% Auxiliary Off-channel In-Depth Analysis of Spending Patterns Fig. 1. The T&E Decision Tree. The percentages in the orange circles add up the total T&E, or 100%. Please note the data shown here is illustrative only. Non trip 1 For the current study we omitted the rail component as travel was performed mainly in North America. For European companies however, rail bookings are expected to account for a significant portion of T&E spending PAGE 6

7 Executive summary. T&E Decision Tree analysis The return starting on investment point for (ROI) the analysis of business is travel the is T&E a fundamental expense dataset topic in the typically travel industry. obtained The first by estimations aggregating of a data trip s from ROI are the typically expense made reporting by travelers system, and travel credit approvers card, lodge before card, the trip or - at financial trip approval accounting stage. This system. paper discusses several key aspects of the trip approval process. For this study, we have used a sample of 00,000 transactions from various clients. To each transaction The research we presented successively here is based applied on a the wide-scale four-level traveler classification survey (almost algorithms 10,000 respondents) shown schematically administered by in Carlson Fig. 1 (starting Wagonlit Travel from the () top) between as described May and below. September A quarter of the travelers surveyed declared they are also travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s Level perspective. 1: Trip and Non-trip Spending Determining the portion of spending associated with actual traveling is the first step towards understanding With regard to the T&E. composition In certain of the companies approver group: the client base may be mostly local (especially in large cities) while A for Travelers other direct companies managers employees make up 8% will of travel all approvers, longer distances and the higher to sustain levels of strong management client account relationships. for an additional 1%. Splitting the total T&E into travel and non-travel parts follows the Trip Reconstruction principles [Ref. A2] Compared and uses to the following regular business method: travelers, approvers occupy higher levels in the organization, travel more frequently, are older on average and are more likely to be male. Transaction blocks are formed from expenses that have the same trip identifier, where When looking applicable, at the trip or have approval similar process: date ranges. A 70% Blocks of travelers that contain need approval at least for one every air trip travel, they take, lodging and most or approvers car rental process transaction 2-10 trip requests are tagged every as month. Trip A In blocks. 60% of All the other cases, expense the approval items process are labeled takes OK place Non-trip. figures via a tool. 2 exchanges & are the next most widely used Figure practice, 2 shows accounting the split for between 25% of the Trip responses. and!!!tighter!!! Non-trip + test expenses. font size in Figure doc (11 equivalent) shows the different Non-trip subcategories, A Approvers with declare business it is both meals quick and topping easy to the follow list. the approval process: on a scale of 1 to 5, the average ratings are 4.0 (speed) and.8 (ease), respectively. A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while Business meals 40% The outcome of the approval Total T&E process 100% is mostly positive: Miscellaneous 18% A Approvals are granted for 90% of the trip requests processed. Trip Non-trip Phone 12% 62% 8% M&E 11% Air - Hotel - Car Auxiliary Personal car mileage 6% These results, 47% gathered from a large 15% respondent base, offer a useful framework Parking to better / tolls understand 4% trip approval. In a In-channel future publication, Off-channel we will report results from studying the ROI of a business Office supplies trip. The 4% knowledge of what makes a trip % 15% successful will give travel approvers another handle in making their decisions, and will Taxi shed % light onto % the direct link between TMC booked Extra Gas 1% 1% 1% 2% Public transport 0% <1% 0 % % % 000 % % % Fig. 2. Total T&E breakdown between Trip and Non-trip categories. Fig. 1. T&E breakdown between trip and non-trip related components. Fig.. Non-trip spending subcategories. Fig. 2. Non-trip sub-categories, as percentage 2015 PAGE 7

8 1. Executive summary Level 2: Auxiliary Spending Besides The return air on travel, investment accommodation (ROI) of business and travel car is a rental, fundamental trips topic involve the other travel industry. elements The first such estimations as meals, of a taxi, trip s parking, ROI are typically etc. which made we by travelers will refer and to travel as Auxiliary approvers before spending. the trip Depending - at trip approval on the stage. company, This paper length discusses of stay several or traveler key aspects behavior, of the trip Auxiliary approval spending process. can be significant; for the dataset we have used, it amounts to 15% of the total T&E. The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson We can further investigate the Auxiliary category by breaking it into subcategories (see Figures 4 and 5) Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also with meetings and events (M&E) and business meals coming top of the list. The M&E subcategory travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s includes team meetings, training programs, conferences etc. Scrutinizing these patterns in detail is the perspective. OK figures 4 & 5 first step toward optimizing Auxiliary spending. With regard to the composition of the approver group: A Travelers direct managers make up 8% of all approvers, and the higher levels of management account for an additional 1%. A Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently, are older on average and are more likely to be male. Total T&E 100% M&E % Business meals 21% A 70% of travelers Trip need approval for every trip Non-trip they take, and most approvers process 2-10 trip requests every month. Miscellaneous 11% A In 60% of the 62% cases, the approval process takes 8% place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. Phone 8% A Air Approvers - Hotel - declare Car it is both Auxiliary quick and easy to follow the approval process: Gason a scale 8% of 1 to 5, the average ratings 47% 15% are 4.0 (speed) and.8 (ease), respectively. Parking / tolls 8% A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while In-channel Off-channel another 68% challenge the requests only when the trip costs Personal are car too mileage high or the 6% trip booked is non-compliant with % 15% Taxi 2% 2% TMC booked Extra Office supplies 1% 2% A Approvals are granted for 90% of the trip requests processed. Public transport 1% 1% 1% 1% % 160 % 2040 % 2720 % 400 % A The approval Fig.. rate T&E also breakdown depends travel on and the auxiliary traveler s related department, components. Fig. 4. Auxiliary spending and, to a smaller extent, Fig. on 5. Auxiliary the approver s spending job level. as a percentage of total T&E. subcategories. Fig. 4. Auxiliary sub-categories, as percen In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between 2015 PAGE 8

9 1. Executive summary Level : In-channel and Off-channel Spending Air The travel, return accommodation on investment (ROI) and of car business rental travel costs is make a fundamental up around topic in half the of travel the industry. total T&E The first spending estimations (Figure of a trip s 4). Booking ROI are typically these made services by travelers typically and involves travel approvers a TMC, before which the trip helps - at trip enhance approval travelers stage. This paper safety discusses and security. several Booking key aspects In-channel of the trip approval (i.e. through process. the TMC) also helps travel managers track and lower expenses with main travel suppliers, which include airlines, hotel chains and car rental companies. By The contrast, research presented direct bookings here is based by the on a traveler wide-scale (without traveler going survey (almost through 10,000 a TMC) respondents) are referred administered to as Off-channel by Carlson or Wagonlit leakage, Travel and () their between contribution May and can September measured A by quarter bringing of the together travelers the surveyed expense declared and they TMC are datasets. travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s also perspective. The process of finding the same air, hotel, or car transaction in both datasets is called transaction matching. Often, the absence of a unique transaction code across the two datasets makes it necessary to With simultaneously regard to the composition match multiple of the approver transaction group: elements such as dates, location or supplier names etc. To allow A for Travelers occasional direct managers differences make (spelling, up 8% of typos, all approvers, formatting) and the between higher levels the TMC of management and expense account records for an we additional a fuzzy 1%. matching technique [Ref. ]. Namely, we form all possible TMC-expense pair employ combinations and for each pair we compute a similarity score; the larger the score, the more closely the A Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently, transaction elements match between the two datasets. are older on average and are more OK likely to figures be male. 6 & 7 15% of total T&E corresponds to Off-channel bookings, and almost three quarters of the Off-channel spending When looking comes at the from trip approval direct process: hotel bookings (see Figures 6 and 7). For the dataset we have used here, about half of all hotel bookings were not made through the TMC (Figure 8). A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. Air 61% are 4.0 (speed) and.8 (ease), respectively. Hotel 1% Trip Non-trip A Challenging 62% trip requests is common in the approver 8% group: 11% Car of approvers 8% challenge all requests received, while Air - Hotel - Car Auxiliary 47% 15% In-channel A Approvals are Off-channel granted for 90% of the trip requests processed. Air 2% A % The approval rate 15% drops to 84% for those approvers who always challenge trip requests. Hotel 7% TMC booked Extra 1% 2% Car 4% 4% Fig. 6. In-channel and Off-channel spending Fig. 7. In-channel (top) and Off-channel (bottom) Fig.6. In a future In-channel publication, as and a percentage Off-channel we will report of total spending results T&E. from studying the ROI of a spending business Fig.7 breakdown trip. The into knowledge air, hotel of and what car subcategories. makes a trip as successful a fraction will of give total travel T&E. approvers another handle in making their decisions, and a. In-channel, will shed light b. onto Off-channel, the direct link between c. Air - Hotel - Car spending split between In-channel and Off-channel 14% Total T&E 100% 750 % 7500 % 18% % % 49% AIR HOTEL CAR 86% 82% Fig.8. In-channel vs Off-channel split for the air, hotel and car subcategories. In-channel Off-channel 2015 PAGE 9

10 1. Executive summary Level 4: TMC booked and Extra Spending In-channel The return on spending investment can (ROI) be of further business divided travel is a into fundamental TMC-booked topic in and the travel Extra industry. components. The first estimations The TMC-booked of a trip s category ROI are typically is made made up by of travelers all In-channel and travel bookings approvers recorded before the trip by the - at trip TMC. approval Extra stage. spending This paper contains discusses two several main elements: key aspects of the trip approval process. 1. Ancillary expenses incurred in association with TMC-booked transactions but not purchased The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson Wagonlit through Travel () the TMC. between Examples May and include September baggage fees A quarter or extra of the legroom travelers for surveyed air travel; declared room they upgrade are also travel approvers, or pay-per-view which allows for us lodging; to obtain and insight insurance, into the GPS approval navigation practices for from rental both cars. the traveler s and the approver s perspective. 2. Non-itemized Auxiliary expenses, arising whenever travelers are issued a single receipt for a combination of services. For example, a traveler may receive a single bill, non-itemized, for a With regard hotel to the stay, composition laundry service of the approver and in-room group: dining. These Auxiliary services (laundry and dining) will A Travelers generate direct a difference managers make between up 8% the of TMC-booked all approvers, room and the rate higher and levels the of final management expensed account amount. for an additional 1%. Figure 9 shows that Extra spending accounts for 2% of total OK T&E or figures about 6% of TMC-booked 8 & 9 services. Figure A Compared 10 shows to the how regular TMC-booked business travelers, and approvers Extra spending occupy higher breaks levels in down the organization, across air, travel hotel more frequently, and car are older on average and are more likely to be male. subcategories. For each of these subcategories, Figure 11 presents the split between TMC-booked and Extra contributions. A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting Total for T&E 25% 100% of the responses. Air 64% are 4.0 (speed) and.8 (ease), respectively. Hotel 1% Trip Non-trip A Challenging 62% trip requests is common in the approver 8% group: 11% of approvers challenge all requests received, while Car 5% 5% Air the - travel Hotel - policy. Car Auxiliary 1625 % 250 % 4875 % 6500 % 47% 15% In-channel A Approvals are Off-channel granted for 90% of the trip requests processed. Air 17% % 15% A The approval rate drops to 84% for those approvers who always Hotel challenge trip requests. 9% TMC booked A The approval Extra rate also depends on the traveler s department, and, to a smaller extent, on the approver s job level. 1% 2% Car 44% Fig. 9. TMC-booked and Extra spending as a Fig. 10. TMC-booked (top) and Extra (bottom) breakdown percentage of total T&E. into air, hotel and car subcategories. In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip Fig. 7. T&E breakdown travel auxiliary related components. Fig. 8. Auxiliary spending. successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between 2% 8% AIR HOTEL CAR 1625 % 250 % 4875 % 6% 2015 Air Hotel Car 98% 92% 64% Fig.11. TMC-booked vs Extra split for the air, hotel and car subcategories. TMC-booked Extra 2015 PAGE 10

11 Executive summary 4. T&E Decision Tree framework applications The return T&E Decision investment Tree (ROI) analysis of business system travel helps is a fundamental travel optimization topic in the travel in a industry. number The of first ways. estimations For example, of a trip s compliance ROI are typically can made be by increased travelers and by travel investigating approvers before Off-channel the trip - at expenses trip approval to stage. understand This paper when discusses and several why travelers key aspects are of the opting trip approval to book process. directly with air or hotel suppliers rather than through the TMC [Ref. 4]. Other analyses may study the emergence of peer-to-peer accommodation or ride-sharing services in The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson business travel [Ref. 5]. Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also In travel this approvers, section which we focus allows on us two to obtain applications, insight into one the approval related practices to the from total both cost the of traveler s the trip and and the the approver s other related perspective. to Extra spending. With regard to the composition of the approver group: Total A Cost Travelers of Mobility direct managers make up 8% of all approvers, and the higher levels of management account for an additional 1%. Employee mobility, be it on short distances Total or cost longer of trips, the requires trip a number of services besides the core A transportation Compared to the regular segments. business Non-trip travelers, spending approvers occupy patterns higher determine levels the organization, the cost of travel urban more frequently, mobility. Similarly, are Auxiliary older on average spending and are can more have likely a significant to be male. Air impact Hotel on the trip cost. Ground Auxiliary Using the first level 8% of the T&E Decision Tree, we estimate 4% the average cost of 5% a trip to be $975 2% across all trips in our data set. As shown in Figure 12, Auxiliary spending makes up close to a quarter of the total A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. cost of the Fig. trip. 6. Average total cost of trip estimated at $975. Auxiliary spend represents 2% of total cost of trip. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. are 4.0 (speed) and.8 (ease), respectively. A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while Air 8% Total cost of the trip A Approvals Fig. are 12. granted Average for total 90% cost of of trip the estimated trip requests at $975. processed. Auxiliary spending represents 2% of total cost of trip. Auxiliary 2% The average cost of the trip can be calculated for different types of trips and used for benchmarking purposes. Travelers and travel approvers can use these benchmarks in deciding whether to take the trip or approve the trip request, respectively. In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip As successful an illustration, will give travel consider approvers a Chicago-New another handle York in making return their flight decisions, priced and $400. will shed If we light knew onto the that direct on link this between route the a company s airfare is travel expected program to and account achieving for its 40% strategic of business the total objectives. cost of the trip, then the traveler (or approver) should make their decision based on a total cost of $1000. Hotel 4% Car 5% 2015 PAGE 11

12 1. Executive summary Extra Spending in the Air, Hotel, and Car Subcategories For The air return travel, on investment most ancillary (ROI) of services business travel are purchased is a fundamental at booking topic the time travel yielding industry. no The discrepancy first estimations between of a trip s booking ROI are typically and final made expensed by travelers and amounts. travel approvers However, before exceptions the trip - at do trip occur approval and stage. overall, This paper air discusses ancillary several fees purchased key aspects of outside the trip the approval TMC process. amount to 2% of the total air spending. To understand which ancillary services are bought by travelers, one can use publicly available mapping The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson tables based on a combination of airline identifier and transaction amount. Alternately, text analytics Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also can be used to automatically read and interpret the comments entered by travelers when filing their travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s expense reports. By applying this method to our subset of ancillary data containing traveler comments perspective. (40% of all air ancillary records), we found that 90% of ancillary spending was on baggage fees, 4% on flight modifications, 4% on preferred seating and about 1% on on-board internet access. With regard to the composition of the approver group: Similarly, A Travelers hotel direct Extras managers account make for up 4% 8% of the of all total approvers, hotel and spending. the higher The levels situation of management is very different account for for an car additional 1%. as described rental bookings below. Extra ASpending Compared in to Car the regular Rental business travelers, approvers occupy higher levels in the organization, travel more frequently, are older on average and are more likely to be male. As shown in Figure 1, car rental Extras can add up to a significant amount of the total car spending, with a third of all rentals exceeding the TMC-booked amount by $50 or more. Our analysis shows that, on average, travelers expense a car rental cost which is $48 higher than the initial booking amount, a 67% A increase 70% of travelers over the need initial approval cost. for Most every of trip this they is take, attributed and most to approvers taxes and process fees 2-10 which trip can requests be particularly every month. high Aat In airport 60% of rental the cases, locations; the approval the rest process is taken takes up place by via insurance, a tool. navigation, exchanges car are upgrade the next most etc. widely used practice, accounting for 25% of the responses. are 4.0 (speed) and.8 (ease), respectively. A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while $50 to 75 A Approvals are granted for 90% of the trip requests processed. $25 to 50 2% Air seat 2% $0 to 25 7% These results, gathered from a large respondent base, offer a useful framework to better Flight understand change trip 2% approval. In a future publication, we will report results - $25 to from 0 4% studying the ROI of a business trip. The In knowledge flight wifi of < 1% what makes a trip successful will give travel approvers another handle in making their decisions, % of car bookings and will shed light onto the direct link between Difference between expensed and booked amounts for rental car transactions. 6% Undefined Air baggage =($expensed-$booked) Fig. 1. Difference between expensed and booked amounts for car rental transactions PAGE 12

13 1. Executive summary Additional Applications of the T&E Decision Tree Analysis Besides The return the on investment actions previously (ROI) of business discussed, travel is we a fundamental can envision topic several in the travel complementary industry. The first applications estimations of of a trip s the T&E ROI Decision are typically Tree made analysis. by travelers and travel approvers before the trip - at trip approval stage. This paper discusses several key aspects of the trip approval process. Align T&E with business objectives. The T&E split between trip-related and non-trip-related spending should The research reflect presented corporate here is priorities. based on a Global wide-scale business traveler survey expansion (almost 10,000 is typically respondents) accompanied administered by by a higher Carlson proportion Wagonlit Travel of () trip-related between spending. May and September Conversely, a travel A quarter freeze of the should travelers surveyed result in declared a higher they non-trip are also related travel approvers, spending. which allows us to obtain insight into the approval practices from both the traveler s and the approver s perspective. Reduce Non-trip spending. Non-trip costs can be scrutinized by breaking them down into subcategories and With regard analyzing to the their composition relative of the contributions. approver group: For instance, if business meal spending is sizable, then supplier A Travelers agreements direct managers with local make restaurants up 8% of or all catering approvers, service and the providers higher levels are of the management answer. account This is for just an one additional other 1%. options will become apparent by examining each subcategory and isolating those example: expenses A Compared which to are the regular significantly business travelers, higher than approvers average. occupy Recurring higher levels high-spend in the organization, behavior travel more can frequently, also be flagged are and older discussed on average with and the are more employees likely to concerned. be male. Reduce When looking Auxiliary at the spending. trip approval One process: can gain deeper insights into the total cost of the trip by knowing the relative A 70% importance of travelers of need the approval different for every subcategories trip they take, of and Auxiliary most approvers spending. process As with 2-10 the trip requests Non-trip every category, month. actions to lower these costs include negotiating supplier partnerships and modifying traveler behavior A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used when outliers practice, accounting and recurring for 25% high-spend of the responses. patterns are identified. Improve traveler compliance. Off-channel spending can be split into air, hotel and car subcategories and are 4.0 (speed) and.8 (ease), respectively. further analyzed to understand which suppliers tend to get the highest share of Off-channel bookings (e.g. A low Challenging cost carriers, trip requests sharing is common economy in the approver providers group: etc). 11% Actions of approvers to challenge improve all compliance requests received, include while negotiating new supplier partnerships and correcting recurring Off-channel booking behavior, for both travelers and travel approvers. Reduce Extra spending. Possible actions to lower Extra costs include negotiating deals for popular A Approvals are granted for 90% of the trip requests processed. ancillary services such as GPS navigation, or using supplier data to understand if employees are paying for services which have already been included in the negotiated rate, such as insurance fees In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between 2015 PAGE 1

14 " We take standard expense monitoring one step further by advocating the s t u d y o f a l l f i v e c a t e g o r i e s simultaneously, rather than in isolation, at the very start of T&E data analysis "

15 Executive summary 5. Conclusions We The have return introduced on investment a (ROI) simple of business and insightful travel is a methodology fundamental topic to in analyze the travel T&E industry. spending. The first The estimations T&E Decision of a trip s Tree ROI are approach typically made opens by travelers new windows and travel approvers into understanding before the trip why - at trip and approval how stage. money This paper is being discusses spent several by employees, key aspects of which the trip in approval turn helps process. identify the areas of spending where action is most needed in order to mitigate costs and improve employees compliance and travel experience. The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s The benefits of the T&E Decision Tree approach are three-fold: perspective. 1. Strategic perspective: it provides a single view over five important categories of T&E spending. With regard These to the categories composition are of defined the approver to reflect group: and incorporate the demand for travel as well as traveler behavior. A Travelers direct managers make up 8% of all approvers, and the higher levels of management account for an additional Simplicity: 1%. it produces a numerical and visual output which is easy to understand and 2. interpret. A Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently,. Flexibility: it can be further expanded to integrate new subcategories and algorithms if needed are older on average and are more likely to be male. to understand other aspects of T&E spending. For example, new subcategories can be defined by the booking channel used (online versus agent-booked) or the form of payment used by the employee (corporate card or other). A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used The basic practice, ideas accounting behind for this 25% framework of the responses. are not new: for example, many companies are routinely analyzing A Approvers one or declare two it categories is both quick such and easy to Off-channel follow the approval bookings process: or Extra on a scale spend of 1 in to 5, order the average to increase ratings compliance. are 4.0 (speed) However, and we.8 (ease), take this respectively. one step further by advocating the study of all five categories simultaneously, A Challenging rather trip requests than is in common isolation, in the at approver the very group: start 11% of T&E of approvers data analysis. challenge This all allows requests companies received, while to pinpoint and prioritize the main strategic areas for optimization. This is a new, structured approach for analyzing T&E spending. It will help corporate travel and A Approvals are granted for 90% of the trip requests processed. purchasing decision-makers improve spending control and enhance safety and security, policy compliance and the traveler experience. In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between 2015 PAGE 15

16 Executive summary 6. References [1] The, return Travel on investment Management (ROI) of Priorities business travel for 2015, is a fundamental topic in the travel industry. (2015) The first estimations of a trip s ROI are typically made by travelers and travel approvers before the trip - at trip approval stage. This paper discusses several [2] key aspects Solutions of the trip Group, approval process. Trip Reconstruction (201) [] We employ a standard fuzzy matching technique as described in the following website The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson and references therein: Wagonlit Travel () between May and September A quarter of the travelers surveyed declared they are also travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s [4] perspective. Travel Management Institute, Where now for managed travel? (2014) [5] With regard Travel to the Management composition of Institute, the approver Faster, group: smarter, better? (2015) A Travelers direct managers make up 8% of all approvers, and the higher levels of management account for an additional 1%. A Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently, are older on average and are more likely to be male. A 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. A In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. are 4.0 (speed) and.8 (ease), respectively. A Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while Credits A Approvals are granted for 90% of the trip requests processed. A The co-editors approval in rate chief also depends on the contributors traveler s department, and, to a smaller extent, on the approver s job level. Hovhannes Khandanyan Yon Abad Chloe Couchman Jim Lungu These Carlos results, Sanchez gathered from a large respondent Longyi Bi base, offer a useful framework Ron to Hobson better understand Christophe trip approval. Renard Catalin Ciobanu Nell Bury Eric Jongeling Fredrika Rylander In a future publication, we will report results Fabien from Cros studying the ROI of a business Vincent trip. Lebunetel The knowledge Geraldine of what makes Valenti a trip successful will give travel approvers another Pierre-Alexandre handle in making Chanteau their decisions, Sophie and will Le shed Cornec light onto Maciej the direct Wludyka link between a company s travel program and achieving Carrie-Ann its strategic Cooper business objectives. Leisha Lindsey Graphic work and editing Stephan Caso 2015 PAGE 16

17 Copyright 2015 Carlson Wagonlit Travel is committed to promoting environmental sustainability.