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Travel 19th April 2018 - 2 min read

How can you drive a travel program with 41% of your vision blocked?

By Al Norman

“How much does your company spend on travel?” The answer is not as simple as you think.

We made the astonishing discovery that companies spend 41% more on travel-related costs than what their TMC data tells them. You may want to read how we managed to track these numbers down.

When we ask travel managers how much their spend is, the answer is typically based on the spend booked through their TMCs. Occasionally, travel managers estimate by adding their TMC spend plus their card spend and their total expense spend. If only travel spend is included and the duplications are removed, the actual spend is somewhere in between these estimates.

We recently analysed over $8.5 billion USD of travel-related spend, including TMC, Card and Expense transaction-level data, to establish benchmarks for total spending.  This analysis included global companies with $50 million to $1 billion USD of annual overall travel spend.

We found a typical global company spends 41% more on travel-related costs than what is reflected in the TMC data. Travel managers looking at TMC-only data representing 59% of the spend will thus be less effective at managing their programme.

In the chart below, we show an example of a company that spends $100 million USD through their TMCs. After fusing the TMC data with Card and Expense data, while eliminating duplication, we discover that the $100 million increases to over $164 million in total travel-related spend.

Companies typically focus heavily on air spend since it is 72% of TMC spend.  Using a total spend view, air spend was less than half the total spend. Travel Managers need to focus on other spend categories.[Source: Internal Study]

The data analysis reveals the extent of spend missing from TMC-only data – data you need to do your job. The percentage of spending purchased outside the TMC includes:

7%                    Air spend

41%                 Lodging spend

49%                 Car rental spend

69% -100%       Rail spend

100%                Meals, taxis, black cars and travel management costs 

These costs can still leave out additional cost components such as:

  • Meetings Spend. Industries like Pharma can have a meetings spend equal to or higher than air spend — adding up to 35% to the total spend.  Please note, it might only add 10% for manufacturing companies.
  • Meals Spend.  Depending on the industry, meals spend can be highly variable as well.  Pharma companies’ meal spend can be as large as air spend. We have used an average estimate across industries.

Case Study: How can this data be put into action?

A large global client saw that 65% of their hotel spend was booked directly with hotels instead of through the TMC.  

Upon data evaluation, they discovered that Amsterdam, with the 3rd largest hotel spend, had 73%of bookings made outside the TMC. Their travellers were mostly booking directly with NH Hotels, AccorHotels and IHG hotels. Using our tool, they evaluated the NH and AccorHotel spend by hotel property, preferred status, and which travellers were frequently making direct bookings with these hotels.  They determined why people were booking this way, and as a result added two new hotels to the preferred programme, removed one and negotiated new rates with another.

Ask your CPO if he is okay managing the programme with only 59% of the category visible. If not, call us to find out how to see a full 100% view.

Al Norman
By Al Norman
2 min read

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