Why data analytics is the key to cutting business travel costs
It is estimated that, in many corporations, just 60% of all travel costs are visible. The remaining 40% is invisible because those organisations track air, hotel and car rental bookings rather than what was actually spent – any why.
Without full visibility of bookings and spend, companies cannot quantify the true cost of a trip or develop the insights necessary to leverage maximum savings. Understanding how travel is booked through a TMC, online travel agent or self-booking tool, the class of travel and hotel room types booked is just as important.
Technology and data analytics are increasingly driving corporate travel management. Expense management tools have become more sophisticated whilst chief financial officers have an increasing array of data sources to interrogate, from purpose-built tools like SAP Concur to corporate credit card data.
As more countries relax their rules to allow digital copies of receipts, paperless reporting will make expense data even more valuable to travel managers in quantifying the true cost of travel.
The problem is that the numbers alone don’t tell the full story. Inevitably, most travel programs prioritise savings over employee satisfaction and convenience, but the workplace is changing and with it travellers’ attitudes and needs.
By 2020 the millennial generation will dominate the global workplace, with Generation Z hard on their heels. 81% of millennials expect their companies to act responsibly and are less likely to put up with policies that do not meet their needs or expectations.
For instance, Asian business travellers are almost twice as likely to extend their business trips to include the weekend as their global counterparts, yet few Asian travel programs permit bleisure trips. This lack of priority given to personal preferences in company travel policies is a frequent complaint from business travellers and will ultimately cause potential savings to be lost.
Travel managers are turning to data analytics solutions to generate cost savings. This is due to more and cheaper analytic tools coming onto the market, and because travel managers have realised the importance of persuading employees to handle the organisation’s assets responsibly and effectively. By helping travellers and arrangers to make better informed decisions around travel, employer and employee both benefit.
Data analytics enable organisations to fill in the gaps in their knowledge by identifying issues with existing travel programs.
For example, savings achieved at the expense of the traveller experience; poor communication between the company and its travellers or spend and expense sitting in separate business silos.
Compared to the cost of missed opportunities for savings, either as a result of out-of-policy bookings, use of non-preferred suppliers or simply un-necessary travel, the implementation cost of data analytics is comparatively small.
These data insights also highlight opportunities to make improvements that will ultimately reduce travel costs. For example, by understanding the impact of regular or excessive travel on employees’ health and wellness, lost productivity can be mitigated through appropriate action. Similarly, the connection between travel and meetings becomes more transparent.
These data insights can enable employers to ‘nudge’ travellers and arrangers into making the right decisions and thereby reduce travel costs in three ways. Firstly, by reducing or avoiding unnecessary travel. Second, by empowering travellers to decide how they travel. Third, by basing travel choices on cost, value and well-being.
The true value of analysing all travel-related data in one place, at the same time, is a full view of an organisation’s true spend.
That is why at FCM, our technology platforms help our customers make better decisions from a full consolidated view of their travel booking and spend data. Contact us below to learn more.