Corporate Travel Automation &
the Opportunity for Commercial Card Solutions
Prepared for:
November 7, 2012
CONFIDENTIAL: This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client
organization without prior approval by First Annapolis Consulting, Inc.
NVBTA Travel Automation & Cards
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
Introductions
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NVBTA Travel Automation & Cards
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
Introductions
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NVBTA Travel Automation & Cards
Corporate Travel Automation
Organizations are automating travel management to streamline processes.
Organizations are automating
travel processes
Automation costs less per trip
100%
€100
€90
€80
travel policy
preferred supplier
agreements
travel agency
corporate card
60%
Unit Cost
80%
Lower
performance
€70
€60
€50
€40
Average
€30
reporting solution
€20
expense solution
40%
€10
Best
performance
€0
online booking
20%
2001
2006
2011
Automation also improves visibility, traveler compliance to policy, and ability to negotiate discounts.
Source: “Globalization of Corporate Travel Programs,” AirPlus survey of ACTE buyers (2011).
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
“European Expense Management Study,” Amex & A.T. Kearney (2008).
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NVBTA Travel Automation & Cards
TMCs & Travel Card Usage
Almost everyone with >$1 mil in travel has a TMC. Walking card usage rises with spend.
Required for Travel Booking
Single TMC
Multiple TMCs
% Trips outside
North America
Central Bill
Traveler Choice
Walking
Personal
Annual Travel Spend:
$50M+
Cards Used
2%
76%
38%
22%
57%
81%
7%
7%
$10M to <$50M
76%
16%
38%
49%
65%
14%
8%
$1M to <$10M
78%
14%
56%
52%
18%
24%
8%
<$1M
56%
74%
36%
20%
30%
28%
Source: Corporate Travel Policy: Benchmarking and Insight, prepared by TRW Travel & Expense Management LLC, July 2010. n = 689 U.S. and Canadian organizations.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Individual vs. Corporate Liability
Meanwhile, liability structures are drifting further towards corporate.
Liability Agreements for Travel Card Spending
Individual
Corp
65%
63%
58%
28%
25%
2006
23%
2009
2011
Legend:
Other
Cards
Walking Travel Card
Card Issuer
Cardholder
Client
Individual liability
Approves
Cardholder
Sets
Credit Line
Bill
Goes To
Payment
Made By
Issuer must
check credit
Issuer offsets rebate
Client invoiced if
cardholder goes
120 days past due
Corp liability / individual pay
Corp liability / corp pay
Payment
Guaranteed by
when expense
report approved
• CTA / travel agency lodged
• Purchasing
• ePayable / virtual
Source: First Annapolis Consulting market observations; 2011 RPMG Corporate Travel Card Benchmark Survey Results.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Travel Card Benchmarking
Market averages can be used to benchmark your travel card program.
(note: bars indexed to 100% in each category)
# of cards
Annual Spend
5,623
$55 mil
Large corp
755
$10 mil
Mid market
178
$2.8 mil
Fortune 500
% of employees w/ card
21%
20%
60
Annual transactions / card
Average transaction size
Annual spend / card
Spend (% of revenue)
27%
73
75
$162
$188
$206
$9,756
$13,812
$15,480
0.50%
0.60%
0.80%
Note: figures are rounded.
Source: 2011 RPMG Corporate Travel Card Benchmark Survey Results.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
B2B Spend by Form of Payment
A summer 2012 1st Annapolis survey shows travel cards and CTAs lead for travel spend.
Q3/4/5: What is your best guess of the approximate $value breakdown by payment method for ...
B2B spend riding on commercial card network rails:
Comm'l cards (plastics issued)
Travel spend
CTAs / ePayables
Personal Cards
58%
10%
ACH
Wire
Checks
21%
9%
2%
Indirect spend
25%
defined herein as spend not related to
direct operations - office supplies,
computers, telephones, etc
Direct spend
10%
7%
10%
28%
20%
5%
8%
41%
48%
defined herein as spend related to direct
operations - raw materials, delivery, etc,
but explicitly excluding payroll
Notes:
For Travel Spend, meeting cards were less than 2% and prepaid was less than 1%. Both payment methods were combined into commercial cards (plastics issued).
For Direct Spend, SEPA accounted for 1% and was combined with ACH.
Virtual / Ghost Cards includes travel agency lodged / central accounts as well as ePayables solutions that ride the p-card rails.
Source: First Annapolis Consulting B2B payments survey, June / July 2012, n=44 mid-market and large end-user organizations based in North America.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Travel Spend by Form of Payment
Segmentation shows some remaining bastions of personal card and check usage for travel.
Q3: What is your best guess of the approximate $value breakdown by payment method for Travel
Comm'l (Plastic)
>$500 mil
62%
CTAs
Personal Cards
10%
20%
ACH
Checks
6%
2%
<$500 mil
46%
11%
25%
16%
2%
Healthcare
60%
6%
10%
20%
4%
Physicalmanufacturing
Products
53%
12%
31%
wholesale
retail
Public
Sector
gov / education
2% 2%
53%
9%
15%
non-profit
utilities
Technology
20%
3%
70%
11%
19%
Notes:
Minor adjustments were made to Comm’l (Plastic) spend percentages to eliminate rounding errors.
For Travel Spend, meeting cards were less than 2% and prepaid was less than 1%. Both payment methods were combined into commercial cards (plastics issued).
Source: First Annapolis Consulting B2B payments survey, June / July 2012, n=44 mid-market and large end-user organizations based in North America.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Drivers for Card Usage & Growth
This survey also revealed key drivers for selection and use of commercial cards.
Selecting An Issuer
Reasons for Card Use
Working
capital
benefits
10%
Rewards
3%
Data &
reporting
15%
Control &
compliance
, 17%
Ability to
grow
program
15%
Rewards
5%
Process
savings,
33%
Revenue
share, 24%
Key for Increasing Card Use
Revenue
share, 22%
Supplier
enrollment
11%
Improve
online
solution
14%
Lower cost
of
acceptance
17%
Rewards
3%
Online
solution,
15%
Integration
, 18%
Issuer
credentials,
21%
Improve
control &
compliance
, 32%
More rev
share, 23%
Q: What are the reasons for credit / payment card use in your organization?
Q: What would be the key factors in increasing usage of credit cards?
Q: What weighting / importance do you assign to the following factors in selecting card issuers?
Source: First Annapolis Consulting B2B payments survey, June / July 2012, n=44 mid-market and large end-user organizations based in North America.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Drivers for Card Usage & Growth
Organizations who put more travel spend on cards / CTAs realize more value-add.
% of travel on a travel card or CTA
80%
70%
60%
50%
40%
30%
20%
10%
0%
<70%
>=70%
for respondents that place 70% or
more of travel spend on travel cards or
CTAs, one-third would say data &
reporting capabilities drives 20-39% of
the reasons why they use cards.
0-19%
20-39% 40-59%
60+
Data & Reporting Capabilities
Factor Weighting for Card Usage
% of travel on a travel card or CTA
80%
70%
60%
50%
40%
30%
20%
10%
0%
<70%
>=70%
for 70%+ respondents, one-third
would weight improving control &
compliance as 40-59% of the
rationale for increasing usage
0-19%
20-39% 40-59%
60+
Improving Control / Compliance
Factor Weighting for Growth
Q: What are the reasons for credit / payment card use in your organization? (all responses must sum to 100%)
Q: What would be the key factors in increasing usage of credit cards? (all responses must sum to 100%)
Source: First Annapolis Consulting B2B payments survey, June / July 2012, n=44 mid-market and large end-user organizations based in North America.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Mobile Transaction Authorization
Mobile authentication for corporate travel payments is quite limited, but likely to grow.
Are travelers currently using mobile for payment?
Services for which mobile used to pay
(for 22% of travelers paying via mobile)
Yes, majority of
travelers
1%
Don't
know
7%
Yes, some
travelers,
10%
Yes, a few
travelers, 11%
41%
33%
25%
17%
8%
No
71%
Source: "Mobile Payment - How It Will Transform Corporate Travel and Expense Management," AirPlus, April 2012. Based on global 2012 survey of ACTE buyers.
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Mobile Applications for Travel
Mobile apps are also niche; but fundamental to further enhancing traveler productivity.
Using Mobile Expense Apps
Key Benefits
No, 93%
Yes, 7%
Faster Expense
Approvals
44%
Utility of Mobile Expense Mgmt Apps
Review / approve expense reports
81%
Enter new expenses
81%
Submit expenses
69%
Import data from corp card
63%
Expense type categorization
63%
View itineraries
Greater Visibility
38%
Convenience for work /
life balance
31%
Faster Reimbursement
31%
56%
Source: “Expense Management for a New Decade,” Aberdeen Group survey of respondents from EMEA (23%), N.A. (67%), AsiaPacific (6%), and South/Central America (4%) (March 2011).
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
About First Annapolis
First Annapolis is a specialized consulting firm focused exclusively on payments.
Client Payment Strategy
Background:
 Founded in 1991; privately held
 Headquartered in the Baltimore area
Card
Issuing
Debit /
Prepaid
Commercial
Payments
Merchant
Acceptance
Professional Staff:
 75+ professionals
Clients:
 Card partners (retailers, autos, airlines,
hotels, affinity groups, etc.)
 Banks and specialty finance companies
 Payment networks
 Processors and service providers
(strategy, market research, business casing,
partnerships, implementation)
 Practice areas aligned with all payment
products and services
Strategy Development / Support
(strategic planning, benchmarking, diagnostics, business casing)
Partnership Finance
(retail, travel, entertainment, oil, auto, affinity, agent)
Loyalty Program Support
(platform/delivery, integration, implementation)
Strategic Sourcing
(insource vs. outsource, feature / functionality, vendor selection)
M&A Advisory
 Management consulting and M&A advisory
services
Management Consulting
Service Offerings:
(acquisition / divestiture strategy, buy / sell-side
representation, transaction support)
 Balanced combination of industry,
functional, and consulting experience
 Trade and government organizations
 Emerging payment providers
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NVBTA Travel Automation & Cards
First Annapolis Contact
First Annapolis Consulting | M&A Advisory Services
900 Elkridge Landing Road, Suite 400
Linthicum, Maryland 21090
USA
Lauriergracht 138
1016RT Amsterdam
The Netherlands
www.firstannapolis.com
Frank Martien
Partner
frank.martien@firstannapolis.com
(410) 855-8513
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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NVBTA Travel Automation & Cards
Moderator Script & Questions
Now that we’ve caught a glimpse of some current trends in corporate travel automation,
let’s ask the experts. Bill, if I could start with you, (1) could you describe some of the ways
TMCs are facilitating more automated or sophisticated use of CTAs or walking cards?
[allow Bill and other panelists to address question]. Now, Robin (2) what are some best
practices you’re seeing with regards to travel spend data consolidation, reporting, and
analysis - and - how are organizations creatively using this data to their benefit? [all
panelists address question]. Terry, (3) what trends are you seeing relative to TMC and
travel card mandates; and what are some best practice examples that come to mind? [all
address question]. Bill, as you reflect on the panelists’ input, (4) what advice would you
give to a client regarding how to identify and position an internal executive champion to
push an organization towards further corporate travel automation? [all address question].
Robin, (5) over the next five years, what tangible benefits will mobile deliver for corporate
travel automation / how will the business case be made? [all address question]. And
Terry, do you see banks, card networks, TMCs, or all three types of providers, leading the
charge in mobile - or - will mobile be driven mostly by players outside of corporate travel?
[all address question]. Finally, Bill, what form of corporate travel automation have we NOT
discussed that we’ll start reading about within five to 10-years’ time? [all address
question]. And, Robin, what’s in store for us regarding future convergence of corporate
travel management and payment practices across geographic markets? [all address
question]. Terry, should M&A be on the radar; and what sort of business combinations up
and down the value chain could impact corporate travel automation and payments?
First Annapolis Consulting, Inc. | Confidential | NVBTA_12Nov7
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